Value of Abu Dhabi contract awards plunges to 2006 levels

21 November 2011

Market stalls as government clients continue to slow down spending

The value of contract awards in Abu Dhabi during 2011 has fallen from a peak of $62bn in 2009 to $13bn, which is below the $15bn of awards made in 2006.

The emirate’s projects market across all sectors has stalled this year as construction projects are delayed and put on hold, while national oil companies focus on delivery after awarding billions of dollars of new work in 2009-10.

“Abu Dhabi has been a disappointment this year,” says a UK-based contractor. “We were expecting to win quite a lot of work there. This has not materialised, so we are desperately looking for work elsewhere in places such as Qatar.”

Abu Dhabi contract awards
YearValue of awards ($ bn)
Source: MEED Insight

Government-controlled clients have delayed many of their project plans for this year. The latest major scheme to be delayed is Abu Dhabi’s Advanced Technology Investment Company’s (Atic) $6bn microchip plant. Globalfoundries is 97 per cent owned by Atic, with Atic being wholly owned by the Abu Dhabi government-controlled Mubadala Development Company.

The fabrication plant (fab), has been delayed due to the prevailing market conditions in the microchip sector. The plant would have supplied chips to Intel, but the US firm has put several of its planned facilities on hold, meaning the immediate viability of the plant is now uncertain.

When constructed, the fab will be managed and run by the Atic subsidiary Globalfoundries. The company confirmed the delay when contacted by MEED.

“Globalfoundries is committed to establishing a manufacturing and technology presence in Abu Dhabi, but it hasn’t established a concrete timeline, nor announced specific details about the facility,” says a Globalfoundries spokesman.

MEED reported in May that Germany’s M+W Group had been awarded the design and build contract for the project, which at the time was expected to start construction during 2011 (MEED 20:5:11.

Mubadala has also been slow to award other contracts this year. It is has been evaluating bids for most of the year for a new Four Seasons hotel on Sowwah island. Bidders submitted final offers in October after revised prices were given in July. The planned five-star hotel will be a 144-metre-high tower, with a gross floor area of about 100,000 square metres. Mubadala’s development of the surrounding infrastructure has also slowed, while bridges connecting Sowwah island to Abu Dhabi island have stalled.

At the end of 2010, Mubadala cancelled a tender for an estimated $1.36bn football stadium, which if it went ahead, would have been awarded this year. At the time, Mubadala sent letters to bidders saying the scheme has been put on hold by the government of Abu Dhabi.

Mubadala also suspended the MGM development planned for the Mina Zayed area of Abu Dhabi island last year, which, like the stadium, would have produced several major contract awards for 2011.

Another major Abu Dhabi government-controlled client to have slowed down on projects this year is the Tourism Development & Investment Company (TDIC). In July, it cancelled the tender for the structural package on the Guggenheim museum, which is planned for its Saadiyat Island development.

TDIC has also told consultants to stop working on its Al-Bateen Wharf East Marina development. It instructed the consultant Arif & Bintoak to stop working on the scheme in mid-October.

Delays are also expected on its estimated AED1bn Louvre museum project, as contractors wait for the main construction contract to be awarded. Contractors submitted bids for the work in November 2010 and TDIC shortlisted two groups for contract in March: Australia’s Multiplex; and a joint venture of the local/Australian Al-Habtoor Leighton Group with South Africa’s Murray & Roberts Contractors (Middle East).

There are also early signs the oil and gas sector is scaling back on awarding new work. Contractors say tenders for civils works on projects in the Western Region have been returned unopened as clients, such as national oil company Abu Dhabi National Oil Company (Adnoc), review projects and spending.

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