-- Robust strategies to build customer trust are vital for new entrants to succeed in these markets
CAPE TOWN, South Africa, March 25, 2015 /PRNewswire/ -- As the current demand for electricity in Kenya, Uganda and Tanzania far outstrips supply, a large market for diesel generators (gensets) exists in these countries. Continuing economic and population growth will only increase the demand for power. Thus, companies that can supply effective diesel gensets, which can ensure stable electricity supply, will gain market share.
New analysis from Frost & Sullivan, Analysis of the Diesel Generator (Genset) Market in Kenya, Uganda, and Tanzania (http://www.frost.com/ma8a), finds that the Kenya, Uganda and Tanzania markets earned revenues of $134.7 million, $44.5 million and $145.1 million respectively in 2014. By 2018, however, revenues generated by diesel gensets in these markets are estimated to reach $168.5 million, $65.4 million and $220.1 million.
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Kenya Power and Lighting Company (KPLC), the state-owned power utility, represents 97 percent of the rented power market in the country. Since severe droughts have limited the capacity of hydro-powered plants, KPLC has been forced to rely on genset rentals.
"In Uganda, widespread power shortages have led to an average of five hours of load shedding per week, forcing companies located here to adopt diesel gensets," said Frost & Sullivan Energy & Environmental Industry Analyst Muneera Salie. "Businesses want to maintain uninterrupted production, and this presents robust opportunities for diesel genset suppliers."
With Tanzania having pursued a policy of institutional reform in order to attract foreign direct investment, the country has been seeing a growing need for diesel gensets. One of the major forms of institutional reform, which has occurred is the large-scale drive towards privatisation of state enterprises – thus far, approximately half of the 400 parastatals have been privatised. This has resulted in resources being allocated more efficiently and decreased corruption, in turn lowering the costs of doing business and fuelling the demand for diesel gensets.
However, the recent discovery of gas fields in East Africa is generating interest in using gas as an electricity feedstock instead of diesel. Since the running costs of gas generators are lower than diesel generators, market participants stand to be increasingly affected by this development.
Additionally, an increasing number of suppliers distributing low-quality, cheap diesel gensets that perform poorly and frequently breakdown have damaged the reputation of providers. Further, the insufficient skills of technicians often leads them select incorrect diesel gensets for given applications. As a result, the equipment does not function properly or fails, breeding mistrust for suppliers.
"Within these circumstances, many customers have quite naturally remained loyal to a brand, which they have used before or which has been in the country for many years," noted Salie. "For brands that have not yet established themselves, an effective strategy to build trust and establish strong client relationships is necessary to obtain market share."
For instance, offering more effective after-sales services will help emerging brands grow as many end users rated this as an important factor influencing their purchasing decisions. Providing technical advice is another way brands could differentiate themselves from the competition.
Analysis of the Diesel Generator (Genset) Market in Kenya, Uganda, and Tanzania is part of the Energy & Power (http://www.energy.frost.com) Growth Partnership Service program. Frost & Sullivan's related studies include: Residential Energy Efficiency in South Africa, The Renewable Energy Services Market and its Potential in South Africa, and Global Diesel Generator Set Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Analysis of the Diesel Generator (Genset) Market in Kenya, Uganda, and Tanzania
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