The first transformer and switchgear factory in Ethiopia is slotted to commence operations next month.

Ethiopia does not produce any transformers, despite the fact that the Ethiopian Investment Agency (EIA) has granted licences to a total of five companies to produce transformers, to date.

Out of these, Addis Transformer and Switchgears Plc would be the first to move beyond the pre-implementation phase, according to Yeshiwas Shibabaw, managing director of Bridgetech Plc.

The company was established with an investment capital of 300 million Br as a joint venture (JV) between a local company, Bridgetech Plc, and Federal Transformer LLC, a subsidiary of Al-Nasser Industrial Enterprises (ANIE).

Bridgetech Plc provides consultancy services for information technology, telecommunications, electricity, and industrial sectors. ANIE, which was founded in 1992 in the United Arab Emirates (UAE) and comprises 13 companies, has several business ventures in the power, steel, and roto-moulding sectors in the UAE, Qatar, Oman, and Saudi Arabia.

Out of the total investment, between 20 million Br and 35 million Br is earmarked for construction of the factory and around 170 million Br is to cover the costs of machinery purchases with the remaining to be the working capital of the factory, according to Yeshiwas.

The factory, which lies on a 10,000sqm plot in the Tatek Industrial Zone of Burayu Town, Oromia Regional State, plans to have its maintenance and production equipment shipped from Abu Dhabi in the UAE, where Federal Transformer is based, according to Yeshiwas.

The investment licence for the factory, which was obtained in the second half of 2010, is the first investment activity for the company in Ethiopia and Africa.

It chose Ethiopia as the site of its first JV factory for its safe and stable environment, according to the spokesperson of Federal Transformer, which has an average annual turnover of three billion dollars.

“Bridgetech will commence with maintenance work for transformers in July 2011, and start producing transformers in September 2011,” Yeshiwas told Fortune. “We will produce transformers ranging from 25KVA to 1,250KVA during the first stage. By the second stage, we will sell the transformers to Metal and Engineering Corporation (MetEC).”

MetEC has begun repairing the Ethiopian Electric Power Corporation’s (EEPCo) transformers.

The new factory is expected to produce 4,000 transformers within a year of starting production, according to the managing director of the company that undertakes long-term corrective and preventative maintenance for large-scale industrial automations, telecommunication systems, and electro-mechanical projects.

Transformers are used for transferring electricity from one alternating circuit to another with a change in voltage, current, or phase. In addition to manufacturing transformers, the factory plans to produce switchgears, devices to open and close electrical circuits.

These play an important role in the government’s ongoing plan to increase the output of the electricity from 2,000MW to 8,000MW in five years, according to the government’s GTP. It plans to increase electricity coverage from 41pc to 75pc, increase the length of distribution lines from 126,038km to 258,000km, and reduce power wastage from 11.5pc of the electricity generated to 5.6pc.

The other companies that have been granted licences to invest in transformer manufacturing are Lava Business Solutions Plc, a local company which obtained a licence in October 2008; Chitt Ranjan Singh Bhati from India, which obtained an investment license to manufacture transformers as well as concrete and metal poles in December 2009; Mataji Power & Transmission Plc, another Indian company which obtained an investment licence in January 2010; and Advantage Industrials Plc, a Canadian and Ethiopian JV that received its licence in November 2010.

By ELIAS GEBRESELASSIE
FORTUNE STAFF WRITER