ISSUE 008 | OCTOBER 2014
finance
IN FOCUS
In a sweet spot ABB maps future growth in the Middle East
Sukuk on the rise Countries embrace Islamic finance
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p40
analysis
CONSTRUCTION
Infrastructure hotspots Qatar, UAE and Saudi Arabia top the list
Resource planning Manage better with project-based ERP
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p53
EXCLUSIVE INTERVIEW
The right balance
Zahid Group’s Amr Khashoggi on Saudi Arabia’s “incremental” strategy towards economic transformation
PLUS top 10 UAE INFRASTRUCTURE projects
79832 GE High Efficiency Print ad Pub: Infastructure Middle East Trim: 230mm x 288mm Bleed: 240mm x 298mm Live Area: 200mm x 258mm
INTRODUCTION
Efficiency doesn’t have to be a puzzle. With GE on your team, achieving high efficiency is easier to solve. By combining the power of advanced hardware, software and data analytics, you can boost efficiencies in both your GE assets and broader power plant operation. The results? Lower operating costs, better reliability and a stronger bottom line for your business. High efficiency solutions for your desired outcomes. Puzzle solved. Come see us at POWER-GEN Middle East, booth E2.
imagination at work
Follow GE Power & Water
events.gepower.com Š2014 GE Power & Water, a division of General Electric Company.
@ge_powergen 01
INFRASTRUCTURE MIDDLE EAST
June 2014
INTRODUCTION
Rail ahead GROUP GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP COO GINA O’HARA
PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5713 EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 5473 ASSISTANT EDITOR SHRUTHI SARAF shruthi.saraf@cpimediagroup.com +971 4 375 5715 CONTRIBUTING EDITOR ASHISH SARAF ashish.saraf@cpimediagroup.com +971 4 375 5495 SUB EDITOR AELRED DOYLE ADVERTISING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 433 2857 SENIOR SALES MANAGER JUNAID RAFIQUE junaid.rafique@cpimediagroup.com +971 4 375 5716 MARKETING MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DESIGN ART DIRECTOR SIMON COBON JUNIOR DESIGNER PERCIVAL MANALAYSAY CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH M rajeesh.nair@cpimediagroup.com +971 4 440 9147 PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713 DIGITAL DIGITAL SERVICE MANAGER TRISTAN TROY MAAGMA
ast month, Infrastructure Middle East visited Innotrans, courtesy of Alstom Transport, in Berlin. Covering 100,000 sqm of display area (including nearly 3km of outdoor displays), Innotrans, which is held every two years, is the biggest gathering for the global rail sector. What one couldn’t miss at the event, on the display floors and at the conferences, was the European dominance of key railway technologies and standards. One of the well-attended discussions was on the European Railway Traffic Management System (ERTMS) developed by eight members of the European Rail Industry, in close cooperation with the European Union (EU), railway stakeholders and the GSM-R industry. ERTMS is designed to replace the existing incompatible train control systems throughout Europe. Its benefits in terms of maintenance costs savings, safety, reliability, punctuality and traffic capacity has led to its widespread adoption outside Europe, especially in China, India, South Korea and closer home, in Saudi Arabia. Initiatives at the level of the European Union (EU) like Shift2Rail were also highlighted, their ultimate objective being to encourage a modal shift from road and air to rail for both passengers and freight. In fact, enhanced passenger experience is set to become a ‘crucial’ differentiator in attracting travellers to rail. For example, Alstom Transport’s pavilion showcased a passenger experience booth, where among other things, an interactive touchpad-cum-table and a smart glass window displaying relevant passenger information, saw visitors queuing up for a first-hand experience. Innotrans also provided sneak previews of ongoing railway projects in the Middle East. On display was the Innovia Monorail 300, a computer-controlled and driverless train built by Bombardier Transportation Systems for the new financial district in Riyadh. HE Mattar Al Tayer, Chairman of the Board and Executive Director of the Roads and Transport Authority (RTA) was a keynote speaker at opening session of the Rail Leaders’ Summit. During the panel discussion, he revealed that RTA will be sourcing 39 additional trains up to 2020 in order to improve passenger services. He also confirmed that on November 11, 2014, RTA will operate the initial phase of the Dubai Tram project, the first tram project outside Europe powered by ground electric cables.
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October 2014
INFRASTRUCTURE MIDDLE EAST
1
At the 2014 Construction Machinery Show we sold 70 units and 100 more units are under discussion. We have delivered a positive message to our existing clients, our competitors, and grabbed new clients. I think gaining such an appreciation from all members in the construction equipment sector is a great honour and will encourage us to work very hard to keep the same level of style, image, and standards.”
This year the CM Show team delivered an exhibition Saudi deserves. For years, we have seen a vision in this Show and this year the vision was achieved. We wanted quality traffic and we saw equipment and company owners; and we were able to offer some promotions to entice sales. I saw an increase in our sales immediately. Our principles, Doosan and Everdigm, really enjoyed themselves. We anticipate the upcoming years to be even better.”
The Construction Machinery Show was perfect from an awareness point of view. We explained Roots Group Arabia’s capability of covering the construction industry with all of its needs and requirements. The attendance was good especially during weekdays and towards the end of the exhibition. See you next year.”
Al-Qahtani & Sons Khaled El Shatoury, Managing Director
Saudi Diesel Equipment Ahmed Alkooheji, Marketing Manager
Roots Group Arabia Abdulaziz Felemban, Brand Manager
Co-located with
Raz Islam Publishing Director raz.islam@cpimediagroup.com Mobile: +971 50 451 8213
Michael Stansfield Commercial Director michael.stansfield@cpimediagroup.com Mobile: +971 55 150 3849
CONTENTS
008 October 2014 36
COVER STORY
REGULARS
The right balance
06 Regional update
Zahid Group’s Amr Khashoggi on Saudi Arabia’s “incremental” strategy towards economic transformation
DEWA moves ahead with Clean Coal; Saudi Arabia to study high speed rail
09 Global update
Panama Canal expansion delayed; Egypt taps public money for Suez canal project
10 In focus
Smart thinking in Milan; Rockwell Automation’s MENA strategy; Niche leadership; Veolia’s new concession
30
TOP 10 FEATURE
UAE infrastructure projects The UAE has been ranked the third most attractive country for infrastructure investment in 2014. Our top 10 line-up tells you why ALSO: GCC MEGA PROJECTS
23 Infrastructure tenders 52 The circular model Moving away from ‘take-makewaste’ to a smarter paradigm
58 Executive insight Costly corrosion
59 Events 60 Infrastructure milestones This month: King Fahd Causeway
INDUSTRY SECTORS ANALYSIS
TRANSPORT
34 Infrastructure hotspots
48 Hub strategy
UTILITIES
SPECIAL REPORT
40 Positive gains
54 Poland: Europe’s rising star
Qatar, UAE and Saudi Arabia are in the top 12 global markets for infrastructure investment
Tabreed CEO Jasim Husain Thabet on the GCC district cooling market ALSO: BETTER GENERATION
ABB’s Derek Duggan on making power plants more energy-efficient
The fastest growing economy in the European Union (EU) is keen to build its trade ties with the Middle East. Infrastructure ME reports from Warsaw
FINANCE
CONSTRUCTION
44 Sukuk on the rise
57 Resource planning
Countries, corporates and infrastructure projects are looking to tap sukuk for their borrowing requirements
04
Frost & Sullivan’s Srinath Manda provides a strategic insight into the transportation infrastructure in the GCC
INFRASTRUCTURE MIDDLE EAST
October 2014
Project-based ERP can help contractors manage projects better ALSO: GCC TO SPEND $9.53BN ON MEDICAL FACILITIES
REGIONAL UPDATE
The airport currently has a capacity of approximately 5m people annually. Once the two phases are completed, Al Maktoum International will be able to handle 200m passengers annually. Further development of DWC is also expected to pave the way for Emirates to relocate its intercontinental hub operations to DWC by the mid-2020s.
UAE Dubai Electricity and Water Authority (DEWA) has invited eight international developers to bid for the first phase of the Hassyan Clean-Coal Power Project. The tender closing date is November 26, 2014. The utility received 17 prequalification bids in response to the Request for Qualification released in May 2013. The first phase will have a capacity of 1,200 MW and is expected to become operational by 2020. Under the Dubai Integrated Energy Strategy (DIES), the emirate is aiming to diversify its energy mix by 2030 with clean-coal contributing 12%. “Such pioneering initiatives complement our efforts to carry out energy projects that meet the increasing demand for
Full capacity Dubai International Airport is expected to hit 100m passengers by 2020
energy in Dubai and support sustainable development,” said HE Saeed Mohammed Al Tayer, MD and CEO of DEWA. HH Sheikh Mohammed bin Rashid Al Maktoum, VicePresident and Prime Minister of the UAE and Ruler of Dubai, has endorsed the $32bn expansion of Al Maktoum
International airport at Dubai World Central (DWC). To be built in two phases, the first phase includes two satellite buildings with a collective capacity of 120m passengers annually. Phase 1 will accommodate 100 A380 aircraft at any one time and will take six-eight years to complete. The entire development will cover an area of 56 sq km.
has shortlisted 18 international consortiums and joint venture partnerships to bid for Segment 1.
Oman Takamul Investment Company, the downstream subsidiary of Oman Oil Company, has been named the exclusive Omani partner in the development of a major rare-earth project planned in the Special Economic Zone (SEZ) at Duqm. According to a report in the Oman Daily Observer, an MoU inked in June 2013 commits both parties to exploring the feasibility of setting up a $50m extraction plant at the Duqm SEZ with annual production capacity of 10,000 tonnes of rare-earth oxides. Feed material for the Duqm plant is proposed to be monazitebearing rare-earth mineral, which is a by-product of heavymineral-sands mining activities currently being pursued by a few countries located along
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Abu Dhabi Terminals will spend $108.89m over the next three years to expand the Khalifa Port Container Terminal to handle more cargo. A Gulf News report, quoting the company’s CEO Martijn Van De Linde, said the money would be spent on new cranes and increasing the yard capacity of the port. He said the port is expected to post a growth of over 20% in terms of its container business this year. Work is also underway for sea-side expansion.
