Panama deal set to open Aggreko's road into Latin American market

Published on Wednesday 30 December 2009 20:44

AGGREKO, the temporary power provider, is on the verge of making a major breakthrough in Latin America through a $50 million (£31m) deal with the Panamanian government.

• Aggreko's projects over the past year have included providing power for the inauguration of US president Barack Obama in January.

The Glasgow-headquartered firm, which this month stormed into the FTSE 100, is understood to be close to signing the deal, which would see it supply temporary power generators capable of producing 100 megawatts of electricity.

Sources told The Scotsman the contract would be the biggest Aggreko has secured in Latin America "by some margin". The region is one of the key areas pinpointed by the company for future expansion.

It is believed that the Scots firm received support from government body, UK Trade & Investment (UKTI), to make inroads into Panama.

The deal would round off another successful year for Aggreko's international power projects business, which now drives some 40 per cent of profits.

The company, which is headed by Rupert Soames, who becomes an OBE in today's New Year honours list, hinted at aggressive growth in the developing world in its most recent trading statement this month.

It said contracts with emerging economies are likely to help it to a record annual revenue of more than 1 billion this year. It added that demand has been particularly strong in Latin America and Africa.

Sources said last night that the $50m deal with the Panamanian government could also be just the tip of the iceberg for Aggreko in the Central American country.

One source familiar with the situation said: "It (Aggreko] is also positioning itself to provide temporary power options to the Panama Canal expansion project."

The canal extension project is expected to create contracts worth an estimated $5.3bn.

A spokesman for Aggreko yesterday declined to comment.

He said: "We never discuss contracts that are under negotiation."

UKTI is heavily encouraging UK firms to develop trade links with Panama, which has experienced an economic boom since 2004.

In November, Susan Haird, deputy chief executive of UKTI, staged a trade mission to Panama to discuss future opportunities for British firms.

If signed as expected, the Panama contract will be a further shot in the arm for Aggreko's Scottish workforce. The firm is ploughing 20m into a new manufacturing facility in Dumbarton after it opted to expand north of the Border rather than set up shop in China.

Aggreko received a 2.75m sweetener from the Scottish Government to build the new facility in Scotland after the company said the move would safeguard 120 Scottish jobs and potentially create a further 100.