Larsen & Toubro (L&T) on Thursday signed an agreement with South Africa-based Befula Investments for a joint venture to develop power transmission and distribution (T&D) projects in South Africa. L&T will have a 72.5 per cent stake in the venture.
L&T's agreement will help the company exploit the business potential for T&D projects in Africa. The company claims the South African government is likely to invest $10-12 billion in the next five years in augmenting T&D network in the next five years. The country has a current peak demand shortage of 3,000 Mw and this is expected to grow by six per cent every year.
"South Africa has been facing an energy criss since the last few years due to ageing plants. Substantial investments will be made in generation capacity and evacuation capacity as well," said K V Rangaswami, president, construction, and member of the board, L&T.
The transmission lines that are expected to come up will service major load centres and strengthen the national grid to minimise instances of shutdowns.
The companies will collaborate on turnkey execution of power transmission lines, sub-stations, rural electrification, power distribution and industrial electrification.
The joint venture company will look at the engineering, procurement and construction of high voltage transmission lines and also the associated sub-stations. L&T will be responsible for the design and engineering of the projects. "The joint venture will effectively leverage the strengths of both the companies to tap rapidly emerging opportunities in South Africa," said Rangaswami. Befula Investments is a general engineering and investment company, based in Durban.
Along with its associate partners, it has a wide network access to resource pools for labour and services across multiple sectors, including labour sourcing, site location of labour, logistics and supply chain management support.