Power for the People

By Dan Fost
Photographs by John Samples

As Egypt pushes forward on a path to industrialization, the country is developing an almost insatiable thirst for electric power. Thanks to a joint venture including Bechtel and the Egyptian government, Egypt is satisfying that thirst, and it’s using a newly emerging homegrown workforce to do it.

PGESCo, the Power Generation Engineering and Services Company, has helped take Egypt from 6,500 megawatts of electric power in the mid-1990s to 22,000 megawatts only a decade later. And with seven PGESCo power plants under construction, the nation’s generating capacity is expected to grow by 1,500 megawatts per year for at least the next five years.

Three factors are driving the growth in Egypt’s demand for power: industry, agriculture, and domestic use. The country is developing a modern manufacturing economy, and a rising standard of living creates greater demand for air conditioners and other electric appliances.

PGESCo has 15 power plants either completed or under construction in Egypt. The average plant consists of one or more 750-megawatt units (units are added to meet growing demand), which use natural gas as their primary fuel. Many of the plants are combined-cycle facilities, in which exhaust from gas combustion turbines drives steam turbines that produce additional power.

Egypt once followed a fairly standard model for construction of new power plants. A big international company would bring in a workforce from around the world, build the plants, and then send everyone home. As Egypt grew in the 1990s, the government decided on a different model—a company including foreign partners that would be more Egyptian in nature.

PGESCo formed in 1993, with Bechtel and Egypt’s Ministry of Electricity and Energy each owning 40 percent. The Arab African International Bank owned the remaining 20 percent (it has since sold its interest to the Commercial International Bank). Under this arrangement, no partner has a majority share, and the bank can mediate any differences. So far, everything has gone smoothly.

PGESCo started with 60 employees and is now up to about 450. In the early days, the company had a ratio of one expatriate for every four nationals on staff; that ratio is now one to 15. That meets a goal of the Egyptian government, which wanted to grow its capability to design and manage the construction of new plants.

Bechtel shares that goal. “We want to develop local resources and train local workers because we can use them again on subsequent jobs, and because it helps foster sustainability for the community,” says Ian Copeland, president of Bechtel’s fossil power business.

Egypt’s overall economy is benefiting from PGESCo’s success. “Our nation is becoming increasingly skilled at producing components such as fuel and water tanks, cables, pipes, valves, steam generator parts, transformers, structural steel, and switchgear equipment,” says Mohamed Awad, chairman of the Egyptian Electricity Holding Company. He points with pride to the fact that locally manufactured content accounts for more than one-third of the cost of PGESCo projects.

To develop a local workforce, Bechtel had to start from the ground up. “We worked—and still do—with the universities, trying to upgrade the curriculum,” says PGESCo General Manager Asem Elgawhary. “We have strong local engineering schools, and the American University in Cairo is one of the strongest in the region.”

University graduates hired by PGESCo learn about Bechtel’s processes and policies. Some new employees are sent to Bechtel offices in Frederick, Maryland, for training, or are assigned to other Bechtel Power projects before returning to Cairo.

In addition to managing a growing local workforce, PGESCo coordinates the work of subcontractors from a number of countries. “You’ll have Asian, European, American, and local contractors, and everyone has a different language and culture,” says Elgawhary. “Yet everyone has to work together to get the job done.”

Not every culture automatically shares Bechtel’s demands for strict safety standards. “This is a major challenge for us, because we insist on behavior consistent with Bechtel’s zero-accidents philosophy,” Elgawhary says. “We give our site managers complete authority to shut down any contractor who doesn’t adhere to our standards.”

Work quality and efficiency are also high priorities. PGESCo has trained 90 percent of its people in aspects of Six Sigma, the data-driven methodology that has helped Bechtel improve its work around the world, saving customers time and money.

In the beginning, PGESCo operated power plants after it built them, but it has gradually developed a local workforce capable of running the plants. It now transfers control of newly completed plants to the Egyptian Electricity Holding Company, Egypt’s power utility, which runs them with limited PGESCo consultation.

With virtually a corner on the power market in Egypt, PGESCo is expanding to other countries in the Middle East, and northern Africa. It has a number of projects under way in Libya, and has worked with Bechtel on projects in Syria, Saudi Arabia, and the United Arab Emirates.

When the United States eased its economic embargo against Libya in 2004, the door opened for development, and PGESCo moved in quickly. “Things are moving very fast since we got in,” says Elgawhary. The joint venture has 25 engineers in Tripoli and the Libyan capital, and other workers travel between Tripoli and Cairo.

It all adds up to an extraordinary story, one that has turned PGESCo into one of Egypt’s most successful companies.

“We can look back with satisfaction on what the company has accomplished since its inception,” says Hassan Younes, Egypt’s electricity and energy minister. “The added value of PGESCo to the Egyptian electricity sector is noted for well-executed projects and future opportunities.”

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