Egypt's Orascom Signs Agreement with Babcock-Hitachi for Super-Critical Power Plant Manufacture

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Researched by Industrial Info Resources (Sugar Land, Texas)--Orascom Construction Industries (CAI:OCIC) (OCI) (Cairo, Egypt), one of Egypt's leading engineering, procurement and construction companies, has signed a cooperation agreement with Babcock-Hitachi K.K. (Tokyo, Japan), a subsidiary of Hitachi Limited (NYSE:HIT) (Tokyo) and a leading Japanese firm in energy-related technology and environment systems, for building super-critical-technology boilers for upcoming power projects in Egypt. This collaboration will bring the two companies together for the design, manufacture and erection of boilers in power plants, with a scope for expansion in North Africa and the Middle East.

OCI recently acquired International Company for Manufacturing Boilers and Steel Fabrication (IBSF) (Cairo, Egypt). Formerly known as Nasr Boiler and Pressure Vessels Company, the Egyptian company specializes in the design and manufacture of all types of boilers, condensers, pressure vessels and heat exchangers which serve as integral components of power plants. Acquisition of IBSF gives a value-proposition to OCI in leveraging the former's expertise in engineering, procurement, installation and startup services. OCI plans to develop and upgrade IBSF's existing facilities to enhance its construction business. The engineering major's personnel will be trained through transfer-of-technology sessions with IBSF.

Babcock-Hitachi, the energy systems provider, has a strong presence in Egypt. The company is currently involved in various projects in the country including the Cairo West 1,400-megawatt (MW) power plant. The synergy between OCI's and Babcock-Hitachi's areas of expertise will position the companies as the only supplier of super-critical boiler technology in Egypt, while strengthening OCI's capabilities in the power sector.

OCI, the flagship construction major, operates under three brands. The group mainly undertakes construction and execution of large-scale industrial and commercial infrastructure projects in Egypt, the Middle East, and central Asia. To balance its portfolio for the core construction business, the group is also involved in the steel products business through its subsidiary National Steel Fabrication Company (6th of October City, Egypt), the largest manufacturer of fabricated steel products in the Middle East.

The power boiler industry in the region offers tremendous potential. The OCI and Babcock-Hitachi partnership will bid for the new Ain Sokhna 1,300-MW Power Plant, a super-critical power plant and the first of its kind in Egypt. A series of such power plants are expected to come up to boost the country's power production. Egypt's five-year energy and electricity plan (2007--2012) envisions an increase in domestic electricity production by another 8,300 MW from the installed capacity of 18,000 MW in 2006. To meet the growing power demand, the total capacity is expected to reach 24,000 MW by 2008 and 26,000 MW by 2010. The demand for electric power generation is increasing 10% annually.

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