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M&R’s WorleyParsons joint venture to boost power sector

Murray & Roberts (M&R) has positioned itself to provide operation, maintenance and efficiency enhancement services to the power sector.

Last week M&R chief executive Henry Laas said the group had entered into a joint venture agreement in August with WorleyParsons, an engineering, procurement and construction firm based in Australia, to enable it to offer this service.

“We have existing power plants that are no longer as efficient as they should be and we can enhance that efficiency. We have positioned ourselves to enter into that market and we know how big the opportunities are,” Laas said.

It was difficult for Eskom to keep up with the maintenance programme for its coal-fired power stations because of the shutdown periods and low supply-demand margins, among other issues.

The joint venture would offer this service to Eskom as well as to other power generation capacity that would be put in place in South Africa over time.

The establishment of the joint venture was part of the strategy for its Engineering Africa division to grow its position in the power sector.

“We are very pleased about the way the mutual joint venture was established. It is early days… but we hope to have the first orders secured by the end of this financial year,” Laas said.

M&R is also focusing on its entry to the water industry.

The group has been awarded a contract worth about R350 million to provide water purification services to Gold Fields in Ghana.

Laas said this contract was awarded after its year-end and therefore not included in its R45.3 billion order book at the end of June.

“This demonstrates that M&R is starting to grow its engineering capacity again in areas outside of its involvement in the existing [power station] contracts of Medupi and Kusile.

“We are very pleased about that development. It’s an area that will present significant growth to M&R into the future. We have been out of that market for quite some time and we are getting our position back as we move forward,” he said.

M&R’s recovery phase ended in June and the group had now entered a two-year growth plan of returning to profitability and resuming dividend payments.

However, Laas stressed the growth plan did not mean M&R expected a remarkable recovery in the construction sector in the short term, the markets to become very strong and the group, as a consequence of this, to grow phenomenally.

The strategic need for M&R to return to its core competency of construction and engineering was at the centre of its growth plan, Laas said.

Last week M&R reported a reduced diluted headline loss a share of R2.46 in the year to June from a R4.54 loss during the previous year. The attributable loss shrank to R736m from a loss of R1.74bn the year before.

The losses reported were after accounting for a R1.19bn loss on the contract completion costs for the Gorgon Pioneer materials offloading facility in Australia and a R454m loss in the Middle East.

M&R shares rose 2.66 percent to close at R22.39 on the JSE yesterday. Its market capitalisation is just less than R10bn.

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