FRANKFURT, June 22: Siemens AG expects tougher conditions in the booming US electricity market over coming years, the head of the German industrial giant’s highly profitable power generation unit told a newspaper on Saturday.

“The whole sector is feeling the end of the gas turbine boom in the USA,” Klaus Voges told financial daily Boersen-Zeitung. “(Siemens) Power Generation business will certainly be more difficult in the coming years.”

The Power Generation unit has been one of Siemens’ most reliable performers over the past two years, balancing heavy losses in the telecoms sector and accounting for almost half of group operating profit in the year to September 2001 amid surging US demand for gas turbine generators.

However the business, which profited heavily from plant upgrades in the wake of a crisis in the US electricity sector, is expected to slow as power companies complete investments and trim output plans amid continuing weak economic growth.

Vosges said he expected overall production capacity demand to drop to well below 100 gigawatts in 2002 from 120 gigawatts in 2001 but said the business would remain an attractive one.

“We expect new orders in the current year won’t quite match the previous year’s level but sales volumes in both 2002 and 2003 will remain at high levels,” he said.

The division generated sales of 8.5 billion euros and orders of 12.2 billion euros in its last business year, respectively 10.4 per cent and 14 per cent of Siemens’ group total.

In addition to slowing demand, new orders were also being affected by a “grey market” in existing gas turbines coming back on to the market, he said.—Reuters