The extent of the squeeze on government spending was apparent in the budget released by the Finance, Economy & Trade Ministry in early April. It called for a 35 per cent reduction in capital expenditure to $475 million, out of which $125 million was earmarked for the new Doha International Airport. Bids are now under evaluation for the main terminal package by the client, the Ministry of Municipal Affairs & Agriculture. The three lowest bidders for the work are Jeddah-based Almabani General Contractors Company, Athens-based Consolidated Contractors International Company (CCC) and South Korea's Hyundai Engineering & Construction Company.

No budget allocation was made for the estimated $800 million Ras Abu Fontas C power and desalination scheme, which is now on hold. Its fate remains unclear. The government has talked about implementing the scheme on a build-operate basis and has also looked at a private sector power development at the industrial city of Ras Laffan.

The two largest contract awards since the start of the year have involved the construction of new industrial capacity at Umm Said. A German/Italian consortium of Krupp Uhde and Technipetrol was selected for the $430 million contract to build the ethylene dichloride (EDC) complex for the recently-formed Qatar Vinyl Company (QVC). The group will be assisted by CCC, which is the nominated subcontractor for all the construction works.

Another new entity, Qatar Hot Briquetted Iron Company (Qabico), has issued a letter of intent, worth $350 million, to a German/US group of Lurgi and Midrex to construct its 2 million-tonnes-a-year plant. State-owned National Oil Development Company (Nodco) has just awarded a $680 million contract to Lurgi and South Korea's LG Engineering for the expansion of its existing refinery.

Bids are also due to be submitted in mid-September for the construction of the $800 million grassroots petrochemical plant, planned by the joint venture of Qatar General Petroleum Corporation (QGPC) and the US' Phillips Petroleum Company. Three groups are vying for the lump sum turnkey contract: the US' Brown & Root with France's Technip; the US venture of Stone & Webster Engineering Corporation and Fluor Daniel; and US-based ABB Lummus Global with Japan's JGC Corporation.

Feedstock for the petrochemical plant will come from a new natural gas liquids station, known as NGL-4. QGPC is scheduled to release bid documents for the $300 million-400 million contract in mid-August.

Although 10 new hotel projects are planned, only three or four are expected to proceed in the short term. Financing has been secured for the 350-room Ritz Carlton hotel, to be built in West Bay by Qatar National Hotels Company. Arabian Construction Company (ACC) is expected to be awarded the main contract soon for the estimated $130 million facility. A new five-star Four Seasons hotel also appears to have good prospects of going ahead, as it is being backed by a leading member of the ruling family.

Other proposals include two four-star hotels. Bids for the first, a 400- room hotel to be managed by Holiday Inn, are under evaluation by the client, Sheikh Faisal Bin Qassim al-Thani. It will be part of the City Centre development in the Al-Daffna area of Doha. The other, being promoted by The Group, is a 270-room hotel costing $27 million, to be managed by the UAE's Rotana Group.

Finally, significant progress appears to have been made recently on one of the most ambitious developments, an aquamarine hotel in West Bay. Sources say that a preferred contractor has been selected for the privately-backed project, which will be 14-storeys high and have 500 hotel rooms, plus apartments.

IN a year in which oil revenue is likely to fall by around 40 per cent, it comes as no surprise that the government is moving to rein in capital spending. Little has been said publicly about precisely where and how swingeing the spending cuts will be, but it now appears that payments for ongoing public projects are being slowed down, while implementation of those approved or under planning is being delayed.

The slump in oil prices has, of course, been keenly felt by state energy company Saudi Aramco, which has provided a stream of valuable projects for contractors in recent years. At present, it has only two major projects in the tendering process: the $2,000 million Hawiya gas processing plant, which was retendered after bids came in earlier this year well above budget; and the Rabigh refinery upgrade, which has been slashed to an investment of about $800 million from the $1,800 million originally proposed. Bids were also invited earlier this year for construction of a 300,000-barrel- a-day gas-oil separation plant at Haradh. However, the estimated $150 million-200 million project, known as Haradh crude increment phase two, has now been deferred until the end of the year and is likely to be completely rebid.

