GE Sells $1.7 Billion of Turbines to Boost Egypt Power PushRichard Clough
General Electric Co. sold gas turbines to Egypt for an estimated $1.7 billion, boosting the country’s generating capacity almost 10 percent as it rushes to meet surging electricity demand.
“It’s one of the largest single power projects for the year globally,” GE Power & Water Chief Executive Officer Steve Bolze said in a telephone interview before the terms were announced Friday in Egypt.
GE is spelling out details of the accord after signaling in January that it had landed a sale to Egypt, which Bolze said was one of its biggest-ever turbine deals. While GE declined to discuss financial specifics, the order has an estimated value of $1.7 billion, according to Nicholas Heymann, a William Blair & Co. analyst in New York.
The 46 turbines in the order will provide 2.7 gigawatts of electricity, enough for more than 2.5 million homes, Fairfield, Connecticut-based GE said. Egypt’s current output of about 30 gigawatts will have to rise to 50 gigawatts by 2025 to meet the nation’s needs, GE said. The Egyptian government said it has plans to spend about $2.7 billion to add 3.6 gigawatts of power.
GE’s portion of the deal includes 12 heavy-duty turbines, a category in which the company made 105 sales in 2014. The rest of the units are smaller.
Power-generation equipment is part of the industrial operations that CEO Jeffrey Immelt seeks to expand while shrinking the GE Capital credit business that imperiled the parent company during the 2008 financial crisis.
GE Power & Water, the company’s largest industrial unit, generated sales of $27.6 billion last year. The division is set to surge when GE closes its 12.4 billion euro ($13.2 billion) acquisition of Alstom SA’s energy assets this year.
The agreement with Egypt adds to about 80 gas turbines GE currently has installed in the country, generating almost 10 gigawatts of power, Bolze said. GE signed contracts in 2011 worth $300 million to supply turbines to two plants near Cairo. GE said Friday it would also invest $200 million in a manufacturing facility in Egypt.
The new deal is the largest-ever order in GE’s distributed power business, Bolze said. It is also the largest turbine order for GE Power & Water since it signed $2.7 billion in contracts in September 2013 with Sonelgaz, Algeria’s national electricity and gas company.
GE will have the turbines operating by May. In anticipation of the quick turnaround sought by Egypt’s government, GE began locating and preparing the equipment during contract talks and started shipments the day the deal was signed, Bolze said. The company said 34 of the turbines have already arrived in Egypt.
“In this case, the customer made it very clear to us that they needed the power on short schedule,” he said. “We’ve done a lot of work building up our experience in Algeria, in Angola, in Brazil to be able to compress our cycle times.”