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Philips to establish a manufacturing joint venture for energy-saving light bulbs in Southern Africa


Production facility will accelerate the uptake of energy-efficient lighting bulbs
Production facility will fuel economic growth in Southern Africa

Amsterdam, The Netherlands – Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced it plans to participate in a joint venture to set up a manufacturing facility, as well as a recycling plant, for energy saving Compact Fluorescent Lamp integrated (CFLi) light bulbs in Lesotho, Southern Africa. The facility will be set up jointly with CEF which is a private company held by the State of South Africa that focuses on opportunities in the energy sector in the region, and Karebo Systems, a privately owned company specialized in energy efficiency programs in the lighting and energy sectors. Philips holds a 40% stake, while CEF and Karebo Systems each hold a 30% in the joint venture.

This joint venture is a result of the United Nations Conference on Trade and Development’s mission to seek new business activities that will fuel economic growth in this region. With this joint venture Philips will be able to help stimulate economic growth while accelerating the uptake of energy-efficient light bulbs in general.

The market for CFLi energy-saving bulbs is growing rapidly globally and is expected to accelerate in the South African region through the efforts of the national government to significantly reduce energy consumption. Its intention is to replace 80% of incandescent bulbs with CFLi energy-saving bulbs within the next four to six years. However, Philips expects to reduce this timeframe to approximately three years with the establishment of the Lesotho production facility. CFLi saves 80% energy compared to incandescent bulbs and will help overcome energy shortages now being experienced in the region.

The production facility in Lesotho will be run by local management, and is planned to be officially open for business in September 2008. The facility is scheduled to produce up to 15 million CFLi energy-saving lamps per year. The joint venture will initially start with the assembly of CFLi lamps, followed by the production of burners for CFLi lamps and with the establishment of a recycling plant, and potentially, to gradually include the production of components.

“With this joint venture we create a quadruple win situation”, says Luc Escoute, general manager of Philips SA’s Lighting Sector. “The new production facility will enable us to meet the growing need in energy efficient lighting solutions, stimulate the economic development and reduce the carbon emissions of the region at the same time. By saving on electricity costs, it also improves the Region’s competitiveness. It’s great to see business can help in so many ways at once.”

“We are happy that this new facility will enable our region to manufacture energy saving bulbs that will help to overcome energy shortages and combat global warming. This JV will help us securing sufficient supply of CFLi to meet the country’s ambitious targets in electricity reduction, especially in the residential sector.” says Mr. Mputumi Damane, Group CEO of CEF (Pty) Ltd. CEF, through our divisions, the Energy Development Corporation and the National Energy Efficiency Agency, is playing a leading role in the quest for renewable and alternative energy sources as well as promoting the development of energy efficiency initiatives,” he adds.

“In our efforts to significantly reduce energy consumption in South Africa, switching to energy efficient lighting is the quickest and easiest way to make a significant contribution. With the Philips’ expertise in this field, we bring the high quality energy saving light bulbs this country desperately needs”, says Peter Kgame, managing director of Karebo Systems.

Lighting accounts for around 19% of the worldwide electricity consumption. If all inefficient conventional lighting were switched to energy- efficient technologies the potential worldwide saving would be about 40%. Escoute adds that “in South Africa only, we estimate that Lighting represents 15 to 17% of the overall electricity consumption, which corresponds to approximately 37.000 GWh (GigaWattsHour). Considering the inefficiency of a lot of lighting products currently used in SA, a target of 40% reduction is not over ambitious, if the appropriate technologies and solutions would be promoted and applied. If this would be achieved, the annual savings will cut the Country’s electricity consumption by 14.800 GWh (the equivalent output of 3 medium size power plants), reduce South Africa’s CO2 emissions by 13.3 Million tons (calculated with a grid emission factor of 0.9 kg of CO2 per kWh) and save the economy 5.3 Billion Rands in electricity costs, based on an average of 0.35 Rands per kWh.”

Philips South Africa has also signed on Tuesday 25th March the Energy Efficiency Accord, an agreement which sees business leaders voluntarily agreeing to implement the National Energy Efficiency Strategy as set by the Department of Minerals and Energy of South Africa, demonstrating their commitment to the Government’s call for action, as well as the confidence it has in its ability to make significant inroads in reducing energy consumption through its energy-saving products (such as the CFLi bulbs) and its environmentally-sound business practices.


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