In country value Bidders for rail projects in Oman must source locally or be disqualified
the Indian Ocean basin. Oman Rail has set 10% of bid value as minimum local procurement for the Segment 1 package of the national rail project. The 207km segment links Sohar Port with Oman’s border with the UAE at Buraimi. Tenderers who fail to meet the minimum threshold of 10% will October 2014
be disqualified from the tendering process. Segment 1 bidders can subcontract, outsource or procure their requirement of goods and services from the registered Omani firms. Proposals from the prequalified consortiums and joint ventures for the implementation of Segment 1 Design & Build package are due in by December 21, 2014. Oman Rail
Oman Oil Refineries and Petroleum Industries Company (ORPIC) has invited international and local contractors to prequalify for four packages linked to the implementation of the $3.6m Liwa Plastics Project (LPP) at Sohar Port. The invitation represents only the first part of a twostage process leading to the EPC tendering phase. Package 1 covers the construction of the steam cracker plant complete with offsite works and utilities; Package 2 comprises the construction of the PE and PP units; Package 3 is a natural gas liquids (NGL) extraction plant at Fahud; while Package 4 covers the construction of a 300km pipeline linking Fahud plant with LPP.
REGIONAL UPDATE
of Qatar’s Prime Minister and Interior Minister HE Sheikh Abdullah bin Nasser bin Khalifa Al Thani at project’s headquarters in Mesaieed last month.
Qatar HSBC Bank Middle East, Qatar has signed a $270m deal for contract-related finance facilities with Al Jaber Engineering Company to support Qatar General Electricity and Water Corporation’s (Kahramaa) pipelines for the Mega Reservoirs Project. A Gulf Times report quoted HSBC Qatar CEO Abdul Hakeem Mostafawi as saying the transaction reinforces the bank’s capabilities to provide “sophisticated infrastructure finance” in the local market. Al Jaber Engineering Company is currently engaged in a number of key large infrastructure projects in Qatar, such as the Doha Metro, the Orbital Highway and Kahramaa’s
Barzan Gas RasGas is all set to become Qatar’s largest gas producer
Pipelines for the Mega Reservoirs. The Mega Reservoirs Project is part of the government’s strategy to achieve water security for the country’s and preserve its water quality. The reservoirs will increase the capacity of the water reserve to seven days from one. The first phase of the $7.4bn New Port Project near Doha
is set to be operational by the end of 2016. The port will start with an initial capacity of 2m containers, which will eventually be increased to 6m by 2020. The 26 sq km project comprises of an economic zone, a commercial port and a naval base. The last precast concrete block of the new port’s quay wall was carried out in the presence
Train 1 of the Barzan Gas Project (BGP), a JV of Qatar Petroleum and ExxonMobil Corporation, will commence operation from the first quarter of 2015. BGP will play a significant role in meeting Qatar’s rapidly growing domestic energy demand. Once fully completed, Trains 1 and 2 will produce around 1.4bn cubic feet a day (bcfd) of natural gas from the North Field. The $10.3bn project is fully integrated from reservoir to customers. Construction work on Train 2 is expected to be completed by the middle of 2015. Barzan will also produce condensates, ethane, propane and butane.
FINISHED PRODUCT SALES HOSE & BELT MANAGEMENT HYDRAULIC TUBING & PIPING HYDRAULIC SYSTEM REFURBISHMENT GATES ENGINEERING & SERVICES
MENA Headquarters, Jebel Ali Free Zone Dubai, United Arab Emirates Telephone +971 4 886 1414 Fax +971 4 886 1413
FLUID POWER EQUIPMENT DESIGN & BUILD mena@gates.com <> Gates.com
REGIONAL UPDATE
Over a period of 12 months, NBK Capital will assess the funding requirements, determine the capital structure and negotiate preferential terms with lenders on behalf of KNPC to maximise the overall return of the project.
Kuwait In a bid to attract foreign investment, Kuwait has decided to suspend the offset clause under which foreign winners of government contracts are required to invest in the local economy. Kuwait’s finance minister, Anas Al-Saleh, admitted to Reuters that the scheme, in its present form, had become a hurdle to attracting foreign investment to Kuwait. A new business-friendly offset scheme is expected to be announced in the next six months. The existing programme, introduced in 1992, mandates that foreign companies must invest 35% of the contract value in an approved offset business venture. The obligations apply to military contracts of a value
Failed scheme Kuwait is planning a new offset regime to attract investments
equal to or above $10.5m, civil/ government contracts of a value equal to or above $35m and downstream oil/gas contracts. Kuwait National Petroleum Company (KNPC) has chosen National Bank of Kuwait’s investment banking arm to advise it on the financing options for its multibillion-
dollar Clean Fuels Project. The Clean Fuels Project is one of Kuwait’s strategic projects, aimed at upgrading and expanding the existing KNPC refineries at Mina Abdulla and Mina AlAhmadi. The project will help increase conversion of fuel oil to higher value products, in order to meet expected market demand and tighter specifications.
infrastructure for the project. “The contract is part of SRO’s plan to reduce the current travel time between Dammam and Riyadh from four and a half hours to less than three hours by increasing the average speed.
Saudi Arabia IFC, a member of the World Bank Group, will invest up to $100m in Saudi Arabia’s ACWA Power to boost the amount of power it generates from renewable sources in the Middle East and North Africa and the southern cone of Africa. IFC began working with ACWA in 2011, when it financed the company’s expansion into Jordan. IFC is also considering investing with ACWA Power in the 160MW Noor 1 project, in Ouarzazate, Morocco, which is the largest concentrated solar power project in the developing world. “We are committed to delivering electricity at the lowest possible price to support the social and economic development of emerging
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Kuwait will issue tenders for a project to expand Al Salmi motorway, which will link its northern Jahra province with the Saudi Arabian border, in early 2015. Minister of public works Abdul Aziz Al Ibrahim said the project would be executed in three phases. It would involve road expansion and the construction of new bridges and roundabouts. “Tenders for this project will be issued in the first quarter of 2015,” the minister said in a report by the Arabic daily Al Rai. The highway stretches nearly 100km to the border with Saudi Arabia.
High energy Power and oil & gas projects dominate Saudi Arabia’s investment spend
economies in MENA,” said Paddy Padmanathan, President and CEO of ACWA Power. “In particular, we hope to champion renewable energy in MENA and are excited by the possibilities that this partnership brings.” Spain’s Consultrans has been awarded a $1.5m contract by the Saudi Railways Organisation October 2014
(SRO) to carry out the feasibility study for a 480km high-speed railway line between Dammam and Riyadh. The 10-month contract will include the traffic movement study between the two cities and determine the line, comparing it with the existing main line, as well as the preliminary technical description of the
Power and oil & gas sectors dominated the value of awarded contracts during the second quarter of 2014. According to the National Commercial Bank’s Construction Contracts Index, the two sectors accounted for 60% of $22.64bnworth of contracts awarded during Q2. The concentration of contracts within the oil & gas sector in the Jazan region allowed it to capture 33% of the overall share by region. Jazan was the recipient of numerous megaproject contracts as part of Saudi Aramco’s development of the Jazan Refinery and Terminal project.
GLOBAL UPDATE
Round Up Grupo Unidos Por el Canal (GUPC), the consortium of international construction firms working on the $5.3bn Panama Canal expansion project, has secured $400m in financing needed to complete the project. The Panama Canal expansion involves the construction of a third lane of traffic allowing the passage of bigger vessels, which will double the canal’s capacity. The project, which was originally slated for completion this year, in time for the canal’s 100th anniversary, is now expected to be finished in 2015, with the opening in early 2016. According to the Panama Canal Authority’s (ACP) website, 79% of the project work is complete. The expansion of the canal will be able to provide passage for up to 80% of global shipping of Liquefied Natural Gas (LNG). The benefits of energy efficiency go well beyond the simple scaling back of energy demand, according to a new report from the International Energy Agency (IEA). The report, ‘Capturing the Multiple Benefits of Energy Efficiency’, shows that when the value of productivity and operational benefits to industrial companies are integrated into their traditional internal rate of return calculations, the payback period for energy efficiency measures drops from 4.2 to 1.9 years. However, IEA’s own assessments suggest that under existing policies, two-thirds of the economically viable energy efficiency potential available between now and 2035 will remain unrealised. IEA Executive Director Maria van der Hoeven said: “This report
Panama Canal expansion The new lane will open for shipping traffic in early 2016
lays out the case for governments to invest more time in measuring the impacts of energy efficiency policies, to improve understanding of their role in boosting economic and social development and to facilitate policy design that maximises the benefits prioritised by each country.” UK’s Airports Commission has shot down London Mayor Boris Johnson’s proposal for an inner Thames estuary airport as an option for providing new airport capacity for the city by 2030. Airports Commission Chair Sir Howard Davies said that implementing the plan would cost around $150bn, apart from tremendous economic disruption and environmental hurdles. He announced that the commission would choose among three remaining options by next
2014. Two of the proposals involve expanding existing runway capacity at Heathrow Airport, while the third calls for building a second runway at Gatwick Airport. The inaugural West Africa Investment Forum (WAIF) in Dubai last month concluded with a package of 17 infrastructure projects for the UEMOA (West Africa Economic & Monetary Union) region. In total, $19bn has been secured for projects in a range of sectors including roads, railways, bridges, checkpoints, dry-ports, airports, energy, food security and water, with a significant amount coming from UAE entities. The projects will be executed as public-private partnerships (PPPs) between the governments of the UEMOA member states and international commercial entities.
Public money Egypt tapped its citizens to raise funds for the Suez project in 8 days
October 2014
Trojan General Contracting along with Earth Capital have committed $16bn for equity participation in railway and road sector projects across the region. Other exposures include $1.98bn by Essar Projects, the UAE subsidiary of Essar Group in road, bridge, airport and thermal power plant projects in Benin, Guinea-Bissau and Niger; and $700m by Hasan Juma Backer Trading & Contracting of Oman in a dry-port development project in Cote d’Ivoire. A new International Renewable Energy Agency (IRENA) report has called for speeding up the adoption of renewable energy technologies to reduce carbon emissions and avoid catastrophic climate change. The first edition of REthinking Energy focuses on the global power sector and how technological advances, economic growth and climate change are transforming it. “While the outlook for renewable power is bright, we need to rethink the mechanisms which have, up to this point, brought renewables into the mainstream and prepare for the next stage of this global transformation,” said Adnan Z Amin, Director-General, IRENA. Egypt has raised the $8.5bn it needs to fund a project to expand the Suez Canal. The project includes a new 72-km lane parallel to the current canal to enable two-way traffic and a 76,000 sq. km international industrial and logistics hub supported by six new tunnels across the canal. The certificates came with a tenure of five years at 12% interest rate. Nearly 90% of the certificates were subscribed to by individuals, with local institutions and companies making up the rest.
