Construction and building activity has traditionally represented little more than 4 per cent of total gross domestic product (GDP). The latest government statistics show that in 1991 the sector was worth a mere $260 million. But, buoyed by the industrial expansion programme, the figure should jump markedly over the next two years.
The market remains a paradox. While industrial projects have moved ahead, municipal schemes have been scarce. The lion's share of industrial work has gone offshore, leaving local companies complaining of empty order books. In future, the government is likely to invite bids for future projects in smaller packages, so that a greater proportion of business is recycled through the local market.
Gas. The cornerstone of recent contracts has been work on the first integrated gas project, sponsored by Qatar Liquefied Gas Company (Qatargas). Downstream, Japan's Chiyoda Corporation is close to finalising all the major subcontracts on the $1,400 million liquefaction plant, having itself won the engineering, procurement and construction contract last May. On the upstream programme, Japan's Toyo Engineering Corporation is mobilising on an estimated $100 million order to build the onshore gas receiving station.
Power. By April, subcontracts are due to be awarded for the civil works on the $1,100 million Ras Abu Fontas B power station project. The main contractor, Italy's ABB SAE Sadelmi, has split the work, worth about $160 million, into onshore and offshore packages. Further construction orders will come from the $450 million expansion of the local fertiliser plant and the $385 million project to increase capacity at Qatar Petrochemical Company (Qapco). International contractors on both projects have been selected, but contract signings await finalisation of the financing packages.
Industry. Future hopes are pinned on yet more industrial schemes. Qatar Steel Company (Qasco) is expected to decide by the end of the year whether to proceed with a $250 million expansion of its Umm Said plant. Another gas liquefaction plant is also a possibility. In late 1993, Ras Laffan LNG Company selected Chiyoda to draw up basic designs for the multi-billion- dollar project.
The government is likely to announce soon whether a new international airport will be built. As with all local projects, its future will depend on the perennial problem of finance availability.
A SLOWDOWN is expected in the Saudi market this year after three years of hectic activity. The reason for the adjustment is the government's attack on the budget deficit and its intention to cut spending by 20 per cent in 1994. Recurrent outlays on salaries and subsidies are more or less fixed costs, so public-sector construction programmes are a likely target for cutbacks. Many international contractors had quit the Saudi market by the mid-1980s in response to earlier recessionary conditions but those that remain are likely to stay through the current downturn.
Power. There are still likely to be significant public-sector opportunities. These include up to four new thermal power stations. The largest is a 2,400-MW expansion of the Ghazlan plant for which prequalifying bids went in last December.
Bids are also being evaluated for a 600-MW expansion of the Rabigh plant, and the Zurich-based ABB Asea Brown Boveri, Siemens of Germany and the US' General Electric Company (GE) have all put in offers for the PP9 thermal power plant to be built in Riyadh. Forthcoming electricity schemes include a 1,000-MW unit at Shuqaiq, and another 1,000 MW for Shuaiba. The expansion of gas turbine plants at Mecca, Medina, Tobuk, Jouf and Abha is also under way. A national grid scheme is going ahead slowly and there is plenty of substation and transmission work to interest specialist contractors.
Water. Water is another essential resource for which demand is rising inexorably. In the past 18 months, contracts for desalination plants with a combined capacity of 180 million gallons a day (g/d) have been let and the Saline Water Conversion Corporation has plans for a further 200 million g/d that it considers essential to meet expected demand.
Oil & Gas. Activity in the oil and gas sector has slowed because Saudi Aramco is close to achieving its current capacity expansion targets. The biggest project this year will be for the revamp of the Ras Tanura refinery, which could cost about $1,000 million.
Telecoms. Telecoms activity will get its biggest boost in more than 10 years when a contractor is appointed for the 500,000-line expansion of the national network.
Infrastructure. Residential property and hospitals are other active sectors. Five large public-sector hospital projects which are now under evaluation could get the go-ahead in the coming months. Commercial property development is driven by private-sector investors who have been very active in recent years.
Private sector. Observers say that another area to watch is private-sector initiatives to meet the government's financing needs. One example is an arrangement which will see the local Al-Rajhi Banking & Investment Corporation building and leasing accommodation to the Mohammad Ibn Saud Islamic university in Riyadh. Variations of this formula could be used to enable other schemes to go ahead.
THE snail's pace of Syria's economic liberalisation policy has meant that new projects of interest to international construction firms are thin on the ground.
Power. The only area to have seen vigorous activity is emergency power generation. Italy's FiatAvio has picked up contracts worth more than $300 million in total to install eight 125-MW gas turbines to provide power for Syria's two largest cities, Damascus and Aleppo.
