GE In Long-Term Investment Mode In Egypt

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Mar 16, 2015

U.S. conglomerate General Electric (GE, Financial) has mentioned several times in the past at various conferences that the focus segment that contributes to the maximum revenue of the company is the industrial sector on which it would be investing at international growth locations for improving earnings in the near future.

Based on such a strategy, GE Power & Water’s Distributed Power business has confirmed that it is heavily investing in Egypt where there is an ongoing huge power crisis that needs to be immediately met by the government. Such an announcement has been made at a conference where Egypt hopes to secure billions of dollars of investment from GE chiefly with respect to the energy domain and in the Suez Canal Zone. Let’s dig in further to find out what GE is doing or planning to do for Egypt to help the government resolve the power crisis, as well as for meeting its long-term goal of improving the revenue earned from the industrial sector.

Investing in Egypt

The Power & Water business of GE has stated that it would be delivering 34 of its gas turbines and 12 of its heavy-duty turbines to 15 remote sites of Egypt, with all of these turbines beginning to generate power by May this year. It is expected that these turbines would contribute around 2.6 gigawatts of power to the grid by May 2015.

This plan of action represents a portion of the larger project that has been undertaken by GE in Egypt according to which it should be able to add six gigawatts to the power grid by the end of 2015, thereby aiding the push the total power capacity of Egypt to 38 gigawatts.

In a statement on the turbine delivery project, CEO Jeff Immelt, mentioned, “I track this project personally. … We know how important this is to Egypt.”

It is to be noted that this turbine deal signed in last December is worth around $1.9 billion, and is the largest deal to date for GE Distributed Power. GE said in a statement that presently it generates about 30% of Egypt’s installed power capacity, and these gas turbines would help to ease the load on the overburdened energy grid during the time of peak summer usage.

Besides boosting the power generation capacity of the country, GE is also looking forward to invest around $200 million in a planned economic zone near the Suez Canal – the company confirmed this piece of information last Friday. The Suez project aims to turn the canal area into an international logistics and industrial hub, and GE is trying to exploit this opportunity being given by the Egypt Government to build its manufacturing and training facility focused on power generation, oil and gas and aviation segments of the industrial sector.

The management tone remains firm

GE had announced an investment commitment to the tune of $2 billion in Africa and Egypt is obviously one of the key investment markets being considered by the company for growing its industrial base. That’s why GE is focusing not only in the power segment here; but is also pushing further to strengthen its presence in the healthcare, oil and gas, transport and aviation segments of the country.

While speaking with the Daily News Egypt, Chairman and CEO Jeff Immelt agreed that Egypt remains a core investment market for GE and emphasized on his belief that “here is a significant long-term gain for the country and businesses by shifting to renewable energy sources.”

GE has been in Egypt for the past forty years and the company is looking forward to newer partnerships on core growth sectors which include energy, oil and gas, water, aviation and transport. And the turbine and Suez Canal projects potentially speak abound on the indelible footprint that GE has created in Egypt all through the past years.

Final word

One thing is clear- Egypt is the focus of GE’s investment right now and the company urges to stay and prosper in the country in the long-term. In the endeavor to help Egypt that has been suffering from the worst energy crisis in decades, GE looks confident to fortify its industrial foothold in the country by strengthening or building partnerships linked to its industrial segments in the near future.