STEVE HARRISON

STEVE HARRISON
Business platform CEO

POWER & WATER

“GIVEN THAT THE PLATFORM’S CAPACITY
OVER MOST OF THE PAST DECADE HAS BEEN
LARGELY DEDICATED TO THE POWER
PROGRAMME, A KEY PRIORITY IS TO
RE-ESTABLISH ITSELF AS A CONTRACTOR OF
CHOICE WITH NEW CLIENTS IN THE BROADER
POWER AND WATER SECTORS.”

   POWER1   WATER   OIL & GAS   ELECTRICAL &
INSTRUMENTATION  		 CORPORATE
OVERHEADS
AND OTHER  		 TOTAL   
R MILLIONS  2017   2016    2017    2016    2017   2016     2017   2016    2017    2016    2017   2016  
Revenue 5 063   3 733   56    42   669   367    106   189   14    (55)   5 908    4 276   
Operating profit/(loss) 243   272   (20)   (9)   5   (18)   35   36   (92)   (254)   171    27   
Margin (%) 5%   7%   (36%)   (21%)   1%   (5%)   33%   19%   –    –   3%    1%   
Order book 3 198   6 326   –    25   483   283    26   47   –    2   3 707    6 683   
Segment assets                                         1 527    1 468   
Segment liabilities                                         1 341    1 284   
People                                         6 936    5 354   
LTIFR (fatalities)                                         0.43(0)   0.07(0)  

1 Power programme contracts.

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HISTORY
(R billion)

          

GEOGRAPHIC
SPLIT (%)
HISTORY (R billion)           GEOGRAPHIC SPLIT (%)
   

NEAR ORDERS AND PIPELINE
(R billion)
NEAR ORDERS AND PIPELINE (R billion)

ORDER BOOK
TIME DISTRIBUTION (R billion)
ORDER BOOK TIME DISTRIBUTION (R billion)
   

Near orders: Tenders where the Group is the preferred bidder and final award is subject to financial/commercial close – there is more than a 95% chance that these orders will be secured.

Category 1: Tenders the Group is currently working on (excluding near orders) – projects developed by clients to the stage where firm bids are being obtained – chance of being secured as firm orders a function of final client approval as well as bid strike rate.

Category 2: Budgets, feasibilities and prequalification the Group is currently working on – project planning underway, not at a stage yet where projects are ready for tender.

Category 3: Opportunities which are being tracked and are expected to come to the market in the next 36 months – identified opportunities that are likely to be implemented, but still in pre-feasibility stage.

PROJECT LIFE CYCLE REVENUE DISTRIBUTION

  

GEOGRAPHIC DISTRIBUTION

REVENUE PER REGION
PROJECT LIFE CYCLE REVENUE DISTRIBUTION   GEOGRAPHIC DISTRIBUTION

 
POWER SECTOR
  
OUTLOOK AND KEY DRIVERS
 

4 600MW

Determination Window 2
IPP coal baseload and
gas-to-power projects in
Richards Bay and Coega.

  

2 383MW

Remaining 37 REIPPP
projects yet to be signed
by Eskom.

  
  • The Eskom board approves Fleet Renewal Strategy based on economic viability-life extension to ensure continued reliability of the power stations.
  • South Africa’s coal baseload IPP programme (CBIPPPP) Window 1 two preferred bidders. Window 2 to be announced later in 2017.
  • Large maintenance backlogs in power plants in sub-Saharan Africa, including South Africa.
 
DIFFERENTIATORS
  • Experience in power plant SMEIPP.
  • Appetite for taking up EPC role with in-house key skills and partners.
  • Multi-disciplinary offering through collaboration of Group entities.
  • Experience and track record in implementing large projects.
 

IRP2050

Under public review.
Proponent for gas-to-power
and renewable energies.

  

ESKOM

Repair and maintenance
estimated R10 billion per annum.

Estimated to peak at
R20 billion by 2020.

  

 
OIL &
GAS SECTOR
  
OUTLOOK AND KEY DRIVERS
 

2019/2020

South Africa to develop a gas industrialisation unit resulting from LNG imports.

  

BULK STORAGE TANKS

New build and refurbishment
opportunities emerging
across the continent.

  
  • Refresh strategy to deploy an integrated full project life cycle offering, to include Clough’s front-end and upstream experience.
  • Gas-to-power and LNG import will bring infrastructure opportunities.
  • Sasol ‘stay-in-business’ spend will provide opportunities.
  • Bulk storage opportunities in sub-Saharan Africa and South Africa.
  • Ghana’s investment in the Tema and Takoradi ports will create downstream infrastructure opportunities.
 
DIFFERENTIATORS
  • Capability and experience of Murray & Roberts Group companies.
  • Petrochemical-related activity in Secunda is transferable to Sasolburg.
  • Relationships with EPC and trading houses through Clough.
 

2018 AND BEYOND

Gas commercialisation
projects in East Africa.

Clean fuels will provide
refinery upgrade opportunities.

  

2018 AND BEYOND

Significant stay-in-business
spend by Sasol at Secunda,
Sasolburg & Natref operations, expand registration offering.

  

 
WATER SECTOR
  
OUTLOOK AND KEY DRIVERS
 

ORGANICA

Demo plant secured at
Verulam in eThekwini
Municipality.

  

LIFE HEALTH

Feasibility study to provide
water security measures
to all Life Health’s hospitals.

