Hyflux ventures to the Dark Continent
Hyflux, one of the world’s leading technology-driven environmental companies, has just signed a memorandum of agreement (MOA) for two seawater desalination plants in Libya and could potentially enlarge EPC order book by S$1billion and extend earnings visibility to 2013.
But what’s all the fuss about expanding into the Middle East and North African market?
For starters, The MOA is to develop in Libya one 500,000m3 a day capacity desalination plant in Tripoli, and one 400,000m3 a day desalination plant in
Benghazi.
Comparing these two plants to Hyflux’s biggest win in Algeria at 500,000m3 a day in Magtaa, these potential contracts totalling 900,000m3 a day is almost twice as big in terms of capacity.
It is also anticipated that Hyflux will undertake the EPC portion while the 49%-51% deal with its joint venture company with its state-owned Libyan partner would be responsible for O&M throughout the 25-year concession period.
And there’s more good news to come, with projects worth a potential S$1.1billion. While financial details are still in the works for these projects, the lovely analysts from DBS Group estimate that these contracts could add a cool S$1billion to Hyflux’s EPC order book, which currently stands between $700million – $800million.
Assuming financial close for both projects are completed by next year, projected completion duration of 36 months implies that Hyflux’s earnings visibility will be extended to 2013.
But the main piece of good news is to be taken from OCBC’s research team who believes that the latest geographical expansion into Libya is an important milestone for Hyflux and would further serve to showcase its technologies to the rest of the world.
“Hyflux is constantly exploring projects in countries with sustainable water programs that provide us with the opportunity to deliver effective technological applications at unmatched values. We are delighted to collaborate with GDC and are confident in delivering comprehensive and effective seawater desalination solutions to Libya,” said Hyflux Group CEO, President and Managing Director Ms Olivia Lum.
And with Libya and Algeria already in, the rest of the Middle East and North Africa is there for the taking and given the technological advancements when it comes to water desalination for Hyflux, more project wins for the firm should make Olivia Lum a very happy woman indeed.
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