Hanwha Engineering & Construction (E&C) has signed a huge deal valued at $7.75 billion to build a new town in Iraq near the capital, Bagdad. 

Hanwha E&C said on May 24 that its Vice Chairman Kim Hyun-chung signed the deal with Iraqi National Investment Commission Chairman Sami R. Al-Araji in Bagdad. The Gulf nation’s Prime Minister Nouri Al Maliki also took part in the signing ceremony along with Chairman Kim Seung-youn of Hanwha Group.

Chairman Kim said it is a big national project in Iraq and the construction of 100,000 residential houses is only the beginning. “We should secure more projects in Iraq,” he said. 

The company plans to break ground at the 1,830-hectare site situated 25 kilometers east of Bagdad this year with the aim of completing the project in about seven years or by 2017 at the earliest. 

“Based on our experience in Korea, we will facilitate various infrastructure first at the new town where up to 100,000 houses will be built for Iraqi residents,” a Hanwha E&C spokesman said. 

“We have made efforts since last year to win the order, which marks Korea’s first case of exporting our expertise and knowledge of building new towns on such a huge scale. This is an opportunity for us to show our capabilities to the Middle East and North Africa.”

Hanwha E&C, an unlisted unit of the conglomerate Hanwha Group, will forge ahead with the project from the very beginning to the very final touches, encompassing the engineering, procurement, and construction (EPC) format. 

“We will start with the design of the whole installation and continue to the actual construction so that people can simply move in to the houses at the new town. In other words, we will take care of everything from A to Z, which is possible for only a few versatile and competitive contractors,’’ he said. EPC is a format of contract in the construction business under which the constructor is supposed to design the entire project, procure the necessary materials, and build it on its own or through subcontractors. 

Asked about the financing aspects of the contract, Hanwha said that Iraq will pay the total price tag of $7.75 billion in stages. 

“Iraq is scheduled to provide 10 percent as a down payment and 5 percent in intermediate payments at three subsequent times. Plus, the country will pay part of the remainder step by step after the completion of some facilities,” the spokesman said. 

Hanwha E&C has fared well both at home and abroad.

The company successfully carried out a large-sized development project in Incheon, west of Seoul. It also garnered a $1.2 billion deal involving industrial plants in Saudi Arabia. 

Currently, a total of five international construction projects are underway by Hanwha E&C including oil refineries in Algeria and liquefied natural gas plants in Kuwait. 

Hanwha Group plans to win other construction projects in Iraq in the future including a 1 million-resident housing project, railroad, harbor, and highway construction projects. The group will also seek to win power, oil refinery, petrochemical, and solar energy projects in new towns, as well as schools together with its 100 supplier firms and subcontractors and about 1,000 foreign workers.

Earlier this year, Hanwha E&C announced its long-term goal of joining the ranks of the global top 100 constructors. Toward that end, the corporation is briskly tapping into new areas such as renewable energy on top of strengthening its existing businesses.

By maintaining top-tier competitiveness in its core businesses, the firm hopes to rack up more than 20-percent growth per year in global turnover through 2015, by which time over 40 percent of its sales will be generated overseas.#