Power Rental to Double in Africa by 2014, Says Frost & Sullivan Report

The use of power rental equipment is growing significantly in sub-Saharan Africa because of the current electricity crisis in the region, according to a report from analyst group Frost & Sullivan. According to the report “Power Rental in Key African Markets,” power equipment rental has earned revenues of $79.3 million in 2007 in Angola, Botswana, Egypt, Kenya, Nigeria, Mozambique and South Africa. The report predicts revenue to more than double to reach $164.2 million by 2014.

“A combination of limited generation capabilities, robust economic growth and more attractive payment methods will support market expansion,” said Frost & Sullivan industry analyst Jeannot Boussougouth. “In addition, a strong pipeline of infrastructure development projects will keep the market bullish over the long term.”

The report said the below-100KVA range, which accounted for 46 percent of the total demand in 2007, is poised to continue as the most important power range. Governments or utilities constitute the largest end-user segment, accounting for 64.5 percent of the total demand. This trend is expected to continue in the foreseeable future as increased demand for housing, telecoms expansion and the boom in construction projects in countries such as South Africa and Egypt will persist, the report said.

“However, market penetration will not be easily achievable due to the lack of available stock, persistent skills shortages, the difficulty in providing strong after-sales support, the lack of a rental culture, and the perception that rental is still expensive due to increasing fuel prices,” added Boussougouth. “The combination of these would make it harder for entrants to become disruptive forces in markets with established participants.”

The high cost of fuel is also an impediment to power equipment rental in Africa. The report also points out the need to increase the number of machines available, adopt more flexible payment terms, and develop strong relationships with key customers, such as public utilities, as well as reduce lead times.

More information about the report can be obtained from www.energy.frost.com.