INFRASTRUCTURE MIDDLE EAST 09
IN FOCUS
SMART GRID
Smart thinking in Milan
Siemens’ smart grid control room for Expo 2015 could offer valuable lessons for Dubai By Oliver Ephgrave
Energy balance Siemens has designed the energy management system for Expo Milano 2015
arlier this summer, Siemens launched a control room in its Italy office, equipped with the same software which will be used to manage the energy balance for Expo Milano 2015. The unveiling in Milan was attended by Infrastructure ME. Siemens’ software solution stems from its collaboration with Italian grid operator Enel Distribuzione, its strategic partner for smart grid technology at the Expo. The new software will be the digital heart of the smart grid and the technological infrastructure which acts as the nervous system for the entire Expo site. Speaking at the media event, Claudia Guenzi, head of the Smart Grid Division for Siemens, said: “Currently we are facing several challenges around the world. In Italy, there is the integration of renewable resources. These additional power generation capabilities are not controllable and create a lot of problems for the grid. It is now a
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October 2014
very complex situation… to manage this, it is important to put intelligence into the grid and we start to talk about the smart grid.” She explained that the Expo will be connected to the national grid, with minimal power generation stored within the site. “There will be several issues – the most important one is the management of peak avoidance and the second one is generation and demand. We are producing a lot of data… this has to be managed in a proper way… it needs to be transparent.” Guenzi moved on to describe Siemens’ solution. “The idea we have developed with Enel is to provide a kind of a cockpit for the management of the Expo, which is able to put together all of the information coming out of the system of a smart grid,” she said. “It allows you to take decisions to manage the balancing of the grid in terms of generation and load.” The operating status of all devices in the energy distribution grid can be viewed in real time, directly from the control centre. It is also possible to perform remote tasks,
while supporting routine and supplementary maintenance processes by alerting staff to possible faults and anomalies. The multi-lingual cloud-based interface is said to be user-friendly and was made available to all participating countries from May 1. It allows access to a full range of energy consumption, lighting and environmental climate data for each pavilion, from a smartphone. Siemens’ partnership with Enel is longstanding; they worked together on the vehicle charging infrastructure control system for an e-mobility project in Italy in 2009. Since then, Siemens’ Milan team has continued to develop its expertise in the area of electric transport, gaining accreditation from the German parent company in October 2013. In accordance with this expertise, the energy management system for Expo 2015 will also receive data from the technological platform controlling the charging infrastructure for the electric vehicles operating on the Expo site. Also speaking at the event, Siemens Italia President and CEO Federico Golla highlighted the challenges ahead. “We have a major technical challenge: getting the complex energy system of Expo up and running and doing it in an intelligent manner, reducing consumption and providing all users with easy access to services,” he said. After speeches from Golla and Guenzi, attendees were guided to a processional tunnel lined with displays of Siemens’ “mission into the future”. The performance of Milan’s smart grid will provide valuable insights for Dubai as it gears up to host Expo 2020. Golla believes that the data collected from the Milan event should be studied carefully. “I think we can help Dubai later on, on what was successful in Milan. Dubai should, and will be, in touch with the Italian organisation, and we are more than willing as a company to cooperate with Dubai and tell them what will be worthwhile in the years to come.”
seabury report
THE NEW GATEWAY TO THE GULF
IN FOCUS
AUTOMATION
Geared up for growth Rockwell Automation is eyeing opportunities emerging from the Gulf region’s fast diversifying economies s the Gulf economies diversify into nonoil economic sectors like manufacturing and heavy industry, the world’s biggest industrial automation player hopes to play an ever-increasing enabling role in that transformation. “We see the middle classes swelling in the Middle East as oil money permeates the economy through economic diversification and building up of infrastructure,” said Dominic Molloy, Director of Marketing EMEA, Rockwell Automation. “The middle classes are always looking to improve their living standards and quality of life, whether it is better education and healthcare or better consumer goods, which in turn creates a huge demand. It is estimated that $8tn worth of spend is created by the emerging middle class globally.” He continued: “We serve pretty much any industry you can think of but the main ones for us, in the Europe Middle East & Africa (EMEA) region, would be Consumer Packaged Goods (CPG), Food & Beverage (F&B), Life Sciences, Oil & Gas, Automotive, Water and Wastewater and Metals and Mining.” Molloy noted that different industries have different challenges but most of them are looking for ways to get their products to market faster, manufacture them in a more productive and sustainable way and drive profit and productivity in their business. For example, in F&B, the main challenge, from an automation standpoint, is building in flexibility and scalability because the sector is highly market-driven. On the other hand, in the life sciences industry, the challenge is to implement a secure yet easy track and trace system within a very tight regulatory environment. “We understand these issues because we are focussed only on automation,” said Molloy. “When we get up every morning, we
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don’t think about anything else, and more so in recent years, as we started becoming more industry focussed.” “As an organisation focused only on automation, we are able to inject good investment in countries where we are not that much diversified,” added Yahya Darwish, KSA Country Director - Sales, Rockwell Automation. “Unlike our competitors, we are not coming in and offering a whole basket of solutions. The fact that we are offering only automation allows us to minimise the risk of our investment and maximise the opportunities for success.”
“It is hard enough to find people equipped with skills, without asking them to be experts in four or five different control areas” DOMINIC MOLLOY, DIRECTOR OF MARKETING EMEA, ROCKWELL AUTOMATION Rockwell Automation offers a whole range of products and services, from component and system sales through system integrators and OEMs to turnkey engineering services. “We have the ability to be a Main Automation Contractor (MAC) and take on complete turnkey projects, integrate third party products and manage the full project lifecycle,” said Molloy. “In the end-user market, we promote Total Cost of Ownership (TCO). We tell them - it might cost a little more upfront but you have got to look at the value over the years.” In terms of driving automation trends, Rockwell Automation is a proponent of the single platform approach. Molloy explained: “Whether it is discrete control or hybrid or process or a mix of them
all, having one platform, in terms of both hardware and software, ultimately lowers your lifecycle costs because your spare holding goes down, the software packages you need to support it are less and training of personnel and maintenance becomes easier.” “End-users benefit from technology convergence and standardisation of communication protocols,” added Darwish. “There are no barriers in terms of proprietary systems. Our system is open enough to accept and read other’s systems the way they can accept and read ours.” A single platform also addresses the problem of skills shortage plaguing the industrial automation sector globally. “It is hard enough to find people equipped with skills, without asking them to be experts in four or five different control areas,” said Molloy. “When you are called into a breakdown situation, the last thing you want to be doing is looking through the manual. When you have one platform, you have unified programming, unified visualisation and ease of use.” “The other thing we are doing with our platform, from a big data perspective, is building in security in the network and in the architecture as well. We are also looking at predictive maintenance functions within the processes and I/Os. You will know if something is going to go wrong well in advance.” Darwish added that in safety applications, the trend is to go for completely integrated control and safety systems. Whether it is the Middle East or Europe or Africa, Rockwell Automation offers the same technology to all its customers. “The technology we sell is global,” said Molloy. “The thing that differ may be the levels of safety or the safety legislation but even that is beginning to standardise. Most companies today realise that a safe and secure working environment is not only a moral imperative but is also good for business especially from an employee productivity standpoint.”
October 2014
Infrast
Reduce energy losses by up to 30%? While increasing demand for power in the Middle East is a reality, the challenge is to achieve the goals sustainably and with minimal environmental impact. ABBâ&#x20AC;&#x2122;s smart grid solutions, energy efficient technologies and renewable innovations can help you be energy smart today and reduce energy losses by up to 30% from source to socket. www.abb.com/middle-east
Naturally.
PGME 2014, Hall 4, Stand No - A26 12 - 14 October, Abu Dhabi National Exhibition Centre, Abu Dhabi, UAE
Infrastructure middle east ad.indd 1
9/30/2014 1:36:59 PM
IN FOCUS
POWER BUSINESS
In a sweet spot As ABB maps its future growth opportunities, the company’s markets in the Middle East have much to offer BB is anticipating revenue growth of 4-7% through 2020. Helping the company achieve this forecast will be its Asia, Middle East and Africa (AMEA) market, which contributed 37% of the revenues in 2013. Last month, ABB presented its Next Level strategy and financial targets for the 2015-2020 period and also announced a $4bn share buyback programme. At the event, Frank Duggan, Regional Manager, India, Middle East & Africa and Head of Global Markets, who will lead ABB’s AMEA business from 2015, said the Middle East region in general and the Gulf in particular are hugely important for the company, as they are expected to post higher than average growth in the next five years. In 2013, the Middle East & Africa region contributed 21% of the total revenues in the power systems division, a segment which will continue to be one of the region’s strongest growth spots. Upcoming rail and airport infrastructure projects in the region are expected to provide more growth opportunities. Duggan spoke to Shruthi Saraf about the Middle East markets and future plans to capitalise on the region’s strengths.
Apart from these, ABB is involved in the massive Sadara project, a joint venture of Dow Chemicals and Saudi Aramco. We are the sole supplier of control systems for the project, which is coming up in Jubail.
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Where does ABB stand today when it comes to the Middle East region?
In the Gulf region, Saudi Arabia is a major asset base for us. We have 2,000 employees in the country and are building two new factories in Dammam. The UAE too is important for us, and part of our global headquarters is based in the country. We also have strong units in Qatar and Kuwait, and are planning to expand in Oman. Saudi Arabia and the UAE, though, are our base markets, and we will try to develop other smaller markets from here. In the wider Middle East, Egypt is a strong market for ABB, and also serves as a manufacturing and export hub. A majority of
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Are there opportunities for local manufacturing in the Gulf region?