Bids are also due soon for a Saudi Arabian-financed scheme to build a 1,000-MW thermal power station in Aleppo, the city which has seen the fastest economic growth in Syria in the past two years.
Oil & Gas. Otherwise most construction activity has been confined to the oil and gas sector where the main client is Syria's largest crude oil producer, Al-Furat Petroleum Company. The Syrian Petroleum Company has now entered the fray, moving ahead with a long-delayed scheme to develop gas fields in the Palmyra region.
The problems in moving ahead in other sectors are all too apparent from the difficulty the government has had finalising a Saudi-financed project to build an integrated steel complex near Hama. The delays in this scheme reflect the deficiencies of Syria's tendering procedures and the weakness of the country's economic administration.
The approval of two EC financial protocols has provided opportunities for European firms in the power, water, sewerage and agriculture sectors. Tenders are due to be returned this year for an EU-financed waste water scheme in Tartous.
BOOMING tourism and development projects in Tunis, Bizerte and other centres have provided a steady flow of work, mainly for local contractors. The government pursues only two or three major projects each year, which limits the potential for international contractors, but a mini-boom in the energy sector offers promise.
Hotel construction will provide contracts and jobs around the country, especially as relatively underdeveloped tourism regions such as the north coast and south are opened up.
Oil & Gas. Oilfield development provides a steady flow of contracts, and British Gas' development of the Miskar gas field, costed at $620 million, is the country's single largest project. Running parallel to Miskar are plans to develop a national gas grid. A contract for studies is now being contested between British Gas' Global Gas subsidiary and Gaz de France.
Private-sector. Economic liberalisation means the government is more open than before to private-sector projects. Financing for the Hammamet to M'Saken motorway, opened in early March, is linked to revenues from tolls. The government is now planning a 60-kilometre motorway from Tunis to Bizerte as a toll road. Studies are also under way for motorway links from Tunis to Medjez el-Bab and M'Saken to Gabes. The government has reserved nearly $7 million for these motorway studies for completion by 1997.
The list of important projects expected to take off in the next year includes construction of the 300-MW Rades-B power plant. Award of this estimated $300 million contract has been expected since orders for another 300-MW unit, at Sousse, were placed in 1993 with the UK/French GEC Alsthom group. Companies are also waiting for a decision on the project, to double capacity at Bizerte oil refinery.
The northern port city of Bizerte will see a range of schemes starting over the next year. These include the creation of a free trade zone on a 30-hectare site; construction of the motorway to Tunis; and a fixed bridge/tunnel link across Sabra bay. Pending a decision by the US' Sara Lee, Bizerte governorate could also receive one of the largest planned manufacturing schemes, a $65 million textiles plant.
TURKEY'S project market is an outstanding one by any standards. Imminent or recently awarded contracts amount to about $13,600 million worth of work, despite the budget austerity of recent years which has slowed spending after the 1980s infrastructure boom. The biggest five projects under way are alone worth about $5,005 million.
Significant new investment is required, particularly in the power sector, to keep pace with population growth and economic expansion in the second half of the 1990s. But state resources are stretched and capital investment is only 10.3 per cent of total budgeted expenditure in 1994. In consequence, more build-operate-transfer (BOT) projects, which are not a direct drain on the exchequer, are being negotiated, notably for power stations.
Power. In the power sector, the Turkish Electricity Board (TEK) has also been awarding conventional contracts for the expansion of capacity at power stations fuelled by lignite (brown coal), together with the installation of flue gas desulphurisation units.
Infrastructure. Elsewhere, foreign and Turkish contractors are relying on a staple workload of water supply and sewage treatment contracts, often funded by agencies such as the World Bank. Istanbul's chronic water shortages will finally be addressed after the approval of more than $1,000 million worth of Japanese financing for the construction of a massive supply network from the Melen river mouth on the Black Sea; and BOT negotiations are advanced for a $750 million water supply project for Izmit, which will also supply Istanbul.
Transport. In the transport sector, the large motorway construction programme, launched in the mid-1980s and including the second Bosporus bridge, is nearing completion. The network is to be extended westwards, and design and tender work is proceeding on bridges across the Dardanelles and Izmit bay. Istanbul and Bursa municipalities are making awards for the construction of metro systems.
Plans for a high-speed railway linked to a third crossing of the Bosporus appear to have been postponed indefinitely on cost grounds. Many other awards depend on the successful negotiation of commercial project financing, subject to treasury approval. This could prove increasingly difficult to secure in a market crowded by Turkish sovereign risk.
Turkey may yet earn a dividend from the Middle East peace process. Turkish firms may win work in the reconstruction in Gaza and the West Bank, and Lebanon. Relations with Israel have also blossomed since the January appraisal by Israeli President Weizmann of opportunities for co-operation in the massive southeast Anatolian development (GAP) project.
