General Electric has won a US$2.2 billion contract to provide turbines for six power plants in Algeria, the state energy producer Sonatrach announced yesterday.
“GE has won the contract to provide the turbines with a total capacity of 8,400 megawatts for a sum of $$2.2bn,” the Sonatrach chief Nourredine Bouterfa told state radio.
Algeria plans to build six new power plants with capacities of between 1,200 and 1,600MW each by 2017.
He said the new plants would allow Algeria to put an end to the frequent power cuts that have hit consumers during periods of peak demand, particularly in the heat of the summer.
Mr Bouterfa has previously said that 2,000MW of power production needed to be brought on line every year over the next decade to meet the rise in local demand and a budget of $40bn had been set to meet demand until 2019.
Algeria, the third-largest supplier of natural gas to Europe, has estimated proven reserves of about 4.0 trillion cubic metres and a production capacity of 80 billion cubic metres per year, according to official figures.
Mr Bouterfa said the GE deal was part of Algeria’s efforts to construct its own power stations, buying the turbines only from foreign suppliers and not the complete plant.
In June, media reported that Mr Bouterfa and 15 other top executives at Sonelgaz, the state-owned utility distributing electricity and natural gas, were under investigation over contracts involving GE and France’s Alstom.
“The case is about inflating costs in deals with US firm General Electric and French firm Alstom,” one of the sources told Reuters.
As of June, Alstom and GE have contracts to build electricity plants in Algeria worth a total $4.5bn.
Algerian and Italian authorities are also investigating whether the Italian oil services firm Saipem, which is partly owned by the oil group ENI, paid bribes to Algerian officials to win contracts in Algeria.
It has been a difficult year for Algeria’s energy sector after the attack on the Amenas gas facility in January resulted in the deaths of about 40 foreign workers.
Exports fell 7.05 per cent in the first half of this year compared with the same period last year, from $37.1bn to $34.5bn, the national statistics office reported in July.
In May, BP announced that it was reconsidering further investments in Algeria because of insecurity in the south of the country.
The contract is a boost for GE’s power and water unit, which provided more than a quarter of the company’s $102.8bn in industrial revenue last year, amid slowing demand in developed economies including the US. GE has said it is focusing on “resource-rich regions” like Algeria.
* With agencies