ABB Wins Contract from MGI

ABB Ltd. (ABB - Snapshot Report) has been awarded a $65 million contract by Mass Global Investment (MGI) for its electrical and automation solution. The turnkey solution from ABB will be used for a new gas-turbine power plantand also for the extending of a substation.

The new system will increase power supply and will also strengthen the transmission infrastructure in northern Iraq. Third quarter’s order bookings of ABB include this contract.

The project involves extension of 500 MW Dohuk 1 power station built by ABB, started in 2011. The new Dohuk 2 power plant will have four gas turbines with a capacity of 125 megawatt (MW) each. ABB will connect two plants by extending the existing 132 kilovolt (kV) substation.

The Dohuk 2 power plant is a 500 MW open cycle gas turbine (OCGT) unit and will be fueled by natural gas and light fuel oil. Under the deal, ABB will design, supply and install the electrical balance of plant (EBoP) solution and provide the grid connection for the new power plant. Low- and medium-voltage switchgear, the auxiliary systems for fuel supply and the control and automation system are among the key products to be supplied by ABB. The new plant is expected to be operational in ten months.

The project helps in the economic and social development of the region. It will enhance power supply for the people.

Moving ahead, ABB expects the emerging markets to be a significant growth driver; however, 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, organizing its global structure into five regions: Europe, the Americas, Asia, the Middle East and Africa.

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