Frank Duggan Regional Manager, India, Middle East & Africa and Head of Global Markets, ABB
ABB exports from Egypt go to Africa, and some into the Gulf. We are quite proud of the unit’s performance in the past three-four years. It had been quite stable even during the crisis and recently increased its turnover. In Iraq, we see a huge market opening up for our power and automation business in the field of utilities and infrastructure. All of these play onto the sweet spot of ABB’s capabilities and offerings. Could you tell us a bit more about the factories coming up in Saudi Arabia?
We are setting up a High Voltage Gas Insulated Switchgear (GIS) factory in Saudi Arabia. This facility will manufacture GIS up to 400kv for local consumption and exports. A fast-moving product, High Voltage GIS is currently being imported from different parts of the world including Japan, Europe and Korea. We hope to inaugurate the factory in February 2015. We are also investing in a transformer service workshop.
In Saudi Arabia, we have a good portfolio of local manufacturing, while the UAE is more of an engineering and services organisation. We do have a manufacturing facility in Dubai, but it is predominantly a sales, services and business development organisation. In the Middle East, the market is driven by the hydrocarbons business, which is now going downstream into the chemicals and petrochemicals chain. This, of course, is going to require a lot more engineering capability closer to the customers. I think the days when the Middle East waited for someone from Europe to do service is gone. Today, customers want services to be closer to them. What is ABB’s outlook for the region?
Excluding Egypt, the Middle East accounts for around $2.5bn in orders. The region is not a bigger market than Asia, especially if you include China, which alone brings ABB $6bn worth of business. However, we have a solid base in the Middle East and opportunities to grow. In fact, we have been quite narrow in some of the industries we dealt in so far, and would like to grow much broader into downstream industries. We have taken keen interest in training local manpower and also support our customers in their efforts in this regard. Our learning zone has been a vehicle for building solid relations with the customers on a long-time basis, with a focus on training local talent. While we have a strong Saudisation programme – over 30% of our local office staff are Saudi nationals – it has been a challenge to hire Emiratis and Qataris in their respective countries.
IN FOCUS
TURNKEY EXPERT
Niche leadership AES Arabia’s Asad Iqbal Khan speaks to Infrastructure Middle East about water saving trends in the energy industry sad Iqbal Khan, Manager – Business Development, AES Arabia believes that the region’s energy sector understands water security concerns better than any other industrial sector. “Whether it is power, oil & gas or petrochemicals, the energy industry in the Middle East is highly conscious of the fact that water is scarce in the region. There are strict regulations in Saudi Aramco, Sabic and Ma’aden about water reuse. Wastewater or brine has to be treated before being recycled or disposed.” He should know because AES Arabia is among a handful of regional leaders focusing on industrial water treatment in the energy industry. The Riyadh-based company provides turnkey water and wastewater solutions for power, oil and gas, mining and petrochemicals sectors. Key clients include the likes of Saudi Aramco, Sabic, Gasco, Total, ExxonMobil and PDO. “We design, engineer, manufacture, install and commission the whole plant ourselves,” said Khan. “We work mainly with the Engineering, Procurement & Construction (EPC) contractors and the end users.” Khan pointed out that there are different solutions for enabling efficient water use and savings in the energy sector, ranging from wastewater treatment to RO polishing to Zero Liquid Discharge (ZLD). He continued: “We recently worked on a project where all the process water from different sources like phenol washing or phosphate washing is treated. The water coming into the process is desalinated water; at the other end of the process, we are taking waste stream and treating it in order to recycle the water back into the process. This eventually contributes to water conservation.”
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Asad Iqbal Khan Manager – Business Development, AES Arabia
Industrial water treatment AES Arabia focuses primarily on energy and mining sectors
Khan added that the number of cycles of reuse depends on the application and the nature of contaminants in the water. AES Arabia has also carried out a successful implementation of a ZLD pilot project in Saudi Arabia. ZLD enables greater permeate recovery, while reducing brine volume and the associated disposal cost. Another area that AES Arabia is looking at is solar-powered desalination. “King Abdullah Centre for Science and Technology (KACST) is planning to build a solar desalination pilot project,” said Khan. “In the UAE, Masdar has already awarded contracts to set up pilot projects for desalination powered by renewable energy.” On the business front, Khan is confident that energy sector will continue to show a positive uptrend on the projects front. “Our markets are doing well,” he said. “In the past three years, I haven’t seen any project cancelled or put on hold in the energy sector. In the oil & gas industry itself, there is a lot of project activity in the UAE and Saudi Arabia.” However, AES Arabia is working towards expanding its footprint in the Middle East in general. Khan said: “In the MENA region, we are focussing on Algeria and Iraq. We have executed a couple projects for Sonatrach in Algeria, and are working on projects in Iraq with ExxonMobil.” Within the GCC, the company is planning to expand in Qatar and open a sales and service office in the UAE. So given the positive environment on the projects front, is the region’s industrial water treatment market for the energy industry attracting new entrants? Is competition on the rise? “This is a semi-niche market, and while there is competition, there aren’t too many players,” said Khan. “It is not an easy market to crack because you have to follow stringent standards, specifications; you need to have the technology and the approvals.”
October 2014
INFR
Merkur® German Technology Wooden poles systems
Leading lines power distribution
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in
Visit us in Dubai: Middle East Electricity MEE
Booth 5D30 hall 5 March 2nd - 4th, 2015
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Booth MD 20
March 2nd - 4th, 2015
Impregnation makes the main difference MERKUR® German Technology offers two ranges of wooden poles: Naturally grown round wooden poles PINUS SILVESTRIS are the common standard throughout the world for LV- and MV-power distribution lines, as well as telecommunication lines. INDUO iTP Engineered Timber Poles are the new state of the art poles with impregnation throughout and outstanding durabiltiy.
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INDUO iTP poles
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MERKUR®, one of the leading exporters for pole systems from Europe, completed 33 KV INDUO iTP Engineered Timber Pole Line in Sur, Oman. In recent years most of the supplies where made up by PINUS SILVESTRIS poles. Worldwide demand has been ever increasing recently making round wooden poles a scarce commodity with long acquisition time. In September 2014 MERKUR® has completed the installation of the newly developed state of the art MERKUR®-INDUO ITP Engineered Timber Poles. In cooperation with Mazoun Electricity Company SAOC and local contractors a feeder line from Al Ayjah grid station to the main 33kV stadium line in Sur was completed. The electricity corporation opted for the iTP engineered timber poles
Sheikh Zayed Road
P.O. Box: 31 303
because of the extremely hostile weather conditions which led to a lot of round timber pole line damage in the past, caused by extreme wind conditions during the cyclone seasons. During the execution of the project the client and the contractors where highly satisfied by the handling characteristics of the material and its overall performance. Meanwhile the approval process for the iTP pole technology has been started with the DCRP board in Oman. MERKUR®foresees a strong market for the INDUO ITP Engineered Timber Poles in the region in the coming years.
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03.10.14 13:18
IN FOCUS
STRONG MOMENTUM
Thriving on diversity 3M’s Manohar Raghavan explains how the company’s diversified technology portfolio has helped it tap into the region’s infrastructure boom hanks to rapid urbanisation, an estimated 65% of the population of the Middle East & North Africa (MENA) region will be living in cities by 2025. This trend necessitates huge investments in infrastructure necessary to sustain these cities. As a technologically diverse company operating through five distinct business groups, 3M is excited about the opportunities thrown up by the region’s urbanisation trend. “Infrastructure has always been an important market for 3M,” said Manohar Raghavan, Area Leader – Middle East & Africa, Strategic Planning, Marketing Excellence and Mergers & Acquisitions, 3M. “We have thousands of products on offer, from traffic signs and parking solutions to automated vehicle identification platform, tolling and public safety systems to cater to this market.” In the UAE, apart from Dubai, 3M is also present in Abu Dhabi, mainly to tap the emirate’s oil & gas opportunities. The company is present in Qatar, where it continues to enjoy the benefits of being a first mover after the country bagged the rights to the 2022 FIFA World Cup. In the case of Saudi Arabia, 3M thought it fit to establish a subsidiary in the Kingdom. “It is a massive operation out there,” said Raghavan. “We are now looking at increasing our local capability within the Kingdom.” Apart from the UAE, Qatar and Saudi Arabia, 3M is currently operating in Kuwait and Lebanon. Next on the radar is Oman. “We are looking at entering Oman because we see a lot of growth opportunities there, in healthcare and especially in consumer goods, thanks to the retail revolution underway in the country,” said the 3M Leader. “The ongoing port and airport modernisation programmes and the building of new road networks present
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Manohar Raghavan, Area Leader – Middle East & Africa, Strategic Planning, Marketing Excellence and Mergers & Acquisitions, 3M
exciting opportunities for 3M as also the focus on e-governance, where we see scope for our biometric solutions and signage.” Raghavan pointed to the fact that Oman is a large country with a growing population and steady economic growth. “When you consider these aspects, you realise the need to be there,” he said. “You need to be present to make yourself relevant to the customer.” Outside the Middle East, the company is looking at the African market, where it is investing in Kenya and Nigeria. 3M’s diversified portfolio of technologies and geographies has enabled it to successfully navigate the ups and downs in the global economy. “Being a diversified technology company means we are not at risk from a slowdown or downturn in one particular sector,” said Raghavan. “We are spread across multiple industries, from oil & gas, construction, aviation and infrastructure to consumer
goods, retail and healthcare. We are not dependent on one country or one segment or one set of customers.” The company’s approach to investment is guided by the dictum of being at the right place at the right time. He said: “Even during the slowdown, we have continued to invest, our Saudi operations being a great example.” Urbanisation apart, 3M is also keeping an eye on the region’s sustainable development action plans. “We have energy saving products like window films for cars and buildings,” said Raghavan. “Our renewable energy division offers products for solar and wind segments. For example, we have developed a film that can be laminated on the solar panels to improve efficiency by optimising solar absorption and reflection. Technically, it may only be a 2% improvement but even that is a massive saving potential.” Raghavan ascribed 3M’s technology leadership to the company’s ability to combine its core technologies and collaborate in different ways to address customer pain points. “That’s why we have established customer innovation centres in the UAE, Saudi Arabia and South Africa,” he explained. “One of their main objectives is to look at the pain points of the customer and come up with solutions. We call this customer-inspired innovation. We are planning to set up two more of such centres in Dammam and South Africa.” On the whole, 3M is positive about sustained growth in its key Middle East markets, and particularly, the Gulf region. “Whether it is Expo2020 or GCC Rail, the countries in the region are serious about long-term economic viability,” said Raghavan. “The development of infrastructure to support urbanisation means more growth and more jobs. Moreover, the UAE has been very successful in its efforts to diversify away from the oil economy. Other countries in the region too are moving in the same direction.”
