A shortage of resources will force clients to reassess project timetables and investment plans.
In December, Saudi Arabia's Water & Elec-tricity Company (WEC) announced it was delaying the deadline for bids for the Ras al-Zour independent water and power project (IWPP) by 12 weeks, from 10 February to 4 May.
According to WEC, the decision followed multiple requests from the prequalified companies for an extension.
The delay on the world's largest IWPP is a good indication of what is to come in the year ahead.
Booming activity in the power and water market means that both materials and contracting resources are in short supply, driving up costs. EPC contractors are already overstretched and the situation is likely to get worse before it gets better.
Developers are acutely aware of the fact that their ability to secure a contractor will determine whether or not they are in a position to bid for a project. They will do what they can to buy more time.
Time will also be a key consideration for turbine suppliers, which are feeling the pressure of the aggressive schedules set by the region's utilities. In particular, developers will struggle to source and install steam turbines on time. The Ras al-Zour IWPP has already been affected by global demand exceeding supply in the steam turbine market.
As a result, developers, EPC contractors and turbine suppliers alike will weigh their options carefully before committing their resources to a project. The region's utilities are eager to ensure that new power and water capacity is installed as soon as possible to meet rapidly rising demand. With many projects coming up for bid this year, contractors will need to decide which schemes are worth pursuing.
Judging by the lists of prequalifiers for the region's IWPPs, established developers have so far tried to maximise their options, with the same names appearing over and over again. In the later stages of the tendering process, some seasoned bidders are likely to drop out of the race for projects that they deem less attractive.
As the industry's biggest players find themselves unable to take on much more work, new entrants to the market may be better placed to do so. The recently established United Infrastructure Developers Company, a subsidiary of Saudi Arabia's Bemco, has prequalified for Abu Dhabi's Shuweihat 2 IWPP, for example. Spain's Union Fenosa has also positioned itself to bid for the project, as well as for Oman's Salalah IWPP and Yanbu and Ras al-Zour in Saudi Arabia.
Finally, uncertainty over feedstock supplies is likely to continue to cause concern. Plans to fuel power and water plants using natural gas may have to be abandoned in favour of oil or fuel oil-fired projects.
It is still unclear, for example, whether Bahrain's Addur IWPP will be gas or dual-fired. For all these reasons, the year ahead is likely to be characterised by more shortages and delays.
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