By Rachel Layne
Dec. 16 (Bloomberg) -- General Electric Co., the world’s biggest maker of power-plant turbines, won an order valued at about $3 billion to provide electricity-generating equipment and services to Iraq.
It is the largest single order in the history of the GE Energy segment, Steve Bolze, who runs the power and water division, said in an interview today. GE, based in Fairfield, Connecticut, will provide 56 of its 9E model turbines capable of supplying 7,000 megawatts of electricity, nearly doubling the country’s generating capacity.
GE has supplied power equipment to Iraq, which the company estimates needs about 30,000 megawatts, at various times since the 1970s. Iraq also ordered eight turbines in May as it sought emergency power, Bolze said. The new award comes as GE expands in the Middle East and adds to the $4 billion already ordered by countries including Saudi Arabia, Kuwait and Qatar over the past two years.
“GE continues to see a broad-based need for electricity,” Bolze said. “Electricity is really the backbone much of economic growth in a variety of countries as they improve standards of living. This is really a great opportunity and we’re honored to be working with the government of Iraq.”
Iraq’s daily power-generation output averages less than 6,000 megawatts, while demand is typically more than 10,000, GE said in a statement. The turbines will be made in Belfort, France, and Greenville, South Carolina, with 20 planned for shipment next year to the war-torn country, Bolze said.
‘Strong Need’
The Iraq order comes amid concern the slowing global economy may crimp the pace of deliveries as some utilities struggle for cash for capital investments. In the third quarter, GE Energy had $7.9 billion in orders, up 18 percent, including 33 gas turbines.
“Our customer base is diverse and global,” Bolze said. Sovereign customers have easier access to capital than commercial customers in other industries, he said. “Our customers, governments as well as state-owned utilities, are less susceptible” to the economic downturn “in aggregate.”
“We see an ongoing, strong need,” Bolze said.
Lower prices for commodities including steel may help spur projects globally that had been stalled because of high material costs, John Krenicki, the GE vice chairman who oversees the company’s energy divisions, said in an interview on the company- owned CNBC network today.
Krenicki’s comments and the order come ahead of Chief Executive Officer Jeffrey Immelt’s annual outlook presentation to investors at 3 p.m. New York time today.
Shares Rise
“This is going to play out over months and years, but we’re focused order by order, customer by customer, to win every order that’s out there,” Krenicki said. “And I think this order we have in Iraq today shows there is still business to win out there.”
GE’s energy generation division provided $21.8 billion of the parent company’s $172.7 billion in sales last year. It’s part of the GE Energy Infrastructure segment, one of the company’s four major groups.
General Electric rose 25 cents to $17.20 at 9:32 a.m. in New York Stock Exchange composite trading. The shares had lost 54 percent this year before today.
To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net
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