Since last 15 years, we have been assisting utility companies to manage their assets from operational and maintenance perspectives. Recently, we started to look at the global or in other words “the bigger” picture with the view to see how more effectively we can help the power and energy industry. While in this pursuit, we find an article titled “The key to affordable power in West Africa” from World Bank Group author Mustafa Zakir Hussain not only to the point but also an eye opening one! He correctly highlight the unfortunate fact of West African countries where higher tariff does not mean better service or reliability.
While the effort of the World Bank is certainly appreciable and laudable in their drive to attain better sustainable world, we are wondering whether it is really bringing the “bang for the buck”. We have personally seen the projects undertaken by world bank in Asian countries where they have spent millions of dollar to improve efficiency of old power plants to assist governments in renovation and modernization (R&M) projects. Alas, the successful end result is either satisfactory only on paper or existing for very short period of time.
Personally, we believe that the better business model would be to “fund” or “partially involve” some local private entity who has innovative thinking to participate in such program, and who can ensure and commit to maintain sustainable improvements. In our career we have encountered some private companies who raise and invest money in brown field projects, and are able to maintain such efficiency gains for long period of time at the 1/4th cost of what a typical R&M project would incur. This is a win-win approach for both the investor and asset owners. Challenge for private companies is time and effort it takes to convince government owned assets to follow more effective R&M approach to reduce production cost because of so much bureaucracy, lack of decision making and inherent individualistic interests.
The evidence for success of such a strategy can already be noticed by mere fact that poorly performing companies start to do better only when there is “work cultural change” and not just the “initial investment” or take-over. Private companies knows where they are getting hurt and can take an immediate remedial action to reduce cost which public sector companies certainly pays least interest at. With support and encouragement from groups like World Bank, such involvement of pvt sector may bring better and faster result. As climate problem is getting worse day by day, it is helpful to reflect and consider how far we have come and where we are in this global effort. It is time that we seriously start to question the “status quo” and ensure to make better and faster decisions.