info@aesarabia.com
IN FOCUS
WATER REUSE
Veolia bags wastewater deal Veolia’s local venture Moalajah will manage and maintain wastewater facilities within Dubai Sports City’s 4.65m sqm mixed-use development eolia, through its local operations and maintenance company Moalajah, has been appointed to manage, maintain and enhance wastewater facilities within Dubai Sports City (DSC) for a period of 10 years. Veolia will operate and maintain DSC’s sewerage treatment plant, and the resultant high-quality recycled wastewater and treated effluent will be used to irrigate the array of sports facilities and gardens within the 4.65m sqm mixed-use development. This includes The Els Club’s 18-hole championship golf course and the ICC Academy’s two full-sized cricket ovals and adjoining practice pitches, plus the Dubai International Stadium, the numerous football pitches used by the Spanish Soccer School’s coaching programme and the rugby pitches. Commenting on the agreement, Dubai Sports City’s Chief Financial Officer Vijjay Sajjanhar said: “We have already been recycling our wastewater, but alongside Veolia’s local operations and maintenance company Moalajah we look forward to this area of operation going from strength to strength. With the number of people living and playing sport within Dubai Sports City growing rapidly, this form of recycling is the ideal way to ensure the environment for these people remains world-class. The contract was awarded by GIFM, who hold the Master Concession Agreement, based on excellent results achieved regionally and globally by Veolia. We look forward to working closely with its local team over the next decade.” Xavier Joseph, CEO, Gulf Countries, Veolia, said: “Our win is based on an outstanding track record of providing innovative solutions for the recycling and recovery of water, waste and energy. Our pioneering systems produce secondary resources, which further complements
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October 2014
The Els Club in Dubai Sports City Veolia will supply treated wastewater to irrigate the golf course
our collaborative activities in each region, enabling us to close the loop of value creation at every stage of the resource life cycle.” Dubai Sports City wastewater assets include a sewerage system, a pumping station and a 25,000 m3/day sewage treatment plant based on Membrane Bio-Reactor (MBR) technology. In addition, Dubai Sports City also has an 800 m3/day reverse osmosis (RO) plant adjoining the sewage treatment plant in order IN NUMBERS
10 years
Duration of the contract
25,000 m3/day
Capacity of Dubai Sports City’s existing sewage treatment plant
800 m3/day
Capacity of RO polishing plant
to supply polished water to other clients. “In addition to efficient recycling of wastewater, we look to improve the operations and maintenance of the plant,” said Joseph. “Moalajah’s key focus will include professional assets maintenance and operations of the Dubai Sports City plant on a 24/7 basis, ensuring its reliability and performance to ensure continuous supply to off-takers. Our experience will contribute to the optimisation of operational costs and capital maintenance expenditures on behalf of the concessionaire.” The treated water will also be available for use by companies and communities outside of DSC, as required. “Using our innovative solutions, the highquality recycled wastewater will be used for various purposes including irrigation of a vast array of sports facilities and gardens, district cooling and industrial purposes,” said Joseph. “Service levels include Moalajah’s ability to supply treated effluent in quantity and quality that comply with the stringent requirements of Dubai Sports City.” Veolia is expected to bring its long-term experience in managing such concessions in the UAE and Oman to the DSC contract as well. The company operates major concessions in Abu Dhabi (Al Wathba 2 Independent Sewage Treatment Plant) and Ajman (Ajman Sewerage Project). The Al Wathba 2 plant produces approximately 300,000 m3/day of treated water per day for farming, livestock and Abu Dhabi’s parks and gardens. VeBes O&M (a joint venture between Veolia and Besix) is the operating and maintenance company of the project under a 25-year concession. In the case of Ajman, Moalajah has been given a 27-year contract to manage the wastewater services (from collection to treatment) of the emirate’s capital. In Oman, Veolia is operating and maintaining the water facilities owned by Majis Industrial Services, which provide water and wastewater services to the industrial users of the port of Sohar.
Worldwide Suppliers of Specialist Electrical Equipment Are exhibiting at
Come and visit us on the IDC Stand, Hall 2 - Stand 2310 R&M Wholesale Electric LLC was set up to revolutionise the distribution and supply of Industrial and Hazardous Area electrical equipment and cables to major oil and gas projects in the region. R&M Wholesale Electric is a fully fledged joint venture between the UK’s R&M Electrical Group and Wholesale Electric Supply of the USA, combining the geographic strengths and capabilities of two of the world’s leading electrical distributors to offer a service and capability that is unique in the Middle East. Operating out of Dubai and Abu Dhabi our operations in the region have recently been expanded with the launch of a new joint venture partnership with Siraj Naybur in Basra – Iraq.
R&M Wholesale Electric LLC (Dubai) M-03 Al Joud Centre , Al Quoz 1 PO BOX 282566, Dubai Tel: 00971 4 346 8240 Fax: 00971 4 346 8241 Email: sales.uae@rm-electrical.com
R&M Wholesale Electric LLC (Abu-Dhabi) Office No. 11 Mussafah MW5 / 14, Abu Dhabi Tel: 00971 2 550 3370 Fax: 00971 2 550 3220 Email: sales.uae@rm-electrical.com
Siraj Naybur (Iraq) Manawi Basha, Basrah Iraq Tel: 00964 781 1125188 Email: info@sniraq.com
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50Hz Slope Technology offers partial dischage diagnostics representative of 50 Hz network frequency. TDS NT unit offers both VLF and Damped-AC voltage source. Megger Limited Dubai Internet City, Dubai, UAE T: 00971 4443 5489 E: mesales@megger.com www.megger.com
MIDDLE EAST INFRASTRUCTURE TENDERS
Infrastructure Tenders Our monthly analysis of new tenders and key projects across the region
METRO PHOTO
AL SUWAIQ INDEPENDENT POWER PROJECT (IPP)
MAKKAH MASS RAIL TRANSIT SYSTEM
SITRA REFINERY UPGRADE & EXPANSION PROJECT
INNER DOHA RE-SEWERAGE IMPLEMENTATION
BUDGET: $1,500,000,000
BUDGET: $16,000,000,000
BUDGET: $6,000,000,000
BUDGET: $2,700,000,000
Territory: Oman Client Name: Oman Power & Water Procurement Company (OPWP) Description: Build-Own-Operate (BOO) contract for a 3,000-3,500MW power plant. Period: 2018 Status: New Tender
Territory: Saudi Arabia Client Name: Makkah Mass Rail Transit Company Description: Development of a Metro system comprising four lines with total length of 188km and 88 stations. Period: 2020 Status: New Tender
Territory: Bahrain Client Name: BAPCO Description: EPC contract for upgrading and expanding production capacity of Sitra refinery from 262,000bpd to 360,000bpd. Period: Not Available Status: New Tender
Territory: Qatar Client Name: ASHGHAL Description: Building a series of deep tunnels for wastewater that will serve the Doha South catchment area over the next 50 years. Period: 2018 Status: New Tender
POWER PLANT
MASS RAIL
REFINERY
October 2014
WASEWATER PIPES
INFRASTRUCTURE MIDDLE EAST
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MIDDLE EAST INFRASTRUCTURE TENDERS
Top Tenders UAE LIQUEFIED NATURAL GAS EMISSION REDUCTION PROJECT – DAS ISLAND Project Number: MPP2639-U Client Name: Abu Dhabi Gas Liquefaction Company Limited (ADGAS) Address: Corniche Street, Abu Dhabi Phone: (+971-2) 606 1111 Fax: (971-2) 606 5500 Website: www.adgas.com Description: Engineering, Procurement and Construction (EPC) contract for the development of new flaring and Liquefied Natural Gas (LNG) emission reduction in Das Island. The flaring and emission reduction project will be designed to reduce carbon dioxide and sulphur dioxide emission at Das island plants that produce LNG, Liquefied Petroleum Gas (LPG), paraffinic naphtha and sulphur. The site currently flares an estimated 10-15m cubic feet a day (cfd) of waste gas. The scheme is currently being re-designed and the FEED is in progress. The Invitation to Bid for the EPC contract is expected to be issued in the third quarter of 2014. Status: New Tender Tender Categories: Oil & Gas Processing & Distribution
Description: EPC contract to build a new oil storage terminal with capacity of 179,000m3 scheme in Hamriyah Free Zone, Sharjah.The company stores Liquefied Petroleum Gas (LPG), naphtha, gasoline, kerosene, aviation turbine fuel, diesel oil, heavy lube distillate, fuel oil and asphalt. Bids have been submitted for the main EPC contract by Overseas AST, Al Banna Engineering, Topaz Marine Engineering and Al Hassan Engineering. Evaluation of bids is currently underway. Period: 2015 Status: New Tender Tender Categories: Gas Processing & Distribution
KUWAIT PASSENGERS BUILDING CONSTRUCTION PROJECT – KUWAIT INTERNATIONAL AIRPORT Project Number: ATR085-K Client Name: Ministry of Public Works Address: Ministry of Public Works Bldg., 3rd Floor, 6th Ring Road, Safat 13001 Phone: (+965) 2538 5520 Fax: (+965) 2538 5219 Email: hmansour@mpa.gov.kw
OIL STORAGE TERMINAL PROJECT – HAMRIYAH FREE ZONE Project Number: MPP2813-U Client Name: Sharafco Group (Sharjah) Address: Behind Sharjah Cement Factory, Al-Sajaa Industrial Area Phone: (+971-6) 531 0786 Fax: (+971-6) 531 0787 Email: info@sharafcogroup.com Website: www.sharafcogroup.com
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INFRASTRUCTURE MIDDLE EAST
October 2014
Website: www.mpa.gov.kw Description: Construction, completion, furnishing and maintenance of the passengers building at an airport. The tender closing date has been extended from the previous deadline of June 30, 2014. Status: New Tender Tender Categories: Airports, Construction, Contracting
NATIONAL RAILWAY NETWORK PROJECT Project Number: SPR791-K Client Name: Ministry of Communications Address: Jamal Abdulnasser Street, Shuwaikh, Safat 11111 Phone: (+965) 2481 9033 Fax: (+965) 2484 7058 Website: www.moc.kw Description: Build-Operate-Transfer contract for the construction of a national railway spanning 511km including five passenger and freight lines. The Ministry of Communications has received prequalification documents from consultants for the project management role and intends to prequalify atleast 12 companies that will be able to tender for this role. The scheme had been put on hold in 2013 after the Ministry ordered a review of plans, whether the scheme should be procured as PPPs or developed through direct government procurement. It was revived as a PPP in February 2014 and scheme went to final design.
