General Electric signs $400 million Algeria generator deal

Wed Mar 19, 2014 1:57pm EDT

General Electric Co. acknowledged on Thursday that a cut in its top-tier credit rating was possible, but its chief financial officer said there was no ''time bomb'' hidden in its hefty finance arm. REUTERS/Brian Snyder

General Electric Co. acknowledged on Thursday that a cut in its top-tier credit rating was possible, but its chief financial officer said there was no ''time bomb'' hidden in its hefty finance arm.

Credit: Reuters/Brian Snyder

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(Reuters) - General Electric (GE.N) on Wednesday signed an agreement to build an industrial complex to produce gas and steam turbines in partnership with Algeria's Sonelgaz at a cost of $400 million.

The complex, which will start operating in 2017, will produce six to eight generators and control systems per year with a total capacity of 2,000 megawatts, officials said.

A joint venture called General Electric Algeria Turbines (GEAT) will be set up to build and operate the complex in the eastern province of Batna.

"It will be one of the biggest plants of GE in the world. This also shows that foreign investment is returning," said Algeria's minister for industrial development, Amara Benyounes.

Sonelgaz will hold a 51 percent stake, while GE Industrial France, a subsidiary of GE, will hold the remaining 49 percent.

GE has invested in the past in Algeria, winning a $2 billion deal with Sonalgaz to supply turbines just last year. But other investors, especially in the non-energy sector remain more wary, concerned about restrictions and state bureaucracy.

Algerian law limits to 49 percent the stake a foreign firm can hold in any investment, which is seen by analysts as a hurdle to overseas capital flow into the OPEC oil-producing North African country.

(Reporting by Hamid Ould Ahmed; Editing by Stephen Powell)

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