Saudi Arabia, one of General Electric Co.’s largest and valuable customers has recently announced that it is lining up competitors against GE for lucrative power plant work. Sources familiar with the matter cite that Saudi Arabia, being the world’s largest oil producer, has grown pretty cost conscious and is aiming to reduce oil dependency under its ‘Vision 2030’.
Reports reveal that the state-controlled Saudi Electric Co. (SEC) has qualified two companies, namely Combustion Parts Inc. and Power Systems Mfg LLC, that will provide service for more than 50 of SEC’s F-class turbines. SEC is also in talks with another two firms over investments for setting up the facilities.
Besides reducing its oil dependence, creating jobs, and lowering state budget deficits, Saudi Arabia is also aiming to seal best possible cost-effective deals with the industry biggies, says a source with direct knowledge of SEC.
If industry experts are to be believed, the move taken by SEC to line up other competitors puts it in a position to break GE’s foothold on the current project by having its rivals bid against it for maintaining the F-class turbine fleet, which incidentally, is one amongst the most profitable service portfolios in the industry. The utility is getting other companies to participate in the bid for power plant services instead of completely relying on GE, since the competitors will lower the prices, they further claim.
For the record, SEC had earlier created competition for an earlier-generation of turbines called as the E-class. However, after the bidding began, GE ended up with less work and the prices plummeted to about 40%.
It has been reported that SEC has not yet signed any substantial F-Class contracts with the new bidders, and it is still not clear how soon it is expecting to seek out the bids.