State-controlled industrial giant Saudi Basic Industries Corporation (Sabic) has pushed ahead with its third expansion programme, letting a string of major contracts last year and in early 1998. Main contractors are still to be appointed for only a few elements of the programme. Saudi Petrochemical Company (Sadaf) is expected to invite bids soon for a co- generation unit; its plans for an aromatics complex remain unclear. Industry sources say the company's owners, Sabic and Shell, are still debating the viability of proceeding immediately with the project in light of uncertain demand in East Asia.

Al-Jubail Fertiliser Company (Samad) is considering three bids to build a 50,000-tonne-a-year (t/y) phthalic anhydride plant. The contenders include Germany's Lurgi, which carried out basic engineering and design for the project, and Japan's Mitsubishi Kakoki Kaisha, which last year completed construction of a di-octyl phthalate plant for the same client. An award is also expected soon for construction of a 1,500-tonne-a-day off-gas ammonia plant for United Jubail Fertiliser Company, a new joint venture among five Sabic affiliates.

Several private sector petrochemicals projects are also expected to make progress in the second half of the year. National Polypropylene Company (Teldene) is due to invite bids for an engineering, procurement and construction (EPC) contract on its 250,000-t/y project planned for Yanbu. Tahseen, a new venture developing a $415 million methyl tertiary butyl ether (MTBE) project, also in Yanbu, aims to complete registration procedures by the end of the year.

Italy's Snamprogetti is thought to be best-placed among three contractors which bid for a lump sum turnkey contract over two years ago.

In Jubail, National Industrialisation Company (NIC) expects to invite bids in the third quarter for a project management contract on its $300 million, 400,000-t/y propane dehydrogenation project.

In the power sector, a decision is still awaited as to how the 1,750- MW Shuaiba project will be implemented. Project sources say the client, Saudi Consolidated Electric Company for the Western Region (EWR), may contract for three of the five 350-MW units on a lump sum turnkey basis with payment to be deferred. The best-placed bidders are thought to be Mitsubishi Heavy Industries (MHI) of Japan and Zurich-based ABB Asea Brown Boveri. An option to build the plant on a build-own-operate (BOO) basis has now been put aside.

Plans for high-voltage interconnections between Riyadh and the northern region are moving ahead. The Electricity Corporation has invited bids to link Hail in the north with Qassim and Burayda in the central region with a 380-kV double-circuit overhead transmission line. Saudi Consolidated Electric Company for the Central Region (Sceco-Central) is expected to issue tender documents soon for a project to connect Riyadh and either Qassim or Burayda with a second 380-kV line.

Tumbling oil prices have proved no disincentive to the region's most prominent investor, Prince Alwaleed Bin Talal Bin Abdulaziz. His Kingdom Holding Company is expected to finalise a contract by late July for main construction work on the Kingdom Centre in Riyadh - an estimated SR 1,600 million ($427 million) commercial complex based around a 300-metre-high tower block. A contract to build the $70 million Kingdom Hospital for the same client was recently awarded to Athens-based Joannou & Paraskevaides (Overseas).

International construction companies are also in the chase for a contract to build a new SR 450 million ($120 million) headquarters in the capital for Sabic. Five bidders remaining in contention have been invited to submit revised proposals, with an award expected by the end of July.

Also in Riyadh, the Equestrian Club invited bids for main construction work on an estimated SR 600 million ($160 million) racecourse project. Saudi Oger is carrying out early works on the development.

INTERNATIONAL contractors have had little to excite their interest in Syria for a long time. However, there is finally one project that may change all that. Saudi Arabia's Prince Alwaleed Bin Talal Bin Abdelaziz has decided to invest $100 million in a new five-star hotel in Damascus, to be managed by Canada's Four Seasons Hotels & Resorts, in which he has a 25 per cent stake.

The project will be carried out by the Syrian Saudi Company for Tourism & Investment. The prince's Kingdom Holding Company holds a controlling stake. The government holds 25 per cent. The Lebanese Dar al-Handasah (Shair & Partners) is designing the 350-room hotel, and international contractors are expected to be invited to bid in early 1999.

Apart from this scheme, the construction sector offers few opportunities, except in connection with oil and gas projects, power stations and telecommunications.

