LSIS to build power substations in Iraq

LS Industrial Systems Co. said Tuesday it had won two contracts worth $115 million from the Iraqi government to install electrical substations in the Middle Eastern country’s capital.

Under the deal, Korea’s top maker of electrical equipment will establish 35 medium-voltage substations in Baghdad within a year. It also plans to supply an additional four air-insulated switchgear substations, including transformers, for a separate order.

The contracts come as part of the Middle Eastern country’s $37 billion program to revamp infrastructure, which was devastated amid three decades of war, sanctions and looting.

Iraq’s electricity ministry aims to establish 100 substations over the next few years to set up a secure nationwide power grid.

LSIS shares closed up 5.79 percent on Tuesday at 60,300 won ($52.64).

“Based on the successful deals as a steppingstone, we plan to bid not only for the remaining 65 substations but also for future reconstruction projects in Iraq and other Arab countries,” the company said in a statement.

The Middle Eastern market is on the verge of a boom as demand surges for housing, power stations, electric cables and other infrastructure following popular uprisings early this year.

Korean builders have beefed up their operations across the region in recent years, focusing on power plant construction. But Iraq has remained a nascent market for them compared with such countries as the United Arab Emirates, Libya and Saudi Arabia.

LSIS is the first non-European company in 60 years to win an electricity project there. It is also working on a 33 billion won deal to build power substations in Syria.

Last May, Hanwha Engineering & Construction won a $7.25 billion order to build a new town in Iraq by 2021.

LS Cable Ltd., another LS Group subsidiary, secured a $200 million deal in 2009 with an Iraqi firm to set up telecommunications networks there.

“The Iraqi reconstruction market is projected to see explosive growth over the next three years,” Park Joong-je, an analyst at Korea Investment & Securities Co., said in a report, adding that the country would become the largest construction market in the Middle East and North Africa next year, topping $203 billion.

By Shin Hyon-hee (heeshin@heraldcorp.com)