Good Reason for Delaying Sell-off
On February 19, Daewoo Engineering & Construction (E&C) announced that the company signed a contract on the EPC-1 package of the Duqm Oil Refinery project amounting to a total of US$2.78 billion on February 15 through a joint venture with global EPC company Técnicas Reunidas of Spain.
Daewoo E&C will conduct engineering, purchase and construction (EPC) jointly with Técnicas Reunidas. Lead manager Técnicas Reunidas has a 65-percent stake in the project while Daewoo E&C, a 35-percent stake which corresponds to US$975.36 million. The construction work will run for 47 months after ground is broken.
The Duqm Refinery ordered by Petrochemical Industries Company LLC (DRPIC), a joint venture between Omani National Petroleum Corporation and Kuwaiti International Petroleum Corporation will have a capacity to produce 230,000 barrels a day. When completed, the facility will become the largest refinery in Oman.
In the meantime, it is forecast that Daewoo E&C will not be sold again within this year as the Korea Development Bank (KDB) decided to begin to sell off Daewoo E&C again early next year. As KDB Value No. 6, which holds a 50.75-percent stake in Daewoo E&C, will mature in July 2024, the KDB is also considering extending the maturity period of Daewoo E&C according to the normalization plan for Daewoo E&C.
The KDB decided to directly manage the normalization of Daewoo E&C's overseas construction sites. As a result, the KDB is investigating overseas construction sites jointly with Daewoo E&C in response to concern over the additional insolvent operation of the builder’s overseas construction sites. By directly checking overseas project financing (PF) construction sites, the KDB will minimize unexpected variables in the resale of Daewoo E&C in the future. In particular, Daewoo E&C has nearly completed Safi Combined Cycle Power Plant in Morocco but lost 300 billion won (US$270 million) due to production of new equipment to replace the previous problematic equipment produced on the spot.
Previously, Hoban Construction was chosen as the preferred bidder to acquire Daewoo E&C but gave up taking over the company because Hoban Construction did not know the problem with the construction site for Safi Combined Cycle Power Plant in Morocco.