Iraq has signed various contracts worth $6.25 million with Caterpillar Inc. (CAT) and other companies to build power plants to augment its electricity output.
Apart from Caterpillar, other companies involved in the same venture include Man SE (MAN) of Germany and a South Korean company. Munich based Man SE is an engineering company and also serves the automotive industry by producing trucks.
These companies together will build 50 new power stations; each generating 100 mega watts. As remarked by the officials, the new power plants are likely to be operational by the summer of 2012.
National grid is currently supplying power to the citizens for an average of about one in every five hours. Iraq’s power distribution network has suffered greatly not only from wars, arson and riots, but also from frequent outages.
The government has beenmaking continuous efforts to increase the power output ever since 2003, but the situation has now become more serious.
According to the officials, the planned investment is likely to eradicate the problem completely by 2015. Moreover, supply during this summer may improve to an average of eight hours a day from six hours last year.
The country’s demand totals 14,000 megawatts, but the country produces 7,000 megawatts and imports another 1,000 megawatts from Iran and Turkey. Iraq is also planning to import power from Syria using a regional grid.
The government had invited bids in December to raise power capacity by 2,750 megawatts by constructing four power plants. These bids include a 1,250 megawatt plant near Basra and three plants of 500 megawatts each in the cities of Samawa, Diwaniya and Amarah.
In addition to these, a new contract for 50 smaller power plants is expected to be signed this week.
Caterpillar currently retains a Zacks #3 Rank (short-term Hold rating).
Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. Caterpillar operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with the likes of CNH Global NV (CNH), Komatsu Ltd. and Volvo AB.
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