January 2016, saw a good start to the year for construction across the Middle East and North Africa (Mena) with power following closely second. A large number of agreements were also signed across the region suggesting contracts will follow.

MEED Projects recorded a total of 70 contracts being awarded with a value of around $16.8bn. This figure was approximately $3.8bn greater than the value of contract awards recorded for December 2015.

The biggest awards by sector were made in construction with MEED Projects detailing over S6.8bn followed by power. The biggest individual contract awarded was for the power project in Egypt valued at $2bn. By value UAE construction takes the largest share, followed by Oman power.

MEED sees momentum for the start of the new year but with pressure continuing to mount on major infrastructure schemes across the Middle East, pressing ahead will be challenging and heavily scrutinized.

In Egypt over 21 contracts were signed between Egypt’s President Abdul Fattah al-Sisi and China’s President Xi Jinping.

Algeria’s contract for the transhipment port is unusually large for the country and the agreements between the Asian parties will enhance movement of goods.

Iraq’s power signings are important, the equipment and maintenance contracts are part of the much larger $1bn project with the country struggling to provide the required output with demand for electricity falling far behind required output.

Saudi Arabia has continued its drive to maintain market share in the oil sector, despite suffering heavyly in revenue on the back of low oil prices. This will be tested following the December announcement in Saudi Arabia that the budget would be cut by 14%, with spending going to non-oil growth sectors, and the effects it will have to overcome in countering low oil prices. Saudi Arabia will have to keep a close eye on the budget and spending.

Globally Brent crude hit a 13-year low of $27.67 a barrel on 18 January, with many banks suggesting the remainder of the year will be low; suggesting budgeting will be critical.

On 20 January, the Washington-based IMF downgraded its growth projections for the Middle East and North Africa (Mena) region on the back of low oil prices and the economic outlook for 2016.

With this in mind, job cuts have been announced across oil and gas, healthcare, banking and rail putting a strain on resources along with the financing and lending for projects across sectors. Belt tightening will be felt and expectations are that only projects critical to development will be prioritized.

 

Chinese contractors win Algeria port project

  • China’s Shanghai Ports Group will be managing the planned transshipment port
  • Port to feature 23 docks capable of processing 6.5 million 20-foot containers and 26 million tonnes of goods per year
  • Contract is valued at an estimated $3.3bn
  • The project has a seven-year construction time-line, with initial services to commence within four years

Algeria’s Transport Ministry has signed a contract worth an estimated $3.3bn with two Chinese contracting firms for the design and build of a major transshipment port located between the cities of Cherchell in Tipaza and Tenes in Chlef.

The port is envisaged to feature 23 docks capable of processing 6.5 million 20-foot containers and 26 million tonnes of goods per year. 

The Transport Ministry expects annual port traffic in Algeria’s central region to peak to 35 million tonnes or two million 20-foot equivalent unit (TEU) by 2050.

 Joint venture wins Bahrain airport construction deal

Contractors also appointed for specialist systems on $1.1bn expansion project

The joint venture of Dubai-based Arabtec Construction and Turkey’s TAV has been awarded the contract to build the new terminal building as part of the $1.1bn expansion of Bahrain International airport.

It also involves managing contractors that have also been awarded specialist systems contracts. They are China’s CIMC for the passenger air bridges; Vanderlande of the Netherlands for the baggage handling system; US-based L3 Communications for the security screening equipment; and Finland’s Kone for the moving walkways, escalators and elevators.

A contract was also awarded to France’s SETEC for the design of a maintenance, repair overhaul (MRO) facility.

Once completed, the expansion project will increase the airport’s capacity to 14 million passengers a-year.

 GE wins Iraq power contracts

  • Deal is worth $328.8m
  • GE will install power equipment under fast-track programme
  • US firm will install equipment at 10 sites around the country

The total value of the contracts signed are worth more than $1bn, with financing already in place for the first stage of projects, which are worth $328.8m. The projects will add an additional 700MW capacity to the grid, to boost electricity capacity in Iraq..

In August 2015, Iraq’s Electricity Minister Qassem al-Fahdawi said peak demand in the summer had reached 21,000MW, while peak output was only 13,400MW.

Read previous contract awards.

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