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November 5, 2015

General Electric mulls equity financing in energy sector


November 5, 2015

DUBAI: American technology and financial services firm General Electric (GE) is weighing a plan of equity financing in the energy sector of Pakistan, said the company’s top official.
“We are considering equity financing in Pakistan,” said Azeez Mohammad, President and Chief Executive Officer (Power Generation Services) at GE-MEA (Middle East and Africa) region. “We always look for new ventures.”
GE provides a range of power generation solutions and equipment, including simple cycle and combined cycle turbines and a number of power plants are using GE’s equipment.
Responsible for driving business growth, Azeez, in an interview, said GE has a very strong balance sheet as well as professional relationship with financial agencies and institutions all over the world. “GE’s financial services offer assistance to companies in arranging financing as well as equity,” he said.
Talking about GE’s recent initiative ‘digital power plant’, he said three power producers in Pakistan have installed this new solution and their efficiency surged an average four percent.
Digital power plant is a combination of custom-made software and sensors and GE has installed the system in Pakistan at value sharing basis.
The power producers did not spend any money as GE made all the investments in return of a share in efficiency improvement after the value addition.
“We have approached every power producer in Pakistan whether or not they have GE turbines,” said Azeez, who has been with the company since 1998.
“Moreover, we are also approaching oil and gas as well as aviation sectors…we have efficiency enhancement solutions for them.”
Talking about the Pakistan’s energy chain, Azeez said policies and tariffs need to be revisited.
He said the country’s existing tariff structure doesn’t provide any incentive for the increased efficiency.
“Absence of incentives for power producers is hampering investment,” he

said. “Increased efficiency saves costs.”
A World Bank official said Pakistan’s energy sector needs as much as $25 billion of investment to come out of its ramshackle conditions.
Richard Spencer, speaking at an energy conference last month, said the energy sector is in a dire state, “but it opens a lot of investment opportunities for the private sector as well as international investors.”
“The energy mix is tilted towards expensive fuel oil accounting for 37 percent [in the energy basket], which leads to cost vulnerabilities,” he said.
The energy expert further said the public sector generation is old and inefficient, while poorly targeted tariff subsidies, which are 0.8 percent of GDP, have worsened the situation.
He, however, said the situation opens up a lot of opportunities for investment, especially in the distribution sector.
Azeez acknowledged that Pakistan’s government is making reforms to upgrade and improve the system, “but the pace is too slow.”

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