ABB Powers Iraq

Recently, ABB Ltd. (ABB - Snapshot Report) announced its plan to engage itself in the extension of transmission substation in the Southern part of Iraq. The contract has been awarded by the Ministry of Electricity of Iraq and is valued at about $75 million. ABB’s scope of work includes project management, design, engineering, supply, installation and commissioning of the substation, including civil works.

The project involves connecting a new 500 megawatt (MW) gas based power plant as well as smaller power stations through the 400/132 kV (kilovolt) Amara substation to the grid. The power plant and power stations under consideration are being constructed. The supplies for the project includes air-insulated switchgear, transformers, shunt reactors and cables. Further, supply control and protection systems as per IEC 61850 open communications standard and related telecommunication equipment will also be provided by ABB.

With this substation extension, new power generation sources will be integrated resulting in power supply enhancement in the region. Further, the grid will become more dependable and the quality of power will improve. The project is expected to be completed by 2013.

Moving ahead, the emerging markets will be a significant growth driver for ABB. Demand in mature markets is also expected to improve. Customer capital expenditures have increased with the rise in commodity prices. Increased capacity in some later-cycle infrastructure-related businesses continues to exist. In many sectors, price stability has been attained and ABB has increased its prices to offset rising raw material costs.

However, ABB Ltd's results are likely to be adversely impacted by macroeconomic weakness as more than 80% of the company's orders are derived from outside the US. A major competitor of ABB Ltd. is Siemens AG (SI - Analyst Report).

ABB Ltd. is a Zurich (Switzerland)based power and automation technology company. The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, Americas, Asia, the Middle East and Africa.

Currently, we maintain a Zacks #3 Rank (short-term Hold recommendation) on ABB Ltd.