German company Siemens (NYSE: SI; XETRA: SIE) has won a $341 million Israel Electric Corporation (IEC) international tender to supply units for producing electricity from natural gas. The units, which will be combined-cycle power plants, will be located at the Gezer power plant sites near Lod, and near Haifa. The innovative units are the first of their kind to be installed in Israel.
The purchase includes an option to buy replacement parts and a maintenance contract. IEC employees will perform the work under Siemens supervision and responsibility..
In the negotiations, the IEC demanded that Siemens allocate €15 million of the price of the equipment to local manufacturing. As reported in "Globes", Siemens agreed to buy transformers for $6 million from Elco Industries.
IEC president and CEO Jacob Razon said that in order to keep pace with the increasing rate of electricity demand in Israel, the IEC must prepare in advance to set up new production units. He noted that the new units could operate with two kinds of fuel: either natural gas or diesel oil.
He added that buying the units from Siemens is only part of the IEC's advance preparation to use natural gas for electricity production. He said he hoped the natural gas transportation system would be ready by 2004.
Published by Israel's Business Arena on March 4, 2002