CONTRACTORS need to be resilient to work in the Turkish market. There is no shortage of infrastructure schemes on the drawing board, but a shortage of funds can make tendering a long, drawn-out process.

Power projects are a top priority as the country struggles to double capacity by 2010. The government has opened up to the private sector, awarding concessions for the operation of power plants, but progress is being delayed by legal moves to block privatisation.

A decision is expected soon on Turkey's first nuclear power plant planned at Akkuyu on the Mediterranean cost. Three bids were submitted to Turkish Electricity Generation & Transmission Corporation (TEAS). The consultant is Spain's Empresarios Agrupados International.

A contract award is also due for the construction of the 1,400-MW Afsin- Elbistan C thermal power plant. Rather that issuing a new bid invitation, TEAS will select a contractor from those that submitted bids for the identical Afsin-Elbistan B power plant. That contract, worth $1,500 million, was awarded to a consortium led by Japan's Mitsubishi Heavy Industries (MHI). The second lowest bid was submitted by a consortium led by ABB Asea Brown Boveri. Industry sources say that Afsin-Elbistan C is likely to be awarded to ABB if it reduces its bid price to that offered by MHI for Afsin-Elbistan B.

Turkey's soaring energy demand has necessitated the laying of new gas pipelines. Local and Ukrainian firms have put in bids to build the Turkish section of a gas pipeline from Iran, which is divided into four contracts. State pipeline agency Botas has also tendered three projects to upgrade an existing pipeline from Russia and add a compressor to the new line being built from Iran.

In the west of the country, Botas has invited bids by the end of August for the construction of a 215-kilometre gas pipeline from Karacabey to Izmir, to meet gas demand in the Aegean region. The work is part of the Aegean natural gas project, which involves the supply of natural gas from Russia's Gazprom.

Railway projects are another priority. Bids have been submitted for the 2.5-kilometre Taksin to Unkapani section of the Istanbul metro, a project the municipality hopes will reduce the city's chronic traffic congestion. The low bid of $79.3 million came from a consortium of the local Yuksel, Guris, Basyacizoglu and Reha.

Four consortia have bid for the construction of the Turkish section of the Kars to Tblisi railway. However, the Georgian government is strapped for cash and is considering tendering its section on a build-operate-transfer (BOT) basis. If Georgia goes ahead with a BOT tender, the Turkish government is reported to be planning to retender the Turkish section on the same basis.

Controversy still surrounds the planned third bridge across the Bosporus. The government wants a bridge, while the Istanbul Municipality is lobbying for a sub-sea metro project in its place. The General Directorate of Highways is working on a feasibility study which should be completed by the end of the year.

THE award of almost $2,000 million worth of new work by Abu Dhabi National Oil Company (ADNOC) since January should ensure that after a contraction in activity last year, the UAE construction sector returns to growth in 1998. However, the revival may prove to be shortlived, given the outlook for oil prices and the fact that Abu Dhabi has put a freeze on all new projects coming out of the Khalifa Committee, traditionally one of the largest sources of new contract work.

Hopes for the immediate future will continue to rest with ADNOC. The state-owned oil company is expected to award by September an estimated $500 million contract for the supply and installation of unleaded gasoline units at the Ruwais refinery. This should be followed towards the end of the year by the selection of a contractor to undertake the $700 million ethylene package on the Ruwais petrochemical project for Abu Dhabi Polyolefins Company (Borouge), the recently established joint venture between ADNOC and the Copenhagen-based Borealis. A second package on the same development, covering the polyethylene works, is scheduled to be released for bid in late 1998.

Tendering on three other ADNOC projects is due to start over the coming six months. Bids have recently been invited for an estimated $50 million expansion of sulphur handling capacity at Ruwais. After several months of delay, bidding is all set to proceed on the $900 million Khuff gas development, which entails the delivery of more than 500 million cubic feet of offshore gas to neighbouring Dubai. Finally, ADNOC is likely to launch by year-end tendering on its $600 million ethylene dichloride (EDC) complex.

