Power and transport systems multinational Alstom confirmed on Thursday that upwards of 50% of the combined contract value of €2,8-billion (about R29-billion) for the 12 turbine islands it would build and install for Eskom at the new Medupi and Bravo power stations over the next eight years, would be sourced locally.

Alstom Power Systems president Philippe Joubert, who was in South Africa this week as part of a bigger French business delegation touring with French President Nicolas Sarkozy, said that it was committed to placing as much as possible with local industry, noting that this also made sense due to the global supply-side constraints in the supply of power equipment.

He said that world demand for new generation capacity was currently growing at an unprecedented 200 GW/y and that, in this context, it made sense to diversify its supply chains.

The company already had a material local footprint through the black-empowered Alstom South Africa structure, which was headed by Mark Wilson – a consortium comprising Tiso, Kagiso and employees own 50,2% of Alstom South Africa.

But Joubert indicated that it was also materially enlarging the group’s overall capacity through its 100%-owned subsidiary Alstom Africa Holdings, which would oversee the delivery of the Eskom projects.

The group had also recently confirmed Didier Farez as country president, underlying the strategic importance of the market, where it has an 80% turbine island market share and also a sizeable chunk of the installed boiler base.

Responding to an Engineering News Online question as to where the localisation opportunities lay, Alstom Africa Holdings MD Mark Otto said the group had compiled a comprehensive list of equipment and systems that could be sourced locally. These included items such as air coolers, pumps, auxiliary equipment for the turbine island, and structural steel and piping fabrication related to the turbine hall.

“We believe that 50% plus of the contract value can be sourced locally,” Otto said, noting, though, that, given the size of the contracts, it would also require that some subsuppliers make significant capacity expansions.

For his part, Wilson stressed that the two contracts held out significant potential for Alstom South Africa, which he noted had already grown from a R1-billion business a few years ago to over R6-billion.

He said it had already made a decision to expand capacity in certain areas and would be targeting as much as R8-billion of the some R30-billion, arising only from the turbine islands at Medupi and Bravo. He also noted that there was considerable workflow arising in the areas of transmission and distribution, as well as from the fast-expanding resources economy in Southern Africa. In fact, he indicated that Eskom relate work was actually only 25% of its current order book, but growing as a percentage.

Joubert said that while there was potential to integrate some of the South African subsuppliers into its global supplier network, he felt that the immediate opportunities resided in the supply to the big coal projects.

In addition, Alstom had put in its lot with the Areva-led consortium for the development of the first conventional nuclear station in South Africa since the development of Koeberg a few decades ago, which could further expand the localisation opportunities.