Crescent Steel Secures Rs 3.27 Billion Letter of Intent for Pipe Cladding for K-IV Project

Crescent Steel and Allied Products Limited announced on Friday that it has received a Letter of Intent (LOI) from China Harbor Engineering Company Limited (CHEC) for pipe lining for the K-IV project, the Greater Karachi Bulk Water Supply Scheme.

Bare pipes will be supplied by CHEC with diameters of 68 and 84 inches.

“This is in addition to the previous quantity of pipe fabrication and coating as stated in our reference letter N CSAPL/CS-08/0903 dated July 04, 2022. The contract value is expected to be approximately 3.2 billion rupees,” Crescent Steel announced in a notification to PSX.

In the previous July 4 notification, the company announced that it was negotiating with CHEC for the fabrication and coating of pipes (hot rolled coils will be supplied by the customer) having diameters of 68 and 84 inches for the K project. -IV.

The company then announced that the contract was to be around 3.8 million rupees.

Meanwhile, the company said Friday that subject to contract performance, manufacturing is expected to begin in the second half of the current fiscal year and be completed “hopefully by the end of fiscal year 2024”.

Senior Research Analyst at Capital Alpha Saquib Hussain said the company could secure the two contracts worth more than Rs 7 billion, which would positively affect their profitability amid weak steel demand in the country.

Another analyst from JS SearchWaqas Ghani said that the letter of intent and the expected contract and schedule show that work is continuing on the K-IV project.

According to news published in Dawn In June this year, the Water and Power Development Authority (WAPDA) awarded three Rs 98.5 billion contracts for the construction of K-IV Phase I to supply 260 million gallons per day (MGD) of water in Karachi.

Two contracts worth Rs 81.116 billion have been awarded to a consortium comprising M/s China Harbor Engineering Company Limited and AL-Fajr International while the third contract worth Rs 17.4 billion has been awarded to Descon Engineering.

The second batch worth Rs 28.846 billion was awarded to the same consortium.

The pipeline length of this set is approximately 80 kilometers and involves pipelines of 84 and 64 inches in diameter. The package must be completed in 16 months.

The third batch of turnkey engineering, procurement and construction (EPC) contract for the 2 x 130 MGD pumping station (civil, electrical and mechanical works) has been signed with Descon Engineering at a cost of 17, 4 billion rupees.

This involves two pumping stations of 130MGD each and 12 pumps of 32.5MGD each, including four for emergency devices.

“The above information has been disclosed based on discussion with CHEC and LOI. However, performance of the contract is conditional upon receipt of the purchase order (PO) from CHEC; finalization of the contract with CHEC; fulfillment of the contract parent between CHEC and WAPDA,” the company added.

“The company is very hopeful that the purchase order and contract will be finalized soon,” he said.

Crescent Steel share price jumped Rs3 from Rs37.39 to Rs40.39 when the notification hit the PSX before settling at Rs38 at the end of the day showing a 1.12% increase over the course of the day. the day when the overall index fell 0.18% or lost 75 points.

About Keith Tatum

Check Also

PM Modi arrives in Bangalore; Kick begins his two-day visit to four Southern states

New Delhi: Prime Minister Narendra Modi embarked on a two-day visit to four southern states …