Period: 2018 Status: New Tender Tender Categories: Industrial & Special Projects; Public Transportation Projects
TERMINAL 2 PROJECT – KUWAIT INTERNATIONAL AIRPORT Project Number: SPA/214-K Client Name: Ministry of Public Works Address: Ministry of Public Works Bldg., 3rd Floor, 6th Ring Road, Safat 13001 Phone: (+965) 2538 5520 Fax: (+965) 2538 5219 Email: hmansour@mpa.gov.kw Website: www.mpa.gov.kw Description: Design and construction of a new Airport Terminal comprising 30 to 51 gates, a transit hotel, VIP and first-class lounges as well as car parking for 4,500 vehicles. In June 2014, the project was put on hold after most firms quit the bidding process due to tough conditions related to offset programme, guarantees and execution. Only six out of the 19 pre-qualified firms had purchased the tender documents. The client has since revived the project and invited bids for the main construction contract. Period: 2017 Status: New Tender Tender Categories: Construction & Contracting, Airport
MIDDLE EAST INFRASTRUCTURE TENDERS
WASTE WATER TREATMENT
UMM AL-HAYMAN SEWAGE TREATMENT PLANT PROJECT – PHASE 2 Project Number: ZPR608-K Client Name: Partnerships Technical Bureau (PTB) Address: Touristic Enterprises Co. Bldg., 2nd Floor, Al-Jahra Street Phone: (+965) 2496 5900 Fax: (+965) 2496 5901 Email: infor@ptb.gov.kw Website: www.ptb.gov.kw Description: Construction of a sewage treatment plant with capacity of 200,000m3/day at Umm Al-Hayman - Phase 2. The project is still under planning with the client delaying the launch to 2016 upon completion of Phase 1. The objective of the Umm Al-Hayman project is to mitigate the negative impact of the increasing discharge of raw wastewater into the environment Period: 2016 Status: New Tender Tender Categories: Power & Alternative Energy Water Works
QATAR
Address: Corniche Street, Number 61, Sheraton Roundabout, Dafna Area, Doha Postal/Zip Code: 41 Phone: (+974) 4484 5484 Fax: (+974) 4484 5496 Email: contactus@km.com.qa Website: www.kahramaa.com.qa Description: Construction of 149.9km pipelines for mega reservoirs corridor-Main 2. There were two separate packages for material supply ,construction, testing and commissioning of water mains and fibre-optic cable ducts within the Southern length of the Qatar National Utility Corridor from PRPS 3 (Rawdat Rashid) to connections to the existing mains from Ras Abu Fontas. Package A was awarded to Al Jaber Engineering while China Harbour Engineering Company was awarded a contract to install pipeline for Package B. A consortium comprising of local Boom Construction and Lebanon’s CAT Group was awarded a contract for material supply, construction, testing and commissioning of water mains around the city of Doha. The project is expected to be completed by 2016. Status: New Tender Tender Categories: Water Works
Project Number: WPR394-SA Client Name: Ma’aden Phone: (+966-1) 874 8000 Fax: (+966-1) 874 8300 Website: www.maaden.com.sa Description: Construction of a water and waste water treatment plant at Waad Al Shamal Mining City in Al Hail to serve the 440 sq km industrial city. Negotiations and signing of the final contract are likely to be completed by October 2014. Construction work is expected to be completed by the second quarter of 2016. Status: New Tender Tender Categories: Sewerage & Drainage, Water Works
the implementation of major modifications to the existing refinery at Ras Tanura to comply with the new environmental regulations and produce higher-grade clean fuels. Jacobs Engineering is the FEED consultant. Awards for the site preparation package, the off-sites and utilities package, naphtha and aromatics processing packages are expected to be issued in the first quarter of 2015. Evaluation of the EPC bids is currently underway. Period: 2017 Status: New Tender Tender Categories: Gas Processing & Distribution Industrial & Special Projects Oilfields & Refineries
RAS TANURA REFINERY CLEAN FUELS & AROMATICS PROJECT Project Number: ZPR413-SA Client Name: Saudi Aramco Address: Dhahran 31311 Phone: (+966-3) 872 0115 Fax: (+966-3) 873 8190 Website: www.saudiaramco.com Description: EPC contract for
PRODUCED IN ASSOCIATION WITH MIDDLE EAST TENDERS
REFINERY
MEGA RESERVOIRS CORRIDOR -MAIN 2 PACKAGES A&B Project Number: GTC/599/2013-Q Client Name: Qatar General Electricity & Water Corporation (Kahramaa)
SAUDI ARABIA WATER & WASTE WATER TREATMENT PLANT
October 2014
INFRASTRUCTURE MIDDLE EAST
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GCC MEGA PROJECTS
GCC MEGA PROJECTS
After China, if there is any other place where Mega Infrastructure Projects are the flavour of the season, it is the Gulf Cooperation Council (GCC) region. The GCC’s infrastructure narrative is fundamentally driven by ‘national vision strategies,’ tied to long term economic and social objectives. Infrastructure ME brings you the kaleidoscope of projects and data that make up this story 26
INFRASTRUCTURE MIDDLE EAST
October 2014
GCC MEGA PROJECTS
RAIL LEADS
BROADBAND
GCC infrastructure spend leaps in 2014 nfrastructure project awards across the GCC are forecast to exceed $86bn in 2014, an increase of 77.8% over 2013. New figures released by construction intelligence firm Ventures Onsite show a dramatic increase in contract awards across the region, in every country except Saudi Arabia. Qatar will award projects worth $26.2bn compared with just $9.4bn last year while Kuwait is expected to award $3.45bn, almost 10 times the previous year. In the UAE, $15.18bn will be awarded, almost five times the 2013 contracts, while in Oman infrastructure awards are expected to reach $7.4bn - up $5.5bn on 2013. Meanwhile Bahrain, which awarded $382m last year, is expected to award $3.4bn. Saudi Arabia’s forecast award of $29.34bn – the highest in the region – represents a decrease year on year, however last year’s total awards of $33.6bn included the $22.5bn Riyadh Metro project. Infrastructure projects make up 16% of the total construction value of GCC projects, and rail projects like the Riyadh
I
Metro are the main beneficiary. According to Ventures, it is estimated that the rail sector is worth $200bn as the six countries aim for an integrated GCC-wide network by 2018. The value of UAE’s building construction sector stands at almost 60% of the total projects in the construction industry, followed by infrastructure, oil & gas and power and water, with total construction projects awarded in the UAE totaling $38bn in 2013. Ventures expects $46bn in awarded projects in the UAE by the end of this year. The April 2014 report by the consultancy, titled ‘Exploring UAE’s Strong Investment Environment’, remarks that the new projects, combined with many previously stalled projects now forging ahead, will continue to bolster the 2013 upswing into 2014. The report remarks that the UAE’s GDP for 2014 is set to grow at 4% to reach $404bn, up from $390bn in 2014, fuelled by the construction sector upturn and support from the oil & gas sector. Retail sector growth, which is forecasted to hit 33% by 2015, has emerged as a key driver of the construction market. New developments on the horizon include Dubai’s recently announced ‘Mall of the World’ entertainment and hotel district at an estimated cost of $6.8bn.
