India's KEC Secures $130 Million Power Transmission Order from Egypt

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Researched by Industrial Info Resources (Sugar Land, Texas)--KEC International Limited (BSE:532714) (Mumbai), a power transmission engineering, procurement and construction firm, has secured a $130 million order from the Egyptian Electricity Transmission Company (Cairo, Egypt) to design, supply and construct transmission lines in Egypt. Under the contract, KEC will construct 500-kilovolt (kV) double-circuit overhead power transmission lines of a total length of 196 kilometers (km).

The deal is the largest in terms of financial value secured by KEC to date and is also the largest ever awarded to an Indian power transmission firm in Egypt. The project will be funded by the National Bank of Egypt (Cairo) and the European Investment Bank (Luxembourg) and is slated for completion within 24 months.

The project, which requires KEC to set up part of the transmission lines across the Nile River, will be executed in two phases. Phase I will involve setting up transmission lines from Abu Quir to Kafr El-Zayat over a distance of 97 km. In Phase II, the firm will set up transmission lines connecting Kafr El-Zayat with Bassous, covering a distance of 99 km.

The order from Egypt puts the total value of international orders secured by the firm in the last few weeks at $157 million. In December 2008, the firm forayed into Tajikistan with a turnkey order worth $18 million from Barki Tojik (Khatlon, Tajikistan), the national electricity firm of Tajikistan, to supply and construct 220-kV double-circuit transmission lines over 118 km in Tajikistan as part of the Tajikistan-Afghanistan Interconnection Project (TAIP). In November 2008, the firm had secured an order worth $28 million to set up transmission lines in Afghanistan over a distance of 157 km, again as part of the TAIP. In Australia, KEC secured an order worth $8.6 million for a turnkey project to be implemented in Queensland.

In India, the firm is implementing projects worth $205 million for the Power Grid Corporation of India (BSE:532898) (PGCIL) (Gurgaon, Haryana), including a $18.5 million project to build and supply transmission lines for the Chamera (HEP) -- III transmission system in Himachal Pradesh and Punjab, and a $11 million rural electrification project in Orissa. In September of last year, KEC secured an order worth $33 million from NTPC Electric Supply Company Limited (New Delhi), a wholly owned subsidiary of NTPC Limited (BSE:532555) (NTPC) (New Delhi), for a rural electrification project in Jharkhand.

With the recent order from Egypt, KEC's order book stands at $1.02 billion, with overseas projects accounting for 70% of total orders and the rest comprising projects in South Asia. KEC is also planning to bid for orders from PGCIL, which is expected to issue orders worth $410 million in the next three months as part of plans to invest $11 billion in the power transmission sector until March 2012.

KEC plans to increase its transmission tower manufacturing capacity, both in-house and outsourced, to 200,000 tons per year by March 2009. This includes increasing in-house manufacturing capacity by 30,000 tons to 140,000 tons and outsourcing 60,000 tons of manufacturing capacity. The firm plans to achieve the expansion by refurbishing equipment and machinery and removing bottlenecks in its existing plants rather than by setting up new manufacturing facilities.

Last year, KEC announced plans to invest $37 million in the current fiscal year, 2008-09, but intends to scale down its capital expenditure plans for the next fiscal year to reduce costs and conserve cash. The firm, which is executing turnkey power transmission projects in 24 countries, is part of RPG Enterprises (Mumbai), one of India's largest business conglomerates.

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