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GE Turbine Plant to Come up in Algeria

Zacks Equity Research

Diversified conglomerate General Electric Company (GE) recently penned a $400 million agreement with state-owned Algerian utility firm Sonelgaz to develop an industrial complex in the country. The industrial complex will produce gas and steam turbines to meet the increased energy needs of the region.

Scheduled to commence operations in 2017, the complex is likely to produce six to eight generators and control systems per year with a total capacity of 2,000 megawatts. The construction and the daily operations post completion will be conducted by a joint venture called General Electric Algeria Turbines (:GEAT). Sonelgaz will have a controlling 51% stake in the JV, while GE Industrial France, a subsidiary of General Electric, will hold the remaining 49%.

General Electric had earlier won contracts worth $2.7 billion from a unit of Sonelgaz in Sep 2013. Under the contract, General Electric supplied combined-cycle gas turbine and aero-derivative gas turbine technology for nine power plants in the country.

The Sonelgaz-General Electric venture has brought in the most sought after foreign direct investment (FDI) into the country. Critics argue that an Algerian law that limits FDIs in any investment to 49% as a hurdle to overseas capital inflow into Algeria. Needless to say, significant foreign funding amid a challenging macroeconomic environment is likely to pep up the domestic economy.

General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content, and industrial products, the company serves over 100 million customers worldwide. Its segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital.

General Electric currently has a Zacks Rank #3 (Hold). Other stocks in the industry that look promising at current levels include Zacks Rank #1 (Strong Buy) Federal Signal Corp. (FSS), and Zacks Rank #2 (Buy) stocks 3M Company (MMM) and CLARCOR Inc. (CLC).

Read the Full Research Report on MMM
Read the Full Research Report on GE
Read the Full Research Report on CLC
Read the Full Research Report on FSS


Zacks Investment Research