Salini Impregilo team wins $1.3bn contract in Libya
Milan, August 13, 2013
A consortium led by Salini Impregilo Group has won a 963 million euro ($1.29 billion) contract to build part of a new coastal highway in Libya, in a sign of a rapidly growing order book for the soon-to-be merged group.
Impregilo and Salini are completing a tie-up to create a global construction player focused on large civil engineering projects from roads to hydroelectric dams in over 60 countries, including the Middle East, the Americas and Australia.
While shareholders are expected to clear the merger only in September, the companies have already set up joint structures to bid for tenders under the name Salini Impregilo.
The stock rose more than 3 per cent on the Libya announcement to reach an 11-week high and was up 3.42 per cent at 3.5 euros by 1323 GMT, outperforming a 0.16 per cent fall in the Dow Jones global industrials index.
Salini Impregilo has a 58 per cent stake in the contract.
"We believe this new intake in Libya might pave the way for the execution of the currently frozen "Lidco" backlog (1 billion euros), which relates to infrastructure jobs in the country," Kepler Cheuvreux, which has a "buy" rating on the stock, said in a note.
The Salini Impregilo consortium, which also includes Italian firms La Società Italiana per Condotte d'Acqua, Impresa Pizzarotti & C. and Cooperativa Muratori & Cementisti, will build the first 400 km (250 miles) section of the highway from the city of Marj in Libya to Emsaad, on the Egyptian border.
The project was initially awarded more than two years ago to a consortium led by Italian oil services group Saipem, following a tender in which Impregilo also participated.
That contract, however, was never formally signed before the civil war erupted in 2011, a source close to the matter said.
The source added that Saipem had asked to renegotiate the price for its contract, which was set at 835 million euros, following the conflict. This led to the body that manages the project going into private talks with the various original bidders and awarding the contract to Salini Impregilo.
Neither Saipem, which is 43-per cent owned by oil major Eni , nor Impregilo were able to comment.
The Salini Impregilo contract is part of an accord signed between the governments of Italy and Libya in 2008 and will be funded by the Italian government.
The entire highway will run across Libya for 1,700 km between the Tunisian and Egyptian borders.
The contract comes at a time when investor enthusiasm in Libya has been dampened by renewed security concerns, even though the country has the money to pay for its vast infrastructure, health and education needs. - Reuters