GCC Infrastructure & Finance

The construction market is recovering, the private power developer market is shrinking, bids are in for a new 70-90 million gallons per day desalination facility in Qatar and Kuwait needs to award more power contracts, delegates at the MEED GCC Infrastructure & Finance conference in London learned this week.

One of the most interesting presentations came from Mott MacDonald’s Dr Prem Mahi who talked through the lessons learned when working with various parties involved in delivery of private power projects. The consultant seems to have worked on nearly all the IWPPs and IPPs in the Gulf in some capacity – whether for the government as on Al Hidd and Al Ezzel (both in Bahrain), or for the developers on Rabbigh (Saudi) and Um Al Nar (UAE), or for the bidders as on Sur (Oman) and Al Adur (Bahrain).  He considered the issues that affect projects from delays in decision making affecting the programme to the need for developers to pre-select EPC contractors enabling them to use the 3-4 month bid time most efficiently. He also highlighted the fact that the number of developers present in the Gulf has fallen and other markets are requiring the developers services. He suggested that more roadshows and communication from government clients may be necessary to maintain interest and competition in the sector. Of course another trend is that local developers such as Qatar’s QEWC and Abu Dhabi’s Taqa are beginning to act as developers outside their home markets. International interest may be waning but local involvement is rising…..

For the construction sector there was also some good news from Habtoor Leighton Group CEO Laurie Voyer.  He reported that the market was recovering and that the firm had won $1.4bn in contracts so far in 2011. MEED ran a shorter version of the story but my original long version is below:

Construction prospects improved says Habtoor Leighton Group CEO

The region is emerging from the downturn and recent political issues experienced in the Middle East will have a positive impact on construction in the long term said CEO of Habtoor Leighton Group Laurie Voyer at the conference this week. He said that the increased need for social infrastructure such as housing, power and water would benefit the construction sector in the longer term.

Voyer revealed that the company had won $1.4bn in regional contracts so far in 2011 with major projects including the $300m Oman Bidbid highway dualisation in joint venture with Turkey’s Sezai Turkes Feyzi Akkaya (STFA). He said the 75km project could act as a stepping stone into more road projects in the Sultanate.

He said that work in hand at the company was relatively stable at $5bn. “The market does seem to have recovered somewhat and is back to a level of equilibrium that we can live with.”

However Voyer also said that significant challenges remain. He said that the contracting environment had become more competitive, project awards were still suffering from delays and liquidity remained an issue for projects.

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