Join the fray: Wary German solar energy solutions firm enters Pakistan

Considers working conditions tough, but sees huge growth potential.

Shahram Haq July 20, 2014

LAHORE: The lofty claims of the government that it is providing all facilities to foreign investors, especially those willing to pump capital into energy projects, seem to be not based on solid foundations as bureaucracy and state departments stand as a major hurdle in the way of smooth flow of investment.

GreenIndus Tree, a German company that provides solar energy solutions, dubs working conditions in Pakistan as very difficult for foreign investors.

“Very slow pace of administrative work, dealing with bureaucracy before registration and the most general problem of bribery are what we are facing in the initial stages of our business in Pakistan,” said Kaiser Chaudhary, Managing Director of GreenIndus Tree, in an interview with The Express Tribune.

For Chaudhary, promises made by Pakistani politicians have little worth. He met a Pakistani delegation, headed by Punjab Chief Minister Shahbaz Sharif in Berlin, German capital, last year where he was invited to come to invest in Pakistan. He was also told that foreign investment would be safe in the country.

“Now that we are here, they should keep their word, but I haven’t noticed this so far,” he said.

However, Chaudhary pointed out that before entering Pakistan they studied the market thoroughly and found a huge potential for solar energy because of the teeming urban and rural areas and better economic growth prospects.

At the same time, they were aware of the challenges posed by red tape. “We knew that it would be difficult, but in reality it is dead difficult,” he said, terming bureaucracy the biggest hurdle to foreign investment.

Hiring engineers

GreenIndus Tree, which was established in Germany last year, had some professional investors who believed in the Pakistani market, paving the way for the company to start operations in Pakistan in April this year. The company develops and distributes solar solutions in line with European standards.

Chaudhary is finding it hard to hire local skilled engineers. Though he has recruited a few and is providing facilities for training by the Germans, at present he is heavily banking on German engineers for planning, installation and maintenance of equipment.

“Solar solutions and engineering go hand in hand, of course, sales are important but the most important thing is engineering. Unfortunately, Pakistan lacks this, that’s why German engineers are here to look after the issues,” he said.

“Our company doesn’t want to compromise on quality, if local engineers don’t know German technology they may not install the panels successfully, which could lead to complaints in the future.”

In Pakistan, many companies are selling solar solutions, but according to Chaudhary almost nobody is doing professional work. “What they do is that they go to China and import panels without giving priority to quality,” he said.

He was taken by surprise when during a survey the company found that average battery life in Pakistan was about one year. On the contrary, average battery life for solar panels in Germany ranges from seven to ten years. Life expectation of solar panels is up to 25 years.

Investment plans

The company has set out a long-term plan for Pakistan’s market. Initial investment stands at a lower level at 250,000 euros, but the company is planning to enhance it to 5 million euros in coming years. Later, the company will focus on local manufacturing of some of the components used in solar panels.

It is currently operating from Lahore, but has plans to spread its footprints to other urban areas of the country to tap the full potential.

In the beginning, the company is targeting high-end customers, but it also has some products in the pipeline, which meet the needs of middle urban class and rural populace of the country.

Published in The Express Tribune, July 21st, 2014.

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