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ABB signs power deal with North Korea

The cash-strapped Swiss-Swedish engineering giant, ABB, has signed a tentative agreement to upgrade North Korea's decrepit electricity network.

ABB spokesman, Wolfram Eberhardt, confirmed that the company has clinched a "memorandum of understanding" with Pyongyang, potentially worth "tens of millions" of francs.

News of the agreement, which ABB emphasises is still at an early stage, came during a visit to the secretive country by the Swiss foreign minister, Micheline Calmy-Rey.

"The memorandum of understanding involves power transmission and distribution projects, which should help improve the electricity situation in North Korea," Eberhardt told swissinfo.

ABB has declined to give further details about the project and warned that it may not come to fruition.

"It's common when we sign an memorandum of understanding not to talk about such projects," Eberhardt said.

"We are at a very early stage, [and] it's not 100 per cent likely we will receive an order."

Politically sensitive

ABB's involvement with North Korea comes at a time of heightened political sensitivity in the region.

Pyongyang is currently embroiled in a dispute with the United States over its nuclear weapons programme.

Washington has threatened to impose economic sanctions against the communist state in protest.

ABB's involvement has the potential to undermine that strategy.

Eberhardt said ABB has had a representative stationed in Pyongyang for several years.

"It's not a very easy situation for our representative in Pyongyang, but he's been very successful in building up contacts, and he may help the people of North Korea improve their standards of living." he said.

Links to Pyongyang

ABB has maintained strong links to North Korea in the past. A unit formerly owned by ABB is involved with Pyongyang's nuclear power programme.

The North Korean deal comes as the heavily indebted firm is busy slashing jobs and selling assets.

ABB is eager for new business to compensate for its heavy losses in recent years.

On Tuesday, the company said it had won an order worth $160 million (SFr207 million) for maintenance and modification work on Norsk Hydro's oil installations on the Norwegian continental shelf in the North Sea.

swissinfo, Jacob Greber in Zurich

Key facts

ABB's deal with North Korea could be worth tens of millions of francs.
ABB has links to North Korea as a former ABB unit is involved with Pyongyang's nuclear programme.
The deal comes amid job cuts and asset sales.

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