BEIJING, September 29 (MarketWatch) — General Electric (GE) says it had held two months of talks with Chinese regulators over a faulty power-plant component before the product was hit with an import ban at Shenzhen Railway Station Customs and Frontier Inspection.
GE says it first identified a problem with a generator that affected its PG9171E (Frame 9E) gas turbines as far back as June, and was working to resolve the problem when the ban was imposed. Chinese officials have expressed concern that the devices could cause large-scale accidents.
GE has sold 24 of the estimated US$20 million (RMB156 million) PG9171E units in China. Counting the Chinese units, about 50 are in operation worldwide, mostly in Europe, and about five more are in production. The devices are manufactured in France.
Russell Wilkerson, a US-based spokesman for GE, pegged the total cost of fixing all of the units at US$10 million to US$20 million.
“This is a minor issue” from a financial standpoint, Wilkerson said. “We have identified the problem (with the generators) and we are addressing it directly with our customers and working on a speedy remedy.”
China has banned imports of the PG9171E turbine and its State Administration of Quality Supervision, Inspection & Quarantine also ordered that their use in China must end immediately. The actions followed a mechanical failure reported in the Hong Kong/China border city of Shenzhen in the southern province of Guangdong.
Chinese regulators didn’t indicate when the ban might be lifted.
GE’s next shipment of the units into China is not scheduled until next year. In addition, the company has a new model of gas turbine generator that it planned to market in China.
“In the past two months, GE has been actively working with customers, relevant government departments and industry experts to implement the recommended modification” to the faulty generators, Geoff Li, director of communications at GE China, said in a prepared statement.
“The generator that experienced the problem in Shenzhen is currently under repair; the solution for the remaining affected generators has been identified and appropriate actions are being taken.”
Li added: “GE will continue to work with the State Administration of Quality Supervision, Inspection & Quarantine to lift this temporary suspension as soon as possible, since the 9A5 generators in production have already addressed this issue.”