Empower to pay off $225m loan on time

Ahmad bin Shafar CEO, Empower. (DENNIS B MALLARI)

Emirates Central Cooling Systems Corporation (Empower) envisioned that the company would become the region’s number one provider of district cooling at the time of its inception in 2004, said its Chief Executive Officer Ahmad bin Shafar. Six years thereafter, the company boasts making profits for two years in a row and continues to grow, he said.  However, he said this time, goals need to be streamlined and results need to be scrutinised now. “It is good to correct and catch our breath, sit, look at what we have done over the past six years and revise our calculations,” he said. “We are always looking at learning from our mistakes. I don’t want somebody to teach me, I want to learn from my own mistake and make a self-assessment of myself and move forward by reducing or redeeming the errors.” Bin Shafar, in an exclusive interview, spoke to Emirates Business about his revised plans and  the current market correction.

 

Empower’s $225 million (Dh826.43m) loan will mature on December 5 this year. Will it be paid on time?

We will be okay. I don’t see any problem  because it’s been financed by the bank and capital contribution was added to it. We are very sure, according to our business plan, that the company will pay off the loan and its factory production will cover the debts.

Is Empower already profitable?

Yes. We are profitable since 2008. 2009 was the second year that we were in profit.  In 2008, we were close to $12m and this also was a very good year but I cannot disclose the figures to you.

Currently how many projects are you working on?

We have around 28 semi-permanent plant rooms of district cooling. We have four major projects – Business Bay, Jumeirah Beach Residence, Dubai Healthcare City and DIFC. The total capacity was around 250,000 tonnes by the December 31. It may be up by 2,000 or 5,000 tonnes today.

As per your website, you have about 1.7 million tonnes to service.

We were hoping that the whole market will continue growing but with the slowdown, there is a lot of correction in our numbers but we expect to hit 800,000 to 900,000 tonnes for the next 10 years.

What will be the capacity for this year?

Conservatively speaking, we expect to reach 350,000 tonnes in 2010. In the next seven or eight years, we hope to go up by 50,000 tonnes, according to a very conservative calculation. But we’re very sure, we’ll perform better.

Has there been a big slowdown in district cooling last year?

No, not in district cooling because it is a contracted job. It is linked to the customer. There was no slowdown in demand. However, we had suspended a lot of projects because the developer had suspended or cancelled their projects.

Did you cancel any contracts considering some of the developers have cancelled theirs?

We did not cancel any contract. Some of them were delayed. However, majority of them were suspended.

Indefinitely?

It’s suspended until we get a green light from the developers to come back again.

Are developers starting to build or at least continue the projects now?

Frankly speaking people are in the correction mode. Dubai is in a situation where the lack of financing is really impacting the whole picture.

Could that have been a blessing in disguise?

Yes. It is good to correct and catch our breath, sit, look at what we have done over the past six years and revise our calculations. I started this business from the scratch and we want to know if we did it the correct way. We are always looking at learning from our mistakes. I don’t want somebody to teach me, I want to learn from my own mistake, make a self-assessment of myself and move forward by reducing or redeeming the errors.

What specifically are these lessons?

That you should always be cost-conscious. I never get emotional about projects. I always calculate the risks. That is why our strategy built over the years, paid us back during the recession. Power consumption is growing and we are still making higher profits. After a huge boom, there will be a change in trend. After every 10 years, there is a drop in each market all over the world. Dubai is not an exception. However, Dubai excelled because it moves quickly and is a major logistics hub for the region. Recently it was announced that 40 million passengers passed through Dubai airports. It’s more than 28 times the number of Dubai population. It is a privilege of being ahead with everybody in this region. ­Yes there is problem in financing, but if you look with a business mind and look at growth, we are still in the positive territory.

PROFILE: Ahmad bin Shafar CEO, Empower

Bin Shafar has been the CEO of Empower since the company’s inception in February 2004. He has more than eight years of experience in senior management with Standard Chartered Bank. He is a member of Cranfield Management Association and the American Society of Heating, Refrigerating and Air-Conditioning Engineers. He is also a member of the International District Energy Association, a designation he has held since 2004.

He is a graduate of California State University, Los Angeles, US, where he obtained a Bachelor of Science in Business Administration in Management.

 

Print Email