Siemens inks record $9-bn energy deal with Egypt

German multinational conglomerate Siemens AG has signed a historic €8-billion ($9 billion) energy deal with Egypt for three large gas-fired power plants to boost the African nation's power generation capacity by 50 per cent.

The signing ceremony of the biggest order ever for Siemens was carried out yesterday in Berlin in the presence of Egyptian president Abdel Fattah El-Sisi and German vice chancellor Sigmar Gabriel.

Under the mega deal, which emanates from the Egypt Economic Development Conference held in March, Siemens will build high-efficiency natural gas-fired power plants and wind power installations that will add extra power generation capacity of 16.4 gigawatts (GW).

Siemens president and CEO Joe Kaeser said in a statement, "With these unprecedented contracts, Siemens and its partners are supporting Egypt's economic development by using highly-efficient natural gas and renewable technologies to create an affordable, reliable and sustainable energy mix for the country's future."

In partnership with Egypt's Elsewedy Electric and Orascom Construction, Siemens will supply on a turnkey basis three natural gas-fired combined cycle power plants to be built in Beni Suef, Burullus and New Capital, each with a capacity of 4.8GW, for a total combined capacity of 14.4GW.

Each of the power plants will be powered by eight Siemens' high-output, high-efficiency H-Class gas turbines.

The initial 4.8GW-stream is expected to be commissioned by mid 2017 and the full capacity will be available 38 months after closing of financing of the projects, the statement said.

Besides, Siemens will deliver up to 12 wind farms comprising about 600 wind turbines that will have a total installed capacity of 2GW. The wind farms will be located in Egypt's Gulf of Suez and West Nile areas.

The project is expected to provide around 1,000 new jobs as Siemens intends to manufacture rotor blades for the wind turbines locally, in Egypt's Ain Soukhna region. The facility is expected to go into operation in the second half of 2017.

Loans for the projects, which will be supported mainly by export credit agency in Germany and Denmark, will be provided by international and regional banks, Siemens said.

Munich-based Siemens is Europe's largest engineering company, which is active in more than 200 countries focusing on the areas of electrification, automation and digitalisation. It generated revenue of €71.9 billion in fiscal 2014 ended September and has around 357,000 employees.

The company has over 150 years of presence in Africa's third-biggest economy, providing technology and equipment in various sectors including power, mobility, healthcare and manufacturing.

The mammoth order will provide a big boost to the engineering giant, which has been under pressure from a more than expected 5-per cent fall in profit in the March quarter compared to a year ago, following a 25-per cent slump in the previous quarter, due to lower prices and higher expenses.

In May, the company said it would further cut 4,500 jobs, after slashing 15,000 positions since late 2013, as part of its restructuring strategy aimed at cutting costs and save about €1 billion by next year. (See: Siemens to cut another 4,500 jobs worldwide).