Outside the hydrocarbons sector, all eyes will be on Abu Dhabi Water & Electricity Authority (ADWEA), which is planning to select in September a developer for the UAE's first independent water and power project (IWPP), the Taweelah A-2 station. The successful bidder will take a 40 per cent stake in a new utility company, which will develop a 480-580 MW plant with 50 million gallons a day (g/d) of desalination capacity, on a build- operate basis. A second, larger IWPP may also be launched in late 1998 for a 1,000-MW and 100 million g/d grassroots station at Abudhayya, west of Abu Dhabi city.

With no new commercial buildings expected out of the Khalifa committee for at least a year, Abu Dhabi-based contractors will be focusing on the AED 430 million paediatrics hospital development and the forthcoming $500 million expansion of the emirate's two airports for the Public Works Department (PWD), as well as a clutch of headquarters projects planned by corporate clients. Emirates Telecommunications Corporation (Etisalat) is evaluating bids for its AED 120 million headquarters in Al-Ain and is due to receive bids on 1 August for a AED 200 million office development in the capital. National Bank of Abu Dhabi (NBAD) is close to releasing bid documents for a new AED 180 million head office, while an extension is under design for the Abu Dhabi Chamber of Commerce & Industry building.

Elsewhere, a slowdown in the Dubai hotel and high quality buildings market is anticipated, following three years of strong growth. Dubai Municipality will proceed with tendering the remaining packages on the estimated AED 600 million Jebel Ali to Sharjah ring road project and has also announced its intention to move ahead with a multi-million dollar development of Hamriya port, while Dubai Electricity & Water Authority (DEWA) is planning a 27.5 million g/d expansion of desalination capacity at Jebel Ali.

Leisure projects will also be to the fore. The local joint-stock company Emaar is expected to start construction work in the late summer of the AED 900 million Emirates Hills golf and housing development beside the existing Emirates golf club. The planned $500 million Magic World theme park scheme should also proceed once Ras al-Khor, another joint-stock company, has been formalised to oversee its implementation.

In Sharjah and the northern emirates, several new hotels are under design. A decision is also awaited on the estimated AED 400 million Sharjah trade centre project, which at 309-metres will be the tallest building in the emirate, if it is ever built. In Fujairah, a new $100 million naval base is out to tender, while studies are proceeding on a privately-backed ship repair yard at Dibba.

WORK is continuing in Aden on the country's most prestigious construction project, the estimated $190 million redevelopment of the port. Ports of Singapore Authority is due to finish work on the project by March 1999, and will then operate and maintain the port for 20 years. South Korea's Hyundai Engineering & Construction Company, which carried out the landmark Jubail harbour project in Saudi Arabia, has the estimated $150 million contract for construction of berths and quay walls. A project to upgrade the city's oil refinery has been held up due to problems raising finance.

Plans to develop natural gas reserves for export also appear to have run into the buffers this year, due to the economic crisis in East Asia, where marketing efforts were concentrated. France's Total, which is leading the Yemen LNG scheme, earlier this year said the project would be delayed until it found buyers ready to sign long-term take or pay agreements. However, the possibility of developing gas for domestic use is being explored. The UK's Kennedy & Donkin has recently started work on a masterplan for the government focusing on the economic viability of using local gas for power generation and direct supply to consumers. The study is due to be completed by the end of the year.

The government was expected to agree terms with the World Bank in late July for a proposed $60 million loan to finance new power projects. The loan will be used to finance construction of a new 30-MW plant in Sanaa, upgrading the existing 30-MW Dhaban plant to 50 MW and expanding the existing distribution network. The Dhaban work will be carried out by Italy's Ansaldo Energia. In the wastewater sector, bids were submitted in mid-June for an estimated $50 million-60 million project in Aden. The scheme is being financed by the German government.

Plans are also emerging for the development of Socotra, an island some 400 kilometres off Yemen's south coast. The government's plans to give the island free-zone status include a project to upgrade Mori airport at a cost of more than $50 million. The government is also considering proposals from the local Hayel Saeed Anam Group and Egypt's Orascom to set up a tourist resort. The Egyptian partner said earlier this year that the venture hoped to win a concession to develop up to 20 million square metres of land on the island where it would build an entire resort community complete with infrastructure. The project would be Hayel Saeed's second tourism venture. It is already building a 120-room four-star hotel in Taiz to be managed by France's Sofitel.