Iraqi plant bid helps to lift Egypt's Orascom Construction Industries

What's Up: Orascom Construction Industries jumps to two week high on bid to build a 1404 MW gas power plant north of Baghdad.

Orascom Construction Industries (OCI) shares rose to their highest point in almost two weeks yesterday, after Egypt's biggest publicly traded builder bid to build a 1,014 megawatt gas power plant north of Baghdad.

The shares, listed on the Egypt Stock Exchange, rose 2.3 per cent to 253.53 Egyptian pounds, the highest since August 7.

OCI bid US$463 million, while South Korea's Hyundai Engineering and Construction bid $500m and an unidentified Chinese company quoted $337m, said Mosaab Al Mudaris, an official at Iraq's electricity ministry.

The contract is for building the plant at the town of Taji, 20km north of Baghdad, installing six gas units, each with a capacity of 169MW, which Iraq bought from the German engineering conglomerate Siemens in a contract signed in 2008.

The competing companies had offered to complete installation of the gas units in two years.

The winning bidder is expected to be announced before the end of this month.

OCI shares have gained 24 per cent since the Egyptian Exchange (EGX) reopened on March 23 after trading was halted for almost two months because of political unrest. That compares with a 7.5 per cent decline for the EGX 30 Index.

OCI is a regional and international construction contractor and fertiliser producer.

The company actively pursues contracts in various sectors, but most of its contracts consist of infrastructure work; ranging from building transportation projects to raising power plants as well as a multitude of industrial and commercial ventures.

More than 60 per cent of its backlog consists of infrastructure, while the rest is split between industrial and commercial contracts.

Most of its backlog springs from the Middle East and North Africa - with Egypt, Algeria and GCC countries leading the way.

In just a few years the group has become a major player in nitrogen-based fertilisers, with a total production capacity of more than 4.84 tonnes a year as of late last year and a target of 7.75 tonnes a year for next year.

Fertiliser revenues have become more important for the company.

"We see no downside risks," said Ahmed Badr, an analyst at Credit Suisse in Dubai.

"We remain buyers of OCI on any signs of weakness and ahead of second-quarter results, which we believe should be strong.

Stock remains attractively valued, trading at 8.6 times to earnings."