  
  • Upgrading wastewater opportunities driven by Government, a priority to ensure environmental compliance and reuse.
  • Industrial opportunities driven by environmental compliance, water security and recycling.
  • Mine water sector has not been active over past 18 months. Drivers are environmental compliance, dewatering to mine areas and reuse. Long-term solution for treating AMD in Wits Basins likely to come to market in two to three years.
  • Sea water desalination opportunities will be ad hoc small containerised plants, as Government policy views sea water desalination as a last resort.
  • PPP opportunities in the short to medium term.
 
DIFFERENTIATORS
  • Organica technology for wastewater treatment.
  • RMB/Murray & Roberts Water offering to industrial sector.
  • Access to Osmoflo desalination plants for emergency situations.
  • Stockholding of selected Aquamarine products.
  • Full value chain offering.
 

WATER RISK

83% of South African
companies say they are
exposed to water risk.

  

R670 BILLION

Department of Water &
Sanitation’s estimate to get
wastewater treatment back to compliant operation.

  
 

POTABLE WATER

15 billion m3 is South Africa’s current potable water allocation –
17,7 billion m3 is the estimated demand for potable water by 2030.

    

 
RESOURCES &
INDUSTRIAL SECTOR
  
OUTLOOK AND KEY DRIVERS
 

RE-ENGAGEMENT

Historical and new clients
in mining & metal and
industrial sectors.

  

INFRASTRUCTURE

Materials handling
opportunities.

  
  • Re-enter the metals and minerals market in South Africa and neighbouring countries.
  • High focus in the short term on real SMP and E&I construction opportunities.
  • Partnering for specific EPC opportunities.
  • Engage junior and mid-tier miners early to assist in the development of their businesses to secure exclusive downstream implementation (EPC and O&M).
 
DIFFERENTIATORS
  • Superior construction delivery ability and proven track record.
 

MARKET OUTLOOK

Opportunities are emerging, however competition
and price is a challenge.

Commodity focus: Coal, graphite, zinc, gold, copper and iron ore.
Regional focus: Namibia, Zambia, Botswana, Tanzania, Ethiopia
and Mozambique.

  

 
ELECTRICAL &
INSTRUMENTATION SECTOR
  
OUTLOOK AND KEY DRIVERS
 

IPP PROJECTS

Support internal
Murray & Roberts
IPP projects.

  

TRANSMISSION PROJECTS

Strategic partnership with
Shanghai Electric in Africa.

  
  • Re-enter the metals and minerals sector in South Africa and neighbouring countries – Mozambique, Namibia, Zambia and Botswana.
  • Enter the oil and gas sector in South Africa and Mozambique.
  • Leverage and support Group power and water projects.
  • Shut-down work opportunities on existing fleet with Eskom and petrochemical refineries.
  • Support IPP programme.
 
DIFFERENTIATORS
  • 33 years of experience in mining & minerals, power & energy, iron & steel, water treatment, industrial and transport infrastructure sectors.
  • Extensive African experience
  • Experienced and competent field personnel.
 

2018 AND BEYOND

Focused and disciplined support to Sasol operations
with E&I capabilities.

  

PROSPECTS

The completion of the power programme at Medupi and Kusile will create capacity to provide maintenance services through the platform’s skilled and experienced workforce. This capacity is also transferable to South Africa’s new IPP coal base-load opportunities. The platform is engaging with the selected EPC contractors on two major projects.

Opportunities also exist in the REIPPP programme, with the Power & Water platform being positioned to secure work in the gas-to-power and solar (LNG Power Producer Procurement Programme: Coega (1 000MW) and Richards Bay (2 000MW)) sectors. Government’s delay in signing off these projects is disappointing.

Obtaining preferred bidder status on the George Biomass project was an important achievement and comprises full project life cycle participation. Murray & Roberts Limited holds an equity position in the project and continues to seek additional projects where it can invest in development and equity ownership, to create additional project opportunities for the platform.

The platform’s investment in Secunda, recent project delivery success and HSE initiatives, have positioned it as an important service provider to Sasol. This oil and gas delivery model will be extended to Sasol’s facilities in Sasolburg. It is likely that emergency water situations will continue to arise in parts of South Africa. Aquamarine’s small capacity water treatment plants can be quickly deployed at short notice and water quality and quantity are guaranteed. In addition, Murray & Roberts Water’s exclusive strategic partnership with Osmoflo allows the rapid deployment of medium-sized sea water desalination plants.

Opportunities are expected in wastewater treatment due to increasing environmental pressure to upgrade dysfunctional treatment plants and reuse treated effluent. Growth is also expected in the industrial sector as businesses look to secure water and reduce water costs through reuse and recycling. Aquamarine’s containerised water and wastewater treatment solutions are highly transportable and rapidly deployed, providing an opportunity for broader market participation.

An Organica demonstration wastewater treatment plant will be commissioned later in the year and operated for 12 months at Verulam wastewater treatment works for the eThekwini Municipality. This should stimulate the uptake of this unique technology. A feasibility study is in progress for Life Health to provide water security and recycling solutions to their hospital facilities countrywide. Subject to feasibility, the project is expected to commence towards the end of the 2017 calendar year. Most of the equipment for these solutions will be supplied by Aquamarine, which has the potential to transform Murray & Roberts Water’s growth prospects.

Growth will be mainly organic, supported by strategic partnerships that position the platform for opportunities and expand and complement its existing service offering.