HYFLUX has clinched a major deal to build what it says is the world's largest seawater desalination plant in Algeria with a project value of US$468 million (S$632 million).

The deal is an important boost to the home-grown water treatment company's ambitions to become a top global player, analysts said.

Hyflux announced on Tuesday that it had won the bid from the Algerian state-owned firm Algeria Energy Co (AEC), which handles power and water privatisation in the country.

The plant, located in the Oran region of western Algeria, will have a capacity of 500,000 cubic metres a day. It will use Hyflux's reverse osmosis membrane technology to supply water to the state-owned national public water group and the national oil company of Algeria.

Hyflux won the bid because it offered competitive pricing and had a 'proven track record in delivering large-scale desalination projects', said Ms Olivia Lum, Hyflux chief executive at a media and analyst briefing yesterday.

The massive project will almost double Hyflux's total order book to about S$1.5 billion as at April this year.

Its unit MenaSpring Utility will hold a 51 per cent stake, with the rest held by AEC. The project will be 70 per cent financed with loans from local Algerian banks, and 30 per cent equity. Hyflux will invest $80 million in the project.

The project is not expected to have a material impact on Hyflux's financial performance this financial year. But it is a 'very profitable', partly because it enjoys 'low interest rates' of 3.75 per cent a year on the project financing offered by the Algerian banks, said Mr Sam Ong, deputy CEO. He added that the project satisfies Hyflux's target of 12 to 15 per cent returns for each project in its global portfolio.