LAST year was the best ever for UAE construction. Turnover reached $6,500 million - or 18.2 per cent of gross domestic product - fuelled by heavy capital expenditure in infrastructure, hydrocarbon and real estate projects.
Over the coming two years, activity is expected to slow. Abu Dhabi's $6,000 million oil and gas expansion programme is winding down. A series of substantial power and desalination schemes are nearing completion. The fall in oil price will also inevitably affect government spending on new projects. As a result, local contractors expect market turnover to slip back to more normal levels of about $4,000 million in 1995.
Despite the anticipated downturn, there should still be plenty of opportunities for contractors. These include:
Power. Contractors expect only one major power station project to be tendered in 1994. This involves the estimated $50 million scheme to install back pressure turbines at Jebel Ali E and G stations in Dubai. Prospects are better for international consultancy firms. For Abu Dhabi emirate, forecasts suggest that a further 2,000 MW of generating capacity and 100 million gallon a day (g/d) of desalination will be required by 2000. Another station at Mirfa or Taweelah is a serious possibility. Dubai Electricity & Water Authority is considering building a new 400-MW plant at Al-Awir, while the federal Ministry of Electricity & Water (MEW) is looking at a 150-MW station in the northern emirates.
Hydrocarbons. The near-completion of Abu Dhabi's five-year programme to raise oil capacity by 600,000 barrels a day has shifted contractors' attention to the downstream sector. Two projects, first planned in the late 1980s, are still awaiting the green light from the Abu Dhabi authorities. These are the estimated $2,000 million expansion of the Ruwais refinery and a new grassroots ethylene complex costed at $1,000 million.
Infrastructure. A wide range of transport projects are likely to be tendered in the next two years. These range from the long-planned third crossing project in Abu Dhabi to a series of road upgrading projects in Dubai. In total, the projects are likely to cost $400 million to implement. A $900 million expansion of Dubai airport is also on the cards.
Leisure schemes. Recreational projects are set to dominate the local construction market in the short term. A masterplan has recently been completed for the $2,000 million Lulu island development scheme in Abu Dhabi. In Dubai, another theme park project, Magic World, is at a similar stage. An ambitious reclamation project is also under study. The Deira sea corniche development will involve establishing a new business and residential centre at a cost of about $600 million.
LOCAL building activity has been hit by Yemen's rumbling political crisis which has delayed decisions on any substantial investment proposals. Yet there are plenty of projects under design and waiting for the go-ahead, including a much-coveted multi-billion-dollar gas development project.
'The big question is, when will they take off?' asks one resident contractor. Financing is the biggest problem. In the key oil sector, development work has gone quiet in recent months. The largest oil contractor in the country, the Athens-based Consolidated Contractors International Company (CCC), has scaled down its presence. CCC is focusing on finishing jobs under contract and is not expecting any significant new commitments in the next few months.
Aden port. Politics has clouded the future of the largest infrastructure project, the self-financing $2,600 million plan to develop Aden port into an international hub. 'We are on hold because of the political situation. We are looking for a new person in charge,' says a source at Dumez, the French company which is trying to organise the scheme along build-operate- transfer (BOT) lines.
Hydrocarbons. However, all is not gloom and doom. international companies still view Yemen as a market with long-term potential. Gas development is the largest single investment prospect: Enron Corporation and a rival joint venture of US companies Hunt Oil Company and Exxon Corporation with South Korea's Yukong, are competing for the licence to develop gas production and liquefied natural gas (LNG) for export. The project is still at the feasibility stage but other companies already recognise its potential. Costain of the UK is about to form a joint venture with the local Thabet.
Government poverty means that it lacks the resources to fund projects but Arab donors are active again. The Kuwait-based Arab Fund for Economic & Social Development (AFESD), having cut aid during the Gulf crisis, is considering applications once again. Several infrastructure projects under design have attracted AFESD funding. Yemeni expatriate capital is also trickling back and some wealthy Saudis of Yemeni origin are backing infrastructure projects in Hadhramaut.
The World Bank is a major source of finance. Consultants are designing and bidding for a number of bank-funded water supply and road projects, which can go ahead if the political situation calms down and the bureaucratic processes can be completed.
One project stands out as a symbol of political success against the defeatism which now dominates debate. Designs are to start for the long-awaited Omani-funded road link to Dhofar, Oman's western border province. The 310 kilometres of road will be carved through mountainous terrain into Oman. It be will a symbol of reconciliation with neighbours rather than the rivalry which now divides the Yemenis themselves.
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