*TABLE 1: ESTIMATED VALUE OF AWARDED INFRASTRUCTURE PROJECTS ($M) IN GCC COUNTRIES IN 2014 COMPARED TO 2013 YEAR
QATAR
KSA
UAE
BAHRAIN
OMAN
KUWAIT
2013
9,426
33,609
2,939
78
1,922
382
2014
26,258
29,387
15,184
4,360
7,375
3,451
*TABLE 2: TOTAL VALUE OF GCC INFRASTRUCTURE PROJECTS (IN VARIOUS STAGES) BY COUNTRY, AUGUST 2014 COUNTRY
QATAR
KSA
UAE
BAHRAIN
OMAN
KUWAIT
Value in $m
103,022
163,022
95,121
14,270
32,121
32,871
*Figures released by Ventures Onsite, the intelligence partner for Middle East Concrete and PMV Live exhibitions co-located with The Big 5
ETISALAT UPGRADES BROADBAND PACKAGES Etisalat’s investments in broadband has enabled it to up the ante in the business segment. The telecom major recently boosted broadband speed up to 2.5 times for no extra cost for its business customers in the UAE. In a rapidly changing business landscape with technology advancements, proliferation of social media and increasing number of business applications, highspeed broadband connectivity is a crucial requirement for increased business productivity and profitability. Salvador Anglada, Chief Business Officer at Etisalat said, “To support this demand and the nation’s ICT vision, Etisalat has invested billions in developing a solid fibre-optic infrastructure. For over 30 years, we have backed businesses in the UAE with technology, connectivity and innovative solutions customised to business needs across industry verticals. As a one-stop integrated technology partner, we want to help you take your business to the next level. The double speed upgrade is our promise and commitment to make our technology work for you and grow your business, allow you to do more and stand out from your competition.” Under the scheme, Etisalat is doubling the speeds of its existing business customers, at no additional charge. As an example, business customers subscribed to 4Mbps speed will be automatically upgraded, free of charge, to 10Mbps broadband speeds. “Among other benefits, Etisalat’s speed upgrades on its fixed-line network will provide faster and extremely reliable fixed-line Internet connection, ensuring increased efficiencies, better global connectivity, reduced costs and improved customer service, resulting in increased profitability,” added Anglada. John Lincoln, Senior Vice President, Small and Medium Business, Etisalat, said: “Etisalat’s dramatic upgrades on both download and upload speeds is a double whammy for your business. It gives you the extra professional edge with much higher speeds and makes businesses futureready. Because there is no extra cost for the upgrades, it also results in huge savings and thereby increased profitability. October April 2014
INFRASTRUCTURE MIDDLE EAST
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GCC MEGA PROJECTS
TOP MEGA PROJECTS RANKED BY SECTOR & VALUE AIRPORTS PROJECTS
OWNER
LOCATION
BUDGET
STATUS
Al Maktoum International Airport
Dubai Airports
UAE
$32bn
NEW
Midfield Terminal Building
Abu Dhabi Airports
UAE
$6.8bn
ONGOING
Kuwait Airport Expansion
Directorate General of Civil Aviation
Kuwait
$6bn
NEW
Muscat International Airport
Oman Airports Management Company
Oman
$1.8bn
ONGOING
King Abdulaziz International Airport
General Authority of Civil Aviation
Saudi Arabia
$1.5bn
ONGOING
PROJECTS
OWNER
LOCATION
BUDGET
STATUS
Makkah Mass Rail Transit
Makkah Mass Rail Transit Company
Saudi Arabia
$16bn
NEW
Oman National Railway
Oman Railway Company
Oman
$15.5bn
NEW
Jeddah Metro
Jeddah Metro Company
Saudi Arabia
$12bn
NEW
Doha Metro Phase 1
Qatar Rail
Qatar
$4.2bn
ONGOING
Abu Dhabi Light Rail â&#x20AC;&#x201C; Phase 1
Department of Transportation
UAE
$3bn
NEW
PROJECTS
OWNER
LOCATION
BUDGET
STATUS
Al Uqair IPP Project - Phase 4
Saudi Electricity Company (SEC)
Saudi Arabia
$5.2bn
NEW
Hassyan Clean Coal Power Plant
Dubai Electricity & Water Authority
UAE
$4bn
NEW
Independent Power Plants Project - 2
OPWP
Oman
$1.5bn
NEW
Salalah 2 IPP
OPWP
Oman
$1.5bn
NEW
Duba 1 Integrated Solar Combined-Cycle Plant Project
Saudi Electricity Company (SEC)
Saudi Arabia
$1.1bn
NEW
PROJECTS
OWNER
LOCATION
BUDGET
STATUS
King Hamad Causeway
Ministry of Transportation
Bahrain
$5bn
NEW
Sharq Crossing Project
ASGHAL
Qatar
$5bn
NEW
Qatar-Bahrain Causeway Project
Qatar Bahrain Causeway Foundation
Qatar
$4bn
NEW
Sheikh Zayed Road Double-Decking Project
Roads & Transport Authority (RTA)
UAE
$3bn
NEW
Masirah Causway Bridge
Ministry of Transport & Communications
Oman
$660m
NEW
RAIL/METRO
UTILITIES
ROADS, TUNNELS, BRIDGES
28
INFRASTRUCTURE MIDDLE EAST
October 2014
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TEN UAE INFRASTRUCTURE PROJECTS
UAE PROJECTS The UAE has been ranked the third most attractive country for infrastructure investment in 2014 by the ARCADIS Global Infrastructure Investment Index. Our top 10 line-up tells you why
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October 2014
AL MAKTOUM INTERNATIONAL AIRPORT
Owner: Dubai Airports Budget: $32bn Progress: To be announced Dubai Airports recently announced a $32bn expansion plan which will ultimately accommodate more than 200m passengers/ year. The development is anticipated to be the biggest airport project in the world and will be built in two phases. The first phase includes two satellite buildings which will collectively be able to accommodate 120m passengers/year, receive 100 A380 aircraft at any one time and will take between six and eight years to complete. Phase 1 of Al Maktoum International Airport is fully operational. The international airport currently has the capacity to handle 600,000 tonnes per annum and operates 24 hours a day on an A380-compatible, 4.5km runway. Phase 2, which includes the construction of an additional two automated and one non-automated cargo terminals, is currently under way.
TEN UAE INFRASTRUCTURE PROJECTS
ABU DHABI AIRPORT TERMINAL BUILDING
ABU DHABI METRO RAIL PROJECT
HASSYAN CLEAN-COAL POWER PLANT
Owner: Abu Dhabi Airports Budget: $6.8bn Progress: Under construction
Owner: Department of Transport, Abu Dhabi Budget: $8bn Progress: Contracts to be awarded
Owner: Dubai Electricity & Water Authority (DEWA) Budget: $4bn Progress: Design stage
The Midfield Terminal Building project (MTB) will take Abu Dhabi Internationalâ&#x20AC;&#x2122;s current capacity from 17.5m passengers/ year to around 30m. It will have 700,000sqm of internal space. Construction commenced in 2013 and has already achieved several significant milestones, including the erection of the first steel buttress and the completion of the first steel arch; the central processing unit is nearing completion while the steel structures on each of the four piers are now in place, together with other roof arches. MTB, with 65 aircraft gates, will be home to Etihad and its codeshare and equity stake airlines. The existing terminals will continue to be used by other airlines. Recently, Abu Dhabi Airports formally kicked off the tender process for retail and food and beverage concessions at the MTB.
Supported by tram and bus feeder services on approximately 131km, Abu Dhabi Metro rail system is intended to serve a substantial proportion of passenger trips and relieve traffic congestions on the highway network, as well as to provide optimal connectivity between Abu Dhabi Island and its suburbs and upcoming communities such as Saadiyat, Yas Islands and Al Raha Beach. In May 2014, it was announced that three consultants have been shortlisted to update the transport masterplan for Abu Dhabi, where the metro is the main component. The preliminary design contract was awarded to a consortium made up of AECOM, Parsons Brinckerhoff and DB International. The contracts are expected to be awarded soon.
The Hassyan project will produce electricity using clean coal based on the Independent Power Producer (IPP) model. Last month, DEWA held a conference for the international developers participating in the 1,200MW Hassyan Clean-Coal Power Plant tender. Among 17 qualification documents received, eight developers were qualified to submit their bids. The deadline to submit the bids for the EPC contract is November 26, 2014. DEWA has announced that it will not only buy the electricity produced by the station, but will also be the biggest partner in the project. The first phase of the project is expected to be operational by 2020. The Hassyan project is being implemented as part of the Dubai Integrated Energy Strategy 2030. October 2014
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TEN UAE INFRASTRUCTURE PROJECTS
ABU DHABI LIGHT RAIL NETWORK PROJECT - PHASE 1
AL-DABBIYA OIL FIELD DEVELOPMENT PROJECT - PHASE 3
Owner: Department of Transport, Abu Dhabi Budget: $3bn Progress: Final design stage
Owner: Abu Dhabi National Oil Company (ADNOC) Budget: $1.5bn Progress: EPC stage
The project involves construction of a 340km light rail transit network connecting Abu Dhabi City to the Saadiyat and Yas Islands. The project has been divided into three lines. The first line will connect the Central Business District by linking Al Reem Island, Sowwah Island, downtown Abu Dhabi Island and the Marina Mall. The second line will link the Al Raha Beach Development, Yas Island, Masdar City and the Abu Dhabi International Airport, while the third line will connect the Saadiyat Island and the Capital District. Phase 1C of this development is still in the final design stage. It is expected to be completed by the end of this year, and the main contract is expected to be awarded by January 2015. The project complements the proposed Abu Dhabi Metro.
The project involves the third phase development of Al-Dabbiya onshore oil field in the North East Bab (NEB) asset, located about 31km from Abu Dhabi city. The objective is to increase production to allow Al-Dabbiya field throughput to increase by 73,000 BPD. The commercial bids submmited for the Engineering, Procurement and Construction (EPC) contract are being assessed. Bidders include South Korea’s GS Engineering & Construction, Daewoo and SK Engineering & Construction; the UK’s Petrofac; Italy’s Saipem and Technimont; and Spain’s Technicas Reunidas. An award is expected before the end of this year. France’s Technip has completed the Front-End Engineering Design (FEED) for the project. NEB-3 will help the UAE to meet its targeted quotas of oil production in 2018.
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October 2014
ETIHAD RAIL
Owner: Etihad Rail Company Budget: TBA Progress: Phase 2 stage Etihad Rail was established in June 2009 under a federal mandate to manage the development, construction and operation of the UAE’s national freight and passenger railway network. Being built in three stages, the railway network will link the principal centres of population and industry of the UAE, and will form a vital part of the planned GCC railway network across the six countries of the GCC. The 264-km Stage 1 from Shah and Habshan to Ruwais has been completed with trial services between Habshan and Ruwais operational since September 2013. Additionally, the sleeper factory in Mirfa is fully functional. Last month, it was announced that the contracts for the 628-km Stage Two, which will connect the railway to Mussafah, Khalifa and Jebel Ali ports and will see the railway extend to the Saudi and Omani borders, are being finalised and awaiting final approval from the federal government.
TEN UAE INFRASTRUCTURE PROJECTS
INTEGRATED GAS DEVELOPMENT EXPANSION PROJECT
Owner: Abu Dhabi Gas Industries (GASCO) Budget: $1bn Progress: RFQ stage Carrying out expansion of Integrated Gas Development (IGD) to add an additional capacity of 200-400m cu.f/d of gas. The project aims to expand the volume of gas from Abu Dhabi’s offshore fields processed at Habshan onshore operations, and is an extension of GASCO’s existing IGD scheme being developed jointly with ADMA-OPCO and ADGAS. Gas will be transported from ADMA-OPCO platform at Das Island via a pipeline to Habshan for processing. Fluor has completed the FEED study for the project. In July 2014, GASCO invited companies to prequalify for the technical engineering, procurement and construction bids for the onshore and offshore pipelines. Upon completion, the project will meet a significant part of Abu Dhabi’s various needs for natural gas.
AJMAN INTERNATIONAL AIRPORT PHASE -1
Owner: Govt of Ajman Budget: $570m Progress: Design approved Last month, the final plans and designs for the Ajman International Airport project were approved by Sheikh Ammar Bin Humaid Al Nuaimi, Crown Prince of Ajman. Expected to start operations in 2018, the airport will be eco-friendly in line with Ajman Vision 2021 and includes arrival and departure lounges, hangars and cargo handling. The airport will be constructed in the Al Manama area and will handle around one million passengers annually. Project construction was originally planned to be started in the second half of 2008 by Spain’s Grupo Immobililario, which had been awarded the main construction contract. However, the project was put on hold due to the economic slowdown. Ajman is allocating 40% of its 2014 budget to increase work on new development, economic and social projects, that aim to boost tourism in the emirate.
