HAPPY TO BE HERE

Panama 2016 | ENERGY | VIP INTERVIEW

TBY talks to José M. Tamayo, President & CEO of LS Energia, Inc., on the reasons it chose Panama as its headquarters and the company's global presence.

Why did LS Energia choose to establish its headquarters in Panama?

Out of all the countries that we could have picked, Panama seemed to be the one with the best environment. It has high-quality infrastructure, the airport is a hub, and there are a number of fiscal benefits. We see Panama in the same way people see Dubai in the Middle East; it is a country that has security, a solid legal framework, and many other factors that allow you to work efficiently. Here you can really focus on work and what you do.

Can you tell us about the company's global reach and why you choose these locations?

We have plants all over the world. We have a few in Colombia and Mexico, and many in Venezuela; however, lately we have been getting a lot of work from Africa. Our business is strongest in developing markets. We have been doing business there successfully for over 25 years.

What are your expansion plans in Africa?

We were initially trying to cover Africa as a whole, but after two years we decided to concentrate on just a few countries. For instance, we presently have a large team of expat and local operators and maintenance employees running plants in West Africa. We find that focusing enables us to provide a higher level of service to our customers and produces better results for the company.

What impact has LS Energia had on the development of countries in which it is present?

We always feel pride working in this sector. When you first provide reliable energy to a city that previously did not have electricity, as we have done in Africa, people are grateful and it feels good. The less developed a country is, the more impact you have.

You also do consultancy services; who are your clients?

We provide consultancy services to help our customers decide what is best for them, even if it means recommending someone else instead of us. We advise what is best and can help in the transition. We also help them design a better power grid. In many countries in which we work, you find that the public employer is there for political reasons rather than merit, which is when they need help the most because they do not have the technical skills and capabilities.

How do you assess Panama's efforts in moving toward renewables?

Where we have dedicated the most time and effort is natural gas and liquid fuels; however, we are making a major effort regarding solar, much more than wind or hydro, as we see a lot of potential here. One of the challenges, especially in Africa or even Latin America, is to bring power to remote villages. If you string in cables from the power grid it will cost too much money and it is not going to be effective. If you put a power plant there then you have to supply the fuel, which is even worse. Solar, on the other hand, if available, is free; you just build the panels and power the town. That is where we see the best solution and best replacement for fossil fuels, which, of course, helps the environment.

What are some of the challenges in the implementation of power from renewable energy?

Once you have a cell phone, you cannot live without it, and that same rule applies to electricity once delivered to a town—it has to be delivered consistently and with quality. This is a huge challenge, especially when we are talking about a remote area. There are technologies for energy storage, which brings some level of solution.

Where are your R&D efforts focused and what innovations are you working on?

We are planning our next moves on the renewable side, which is to build hybrid plants. There are towns that require power for more than, for example, 5,000 people, where it is not feasible to have batteries that last that long. Therefore, we are working on hybrid plants where you have a conventional power source, such as a generator, but you only run the generator when your primary source of electricity, be it solar or wind, is not there and your batteries are empty. This allows for more reliable power, and is a concept we are working on now.

What are your plans for expansion in Panama?

From here in Panama, we are looking at South America, Central America, and the Caribbean, which are three separate areas for us. South America is pretty well developed as far as power generation goes. But this is not the case for the Caribbean, which mostly works with unclean fuels, such as diesel. First, this source of power is expensive and second, the pollution caused acts as a deterrent to the tourism industry on which these islands depend. Those countries present considerable challenges but are also exciting places to work. We are trying to develop that market from our base in Panama. There is a similar situation in Central America, the difference being that Central America has hydro, which is a good source of power, but the region also relies on imported fossil fuels when the reservoirs are low or empty. Again, the hybrid concept may be the ultimate answer, combining technologies.

What are your expectations for 2016?

I predict that the price of oil in 2016 will continue to be low, which has an impact on our business and not necessarily in a positive way. You may think that a lower cost of energy implies more work for us, but it actually means that countries with fewer investment capabilities do not invest in the technology, as they expect their returns will be lower. This year is not going to be a bad one altogether; we will see a year of cheaper energy and countries that depend on imports of energy will experience growth, whereas those living out of energy exports are going to be going down. You will see Europe and Asia grow, and other countries slow down a little. For sure, it is going to be an interesting year.