General Electric, the biggest maker of power-generation equipment, expects "double digit growth" in its sales from the Middle East, North Africa, Turkey and Pakistan, as governments invest billions of dollars in their infrastructure, move towards energy efficiency and meet the needs of their growing populations, the company’s regional President and CEO Nabil Habayeb said in an interview with Arabian Business.
"We are very bullish about the region," Habayeb said. The needs of states need to be addressed and are "magnified after the Arab Spring,'' he said, adding, "there is the wealth in a lot of countries to be able to support meeting those needs; the challenge is for countries that don’t have the same wealth from the petrodollars."
Fairfield, Connecticut-based GE projects revenue growth this year in line with the annual increase of 12 percent in 2011, as Gulf states buoyant by high oil prices look to meet rising demand for electricity, health services and renewable energy, while countries emerging from political turmoil like Libya and Tunisia look to overhaul or rebuild their infrastructure.
In 2011, GE earned about US$10.7bn in revenue from the region, about five times more than what it was generating six years ago. The company reported US$147.3bn in total revenue last year.
In Saudi Arabia, the largest economy in the Arab world, which annually represents US$2bn in revenue for GE, the largest US conglomerate plans to bid for the kingdom’s first power station when the tendering process begins at the end of this year, Habayeb said. Saudi Arabia plans to build 16 nuclear power reactors by 2030.
GE plans to triple its current investment of US$300m in Saudi Arabia by 2015, as the country’s economy continues to grow, Habayeb said. "The expectations of companies like ours are much bigger now than they ever were after the Arab Spring," he said.
With the price of oil projected to average around between US$100 and US$115 per barrel this year, the economy of Saudi Arabia, which has one fifth of the world’s oil reserves, is forecast to grow about 6 percent in 2012 after expanding about 6.8 percent in 2011, according to the International Monetary Fund.
The kingdom’s government has in the past two years earmarked about US$500bn as part of a comprehensive plan to address structural issues in its economy, improve education and transportation, tackle unemployment and build hundreds of thousands of homes to meet growing demand in an under-supplied market.
GE is also "in discussions with different members of consortia" for projects in Jordan, Morocco, Egypt, Habayeb said when asked if the company would be bidding for other power generation projects.
In Libya, where the regime of Muammar Gaddafi was toppled during the wave of revolts that swept the region last year, GE sees a large market for all of its business segments and has been in talks with the government.
"The country needs everything - development of oil and gas - which will create the wealth to improve the life of people, clean water, reliable power, a good healthcare system, building the transportation system both rail as well as the aviation system so that you can get the economy going all of these things are areas are of focus for us in Libya like we did in Iraq,’’ Habayeb said.
"As the momentum starts building up Libya could be another Iraq, another Saudi Arabia, there’s going to be huge infrastructure projects,’’ Habayeb said, adding "over the next three to four years it will be anywhere between US$6bn and US$10bn’’ in revenue for the company.
After contracting 61 percent last year, the North African country’s economy is forecast to surge by 76.3 percent in 2012, according to the IMF.
GE expects to double its US$1bn in revenue from Turkey over the next three years.
In neighboring Iraq, where bureaucracy and rivalry between the government in Baghdad and the Kurdish autonomous region in the north has slowed the pace of economic growth and contributed to a dysfunctional business climate in the country, the potential for GE could mirror that of the Saudi Arabian market.
"It is a great opportunity for us to grow with the country, but it’s not moving as fast as we would like,’’ Habayeb said when asked about Iraq. "We were hoping that the pace would be a lot faster," Habayeb said, adding "the potential could be huge it - depends on how fast they could move’’.
Iraq’s economy is projected to grow about 11.1 percent this year from 9.9 percent in 2011, according to the IMF.
"One of the things that governments - especially those that went through a transition because of the Arab Spring - the big factor for them is credibility and how quickly are they going to be able to deliver on the promises and expectations of people,’’ Habayeb said.
About 65 percent of people are under the age of 30 in the Middle East and North Africa, which has the highest youth unemployment rate in the world. The region needs 100m jobs to be created over the next two decades, according to the World Bank.
By Arabian Business