Economy, Business And Markets

Daewoo E&C Expanding Business in Iranian Market

Daewoo E&C Expanding Business in Iranian Market
Daewoo E&C Expanding Business in Iranian Market

South Korea’s Daewoo Engineering & Construction, which has been engaged in the Iranian market for decades, has sought to expand its business in the country at a faster rate, following the lifting of western sanctions against Tehran over its nuclear program.

Following the 1980-88 Iraq-imposed war, Khorramshahr Port, the biggest trade port of Iran, was disabled. As a result, Iran had no choice but to shift the distribution foothold to the only available port, Bandar Abbas Port, for which the construction of a railroad was inevitable.

In 1984, Daewoo E&C won a contract to construct Lot 6 of the Bandar Abbas-Bafgh Railroad, which became its first stepping into the Iranian market, reads an article published by South Korean magazine Business Korea.

Later, the company consecutively won the contract to construct the Lots 4-B and 4-A of Bandar Abbas-Bafq Railroad.

Daewoo E&C showed a perfect performance in difficult mountainous terrain and rugged environments like flood, and carried out a variety of construction projects, including the restoration construction of Kharg Island oil terminal in 1991.

In May this year, South Korean President Park Geun-hye made a state visit to Iran to meet her Iranian counterpart, Hassan Rouhani. Daewoo E&C accompanied as a member of the economic mission and signed two memorandums of understanding for the construction of road and refinery facilities worth $1.5 billion.

Daewoo E&C and Hyundai Engineering & Construction signed a joint business agreement worth $10 billion with Bahman Geno Refinery Company to construct refinery facilities.

Moreover, the construction of the Tehran-North Freeway’s Section 3, which will be conducted by Daewoo E&C alone, is estimated to be worth $1.5 billion.

Amid the continuously shrinking construction of petrochemical plants due to the prolonged low oil price, new construction orders from Iran might be an opportunity for South Korean builders to break through the recession. In addition to the plant construction, various infrastructure construction projects for power generations, bridges, roads and railroads are expected to come on stream in Iran.

However, many obstacles exist alongside high expectations. An official of Daewoo E&C said South Korean construction companies are watching Iran as an emerging market.

“We understand there are some ongoing efforts of the domestic construction companies and the Korean government to solve the problem. We hope the Iranian government also put a joint effort to solve the problem by providing the government guarantee aggressively,” the Daewoo official said.