Daily Management Review

Saudi Arabia Urges Rivals To Bid Against GE For Large Power Projects: Reuters


Saudi Arabia Urges Rivals To Bid Against GE For Large Power Projects: Reuters
Saudi Arabia – amongst the most critical clients of General Electric Co, is looking at other companies to rival GE to bid for a lucrative power plant work, claims a new report by news agency Reuters.
While it is reported that talks about investments in the sector is ongoing with two companies, at least two companies have been shortlisted by the Saudi Electricity Co for providing service or parts for some of its over 50 GE-made F-class turbines according to the report. The selection of the two new rival companies by the Saudi authorities is a first step in the country attempting to break the stronghold of GE on the work as the authorities have urged rivals to bid against the American company for the job of maintenance of the F-Class fleet which is amongst the largest in the world that is owned by a single entity. It is also being considered to be a very lucrative service portfolios in the industry after the contracts are awarded, says the report quoting industry sources.
The report however states that it is unclear when the Saudi Electricity Co (SEC) will seek the bids and it is yet to make any substantial F-Class contracts offer fort the rivals of GE.
In response to questions from Reuters, GE said: “At present, GE’s F-class units in SEC continue to be covered under long-term service agreements.” There was also no comment from Saudi Electricity.
It has been almost 40 years that the companies had been partnering each other in power generation projects, stressed the companies in a joint statement. “SEC has always embarked on a very balanced policy of procurement to ensure well diversified sources of suppliers,” said Khalid Al-Tuaimi, executive vice president for generation of Saudi Electricity.
Saudi Electricity “always qualifies multiple vendors to bid on services,” Al-Tuaimi said, adding, “We have repeatedly found GE to be an excellent strategic partner for meeting our servicing needs.”
 “We support more than half of the Kingdom’s power supply, and are proud to be a part of the ongoing development of the sector,” said Joseph Anis, President and CEO of GE Power Services, Africa, India and the Middle East, and Hisham Al Bahkali, President and CEO of GE Saudi Arabia and Bahrain.
Under a new “Vision 2030” plan taken up by the largest oil producer of the world, Saudi Arabia is bent on decreasing its dependency on oil, reducing budget deficits and generate jobs. 
Further, a source with direct knowledge of Saudi Electricity quoted in the Reuters report said that the country also is looking to get competitive prices for large contracts with big companies.
Sources said that qualifying rivals of GE would result in low prices for contracts and therefore Saudi Electricity is has embarked in the process of urging other companies to bid for the power plant services.
Sources further reportedly said that because of high service price of some F-Class turbines that had been bought by Saudi Electricity in recent times, they would not be placed under long-term agreements. Sources also said that service contracts for those turbines could also seen be thrown open again.