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Colombia 2017 | INDUSTRY | VIP INTERVIEW

TBY talks to Eduardo Jaramillo Cuervo, President & CEO of General Electric Colombia, on 90 years in Colombia, the hydrocarbons sector, and the fruits of digital transformation.

This is the 90th Anniversary of GE in Colombia. What does this milestone mean for the company?

GE is present in almost every country on earth. The commitment we have with each country is to support their development. Even though it has had turmoil throughout its history, Colombia is now a country with proven high quality institutions, reliable financial policy, and a good draw for foreign investment. In general, it has had the best performance in these areas within Latin America. Through our technologies and services, we support the countries meet the most difficult challenges in infrastructure, while generating the conditions for competitiveness, not only in the industries in which we work, but in the industries, that benefit from the things we do. We have been in Colombia for 90 years, providing cutting-the-edge technologies for the development of a sustainable infrastructure for health, energy, water, ground transportation and aviation. Now, transportation and energy are two sectors that the country needs to improve to become a more competitive economy.

Major investments in offshore exploration have been announced for 2017. What opportunities are there for GE in the hydrocarbons sector?

For both Colombia and GE, the oil and gas industry is one of the pillars for development. We believe in the strategy that the industry in Colombia is performing at this point to go offshore. This is the opportunity that the sector might have to make a good turnaround of our reserves, not only in gas but also in oil. A decade from now, we could be able to multiply the country's production by two with a good combination of gas and oil. If the country doesn't do that, we might not be called an oil-producing country anymore. If we don't play this bet, we may not be in the playing field. We totally support the strategy and we have the technology to support its execution. Through acquisitions, we will be improving our portfolio to serve it better.

In terms of the legislative framework in Colombia, what needs to be changed to make non-conventional renewables a more viable investment?

The only way in which there is going to be a proper diversification of the power generation matrix is with the right incentives to implement all the available technology. It is not only renewables but also thermal, such as coal and gas. The matrix needs to be complemented with all the technologies available and each one should bring a benefit in terms of cost and reliability. Specifically, for non-conventional renewables, the country's regulations need to show signs for remuneration of intermittent non-conventional renewables. The Energy and Gas Regulatory Commission (CREG) has already shown four mechanisms that allow not only reliable remuneration for this technology, but also long-term remuneration. Today, the country is not signing long-term contracts for energy. The regulations need to incentivize the intermittency of the energy and long-term contracts so these projects are bankable. The wind potential that the country has in La Guajira is not only good, but maybe one of the best wind resources in the region. The only way to get the energy out from La Guajira is through a new transmission line that needs to be built to connect to the national grid. Hence, there are not only regulatory obstacles, but also physical obstacles that need to be met, specifically in that region for wind farms. Then, for solar, perhaps one of the things that the country should think about, in terms of regulation would be a two-way meter for energy so that during the day you can be a producer, and at night, get charged up. Getting into that sort of regulation would help expand the solar capabilities of the country, which also have good potential, especially in the north of the country.

How does the transformation toward a digital economy factor into GE's Colombia strategy?

We are going through a digital transformation and aim to lead the transformation of the industry this century. We strongly believe digitalization is the most creative alternative to improve efficiency and optimize manufacturing, as improve your specific processes. What we are telling the world is that the changes are coming quickly—the world is changing faster every day. The amount of information we are receiving from the equipment that is already or will be installed in the near future is not necessarily being analyzed. What we offer the world is Predix, our digital platform, where we are building new apps to collect and analyze data, as well as predict not only the maintenance of equipment, but also the optimization of the processes, mostly operational and manufacturing. Between 1995 and 2010, productivity increased by 3.5%-4% because of new technology and better processes. But from 2010-2015, that went down to 0.5% because there has not being disruptions, especially in the manufacturing sector. We are telling the world that new opportunities for productivity are through digital. In wind farms, for example, we have already proven we can improve efficiency by 20%. Imagine doing that for any industrial process. Our main focus for 2017 is helping our industry partners optimize their operations, be more productive, be more efficient, and create more value through digital transformation based on the Predix platform, where they will be able to build the apps required for managing their assets, processes, and business models.

How has the concept of digital transformation been received so far in the local market?

The reception has been positive around the globe. In Latin America, 2016 was the year to introduce the idea. In 2017, we will start seeing the product of that. The companies that need to be more competitive every day, in the global and not merely local market, need to find ways to be more productive at a lower cost. We should be seeing an important switch in almost every industry in which we participate. We are already seeing the willingness of our customers to take on the digital transformation, which is not only about equipment—it is also about the culture of the companies. You won't have the same people doing everything. Perhaps 20% of the jobs that we have today will be transformed, creating new jobs for people writing apps, analyzing, teaching the software to review the information and then use it to make critical business decisions. The way we do things is changing. The challenge for this is not just to bring in software—it's more about the management of change. Those are the challenges our customers will need to address, with our help of course. The digital transformation is an important topic—perhaps the most life-changing opportunity for the industry.