Group Five Nigerian deal 'worth the risk'

Posted On Wednesday, 28 September 2005 02:00 Published by eProp Commercial Property News
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Group Five says it conducted a thorough risk assessment before accepting a contract from a Nigerian agency to build a power station in that country.

Mike Lomas Group Five said on Tuesday that it had conducted a thorough risk assessment before accepting a $67 million contract from a Nigerian government agency to build a power station in that country.

Group Five financial director Paul O'Flaherty said the company was satisfied that the risk on the project was sufficiently low and the reward sufficiently high.

The margin on the project was 5%, which is above the construction industry average.

The major concern about such a project would be payment, said O'Flaherty. "But we have guarantees," he said.

Most large South African construction companies have down-scaled activities in Africa as the continent proved a difficult operating environment.

The Nigerian contract forms part of a $90 million project for the design, supply and construction of a 180MW gas-fired power plant with General Electric.

Group Five said it was the largest contract it had secured to date in west Africa.

The contract boosted Group Five's order book by about R350 million in its current financial year.

The group had a record-high order book of more than R4 billion at year-end in June. But it had to secure further work worth R1,5 billion to make full use of the capacity it had. Construction on the power station, in the southern Akwa Ibom region on the Niger River's delta, is scheduled to start this month, with completion set for December next year.

Group Five CEO Mike Lomas said the Nigerian contract had proved the success of its west African business.

 

Last modified on Friday, 18 October 2013 16:43

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