TURKMENISTAN: GENERAL ELECTRIC LOOKING TO DEAL

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001591

SIPDIS

STATE FOR SCA/CEN; EEB;
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: DECL: 12/09/2019
TAGS: ENRG ECON PGOV EINV BTIO TX
SUBJECT: TURKMENISTAN: GENERAL ELECTRIC LOOKING TO DEAL
DIRECTLY WITH GOVERNMENT

REF: ASHGABAT 1498

Classified By: Acting DCM Peter Eckstrom for reasons 1.4 (b) and (d).


1. (C) SUMMARY. General Electric (GE) is the leading
provider of power generation equipment to Turkmenistan. In
addition to being the exclusive provider of gas turbines to
the Turkmen, the company provides pipeline and oil field
equipment, and delivers services such as much-needed
technical and maintenance training as well as outage
inspections. Traditionally GE has partnered with other
companies when doing business in Turkmenistan, but plans to
deal more directly with the GOTX in terms of service market
contracts. GE was officially registered to do business in
Turkmenistan in 2009, and has plans to open an office in
Ashgabat. Although providing power generation equipment and
related services has been the company's forte in
Turkmenistan, company officials envision that GE would move
into providing additional products such as airplane engines,
medical equipment and other products and services directly to
the Turkmen. Company representatives hoped that small,
positive changes in Turkmenistan's business climate would
allow GE to deal directly with the GOTX without involving
unnecessary partners or intermediaries. END SUMMARY.


2. (C) On December 8, on the margins of the Second Annual
International Electricity Industry Exhibition and Conference
in Ashgabat, representatives from GE met with Charge to
discuss the company's prospects in Turkmenistan. Company
reps explained that since 2002, GE has been the exclusive
provider of large gas turbines for power generation
throughout the country (reftel). They suggested that
Turkmenistan has one of the most up-to-date power generation
systems in the world, citing modern power plants in
Turkmenbashy, Ashgabat, Dashoguz, and Balkanabat. The
company is continuing its partnership with Turkish companies
Chalik Energy and Lotus Energy to build additional power
plants in the Avaza Tourist Zone, Ahal, and a second plant in
Balkanabat. These three plants alone would produce 520
megawatts (MW) of power.


3. (C) Company officials were convinced that the GOTX liked
GE technology, given the amount of products and services the
country has already purchased. They explained that GE's
overall business strategy in central Asia has been to have
partner companies that were able to mitigate the bureaucratic
hurdles typical in the region. They cited GE's water process
technology work with the Turkish giant Polimeks in
Kazakhstan, Azerbaijan, Uzbekistan, and Turkmenistan as an
example of how partnering with a regional company had helped
GE get access to the Central Asian and former Soviet Union
markets. Company reps told Charge that they had developed an
excellent relationship with Turkmen Minister of Energy and
Industry Yarmuhammet Orazgulyev, and were now inclined to
dealing directly with the GOTX, without intermediaries, to
provide services. The company would still partner with other
companies to sell GE equipment, at least for the time being.
They added that the Ministry of Energy recently asked GE
directly for a price quote for turnkey outage inspections
instead of going through a partner company, stressing that
the value of such inspections can run up to $50 million.


4. (C) GE officials felt that equipment maintenance training
for Turkmen nationals must be a critical component of any
business proposals with the Turkmen. They noted that the few
explosions of GE equipment in Turkmenistan were the direct
result of an inability of Turkmen plant workers to properly
maintain equipment. For example, GE reps recounted that gas
turbines require somewhat extensive maintenance at 24,000
operating hours, but a turbine that exploded had 80,000

ASHGABAT 00001591 002 OF 002


operating hours on it with no maintenance. Company reps
stated that GE already provides extensive training to ensure
that its power generation equipment is properly maintained,
and the company plans on highlighting the company's
commitment to providing high-quality technical training for
Turkmen workers as it eyes expansion in Turkmenistan.


5. (C) As a result of positive signals from the Turkmen
Government, GE plans to open an office in Ashgabat in the
near future. According to the reps, company decision-makers
felt it was time to have a central office in Ashgabat that
could eventually serve as a point of entry for all types of
GE products and services into the Turkmen market. The
company officially registered to do business in Turkmenistan
in 2009, and its operating license does not yet allow for
expanding beyond power generation equipment and services.
Nevertheless, company officials were confident the GE name
and reputation in Turkmenistan would allow the company to
expand over time. Plans are in the works for hiring
administrative staff and field engineers. Charge reminded
the reps of the Turkmen requirement that any foreign
company's staff include at least 70 percent Turkmen
employees.


6. (C) COMMENT. GE's plans to expand its business in
Turkmenistan is great news. GE hopes to be able to strike a
deal on services without assistance from partner/middlemen
companies, but did not rule out using partners when
necessary. The company's experience in Turkmenistan since
2002 has allowed company officials to gauge the correct
timing for increasing its overtures toward the GOTX for more
business. GE is a respected name in Turkmenistan and recent
Turkmen press reports hailed the company as "the world leader
in power generation equipment." GE executives plan to ride
the popularity wave it enjoys at the moment, and opening an
office in Ashgabat would send the GOTX another message that
the Americans are indeed coming to Turkmenistan. END COMMENT.
CURRAN