DUBAI SMILE PROJECT
Owner: Roads & Transport Authority (RTA) Budget: $220m Progress: Bids under evaluation This project is also known as Al Ittihad Bridge/Dubai Creek Seventh Crossing as it involves construction of a seventh crossing across Dubai Creek. It is located near Dubai Creek Park, Wonderland and Dubai Courts on the Bur Dubai side, and Deira City Centre and Dubai Golf Club on the Deira side. The crossing, which will replace the floating bridge, consists of 12 lanes (six lanes in each direction) and a footpath in each direction. The width of the bridge will be about 61.6 metres and the arch will rise to 100 metres. The bridge can accommodate around 24,000 vehicles per hour. The bridge will rise five metres above the water level of the Creek. Bids are currently under evaluation for the main construction contract. An award is expected by the end of 2014. October 2014
INFRASTRUCTURE MIDDLE EAST
33
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ANALYSIS
GLOBAL INDEX
Infrastructure hotspots Qatar, UAE and Saudi Arabia are in the top 12 global markets for infrastructure investment he Middle East is the most dynamic infrastructure investment market for investors, according to the second ARCADIS Global Infrastructure Investment Index. The report findings revealed that the Middle East – Qatar, the UAE and KSA – scored in the top third of the index due to the countries’ strong business environment, healthy pipeline of development work and growing economies. “The Middle East has some of the highest investment profiles of anywhere in the globe, with average growth in the construction industry reaching double digits,” said Tim Risbridger, Partner and Head of Infrastructure – Middle East at EC Harris. “National vision strategies are driving a phenomenal peak spend in these key markets over the next four to five years, increasing investment opportunities for the private sector. Currently, almost half of the investment planned across the region’s major cities relates to transportation.”
T
The Global Infrastructure Investment Index ranks the world’s 41 most dynamic countries with the greatest potential for growth and investment in their economic infrastructure. Economic infrastructure consists of the infrastructure that makes business activity possible, such as transportation, communication, distribution and energy assets. The boxes below lists the top 12 most attractive countries for infrastructure investment in 2014, with their difference in ranking from 2012 in brackets and top five gainers and losers in attracting finance. The study looked at various issues, including the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance. Combining all of these factors provided a strong overview of the risk profile for each market and how attractive each one is likely to be to potential investors. Singapore’s integrated strategic plan linking infrastructure planning with business and social requirements helped it retain top position in ARCADIS’ index as the most
TOP 12 INFRASTRUCTURE DESTINATIONS
COMPETING FOR PRIVATE FINANCE
2014
COUNTRY
DIFFERENCE 2012
1.
Singapore
(=)
2.
Qatar
(=)
3.
UAE
(+1)
4.
Canada
(-1)
5.
Sweden
(=)
6.
Norway
(=)
7.
Malaysia
(=)
8.
USA
(+3)
9.
Australia
(-1)
10.
UK
(+3)
11.
USA
(+3)
12.
Saudi Arabia
(=)
34
INFRASTRUCTURE MIDDLE EAST
attractive global market for infrastructure investment. However, with a government which self-finances most major projects, investment opportunities are limited; other countries with major investment plans, such as Qatar and the UAE, were tipped as more promising for investors. Risbridger continued, “A key differential that we have seen in Asian and Middle East markets is that those countries that have a clear integrated strategy that ties the infrastructure development plans to business and economic objectives tend to be nearer the top of our ranking. This gives long-term clarity to investors and is something that European markets, in particular, would do well to emulate if they are to succeed in attracting more private finance into infrastructure.” The report also underlines that the key risk will be inflation in construction resources, from manpower and specialist skills to construction commodities. Despite the potential for rising inflation, the Gulf countries’ strong credit ratings and enviable taxation regimes will continue to appeal to investors.
October 2014
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COVER STORY
EXCLUSIVE INTERVIEW
The right balance Zahid Group’s Amr Khashoggi on Saudi Arabia’s “incremental” strategy towards economic transformation
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COVER STORY
everal minutes into our discussion about diversifying Saudi Arabia’s economy, attracting foreign investment and creating employment opportunities for the Kingdom’s youth, Amr Khashoggi, VP Group Affairs, Zahid Group, pauses and says: “It is important to keep in mind that Saudi Arabia is a young country. I am a young 62-year-old, and I have lived through all the Kings of Saudi Arabia, from the founder King Abdulaziz and his sons to King Abdullah.” Khashoggi, who earned his MBA from Yale University in 1979, has witnessed first-hand the Kingdom’s multi-pronged yet “gradual” transformation into a global, modern economic power. He continues: “For example, in the early days, you would have problems finding accurate data about demographics, utility prices and state of infrastructure. Today, all that information and more is accessible with a few clicks on several government websites, including that of the Saudi Arabian General Investment Authority (SAGIA). Furthermore,
S
the Saudi population is very much wired and that drives greater efficiency and new opportunities to accelerate economic activity.” Technology and e-government have allowed Saudi Arabia’s government to standardise and improve the quality of services across the country like never before. “In the past, dealing with the Ministry of Labour cost us precious time, causing frustration and stress. Today, 85% of the work is done online, resulting in positive impact where our efficiency is concerned,” he says.
“The Saudi population is very much wired, and that drives greater efficiency and new opportunities to accelerate economic activity” AMR KHASHOGGI VP GROUP AFFAIRS, ZAHID GROUP
At the same time, Saudi businesses are using technology in a bigger way to recruit employees, develop business opportunities and launch new products and services. Within Zahid, all the paperwork and workflow takes place electronically, which has improved the group’s overall business efficiency. OPPORTUNITIES FOR THE YOUNG
The adoption of technology, whether it is in government or business, is largely driven by the youth, and Saudi Arabia is no different. “Fifty percent of our population is under the age of 17,” says Khashoggi. “We constantly search for new ways to work with Generation Next, who bear the responsibility for the future of our country. We have to prepare them to meet those challenges.” But he also agrees that Saudi youth tend to gravitate towards government employment due to the job security associated with it. “Many of our young feel that a government job is more secure and less demanding. But we need to change this mind-set. Through public private partnerships (PPP), we are trying to develop programmes to attract October 2014
INFRASTRUCTURE MIDDLE EAST
37
COVER STORY
Corporate social responsibility Khashoggi believes that hiring employees with disability will help contribute to the employment of Saudi population
youth to private employment and also provide them with a sense of security. Moreover, not all job seekers have the required skills to perform the tasks at hand. At the Zahid Learning Centres, for example, we offer soft skills as well as three-year apprentice programmes for blue-collar workers, with guaranteed employment upon graduation.” However, not all young Saudis are chasing jobs. Many prefer to become entrepreneurs but often find it difficult to get bank loans. Zahid Group, through its subsidiary, AJIL Financial Services Company, provides asset financing to would-be entrepreneurs through its Small and Micro Enterprise Programme (SMEP). “SMEs are going to be the answer to any unemployment problem,” says Khashoggi. “Eighty percent of employment in a country is usually provided by SMEs and not by large corporations. At Zahid, we train young Saudi entrepreneurs into ‘Contractors of the
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October 2014
“Eighty percent of employment in a country is usually provided by SMEs and not by large corporations. At Zahid, we train young Saudi entrepreneurs into ‘Contractors of the Future” AMR KHASHOGGI VP GROUP AFFAIRS, ZAHID GROUP
Future.’ Many well-established private sector employees volunteer to be mentors, working with the young people on business plans to help turn ideas into commercial ventures.”
He also believes that it is important to encourage employers to hire persons with disability. As part of its Corporate Social Responsibility (CSR), Zahid is a founder of a non-profit called Qaderoon Business Disability Network. “We aim to catalyse employers to recruit, train, retain and include job-seekers with disabilities as equal and effective members of the workforce, through disability-friendly work environments and by advocating favourable government policies,” says Khashoggi. “We offer employers appropriate guidance and best practices. Employees with disability have proven to be highly productive and loyal. Hiring them will also contribute to the employment of the Saudi population.” REFORMING EDUCATION
In the long run, it is important that the job market in the country becomes more open and
COVER STORY
transparent. “Employers should allow jobseekers to learn about career opportunities, and job- seekers should be visible and demonstrate their abilities, knowledge and willingness to work,” notes Khashoggi. But the question is whether the education system in the Kingdom is geared up sufficiently to supply the job market. In the past, the skills that were developed through the education system didn’t map with the job requirements, which meant that the country found itself deficient with regard to engineers, doctors, nurses and technocrats. However, the Zahid VP believes that the scenario is changing for the better, thanks to the reforms of the education system underway. “The reforms are addressing the weak links by raising the quality of teachers and curricula that reflect the crucial competencies needed to find a career in the Kingdom or anywhere else,” he says. “Our educational system needs to teach students to think and innovate. Teachers need to be trained and updated with the instructional best practice employed in the best schools in the world. The private sector can help by having internships, mentoring and training, and retraining, which is something that we are doing in our company.” Global Gypsum Company (3G), a Zahid Group joint venture, has initiated a programme wherein the company goes to industrial colleges across the Kingdom and interviews students in their final year to try and identify their weak areas. 3G works with the colleges to address those areas complemented by its own learning centres. Khashoggi believes that offering Saudi students scholarships to study abroad is key to giving them exposure to different ways of doing things through interactions with professionals. Scholarship students become cross-cultural ambassadors and can use their newly found relationships to forge business relations. He says: “What I am trying to work on now is to catalyse our private sector to use their special relationships with leading companies in the West to create internship and job opportunities for Saudi scholarship students with those companies. This will help our students hit the ground running when they come back to the country.”
Effat University Khashoggi is a advisory board member of the first women’s only higher education institute in Saudi Arabia
“We have been doubling the number of women working in Zahid over the past six years. We are expanding opportunities for them to work in technical and engineering positions” AMR KHASHOGGI VP GROUP AFFAIRS, ZAHID GROUP under reforms initiated by King Abdullah. Today, Saudi women enjoy greater access to education, scholarships and employment. The e-government initiative has also made it easier for Saudi businesswomen to carry out their business online and in person without the use of special agents. Women also have access to a greater diversity of skills on the education front. A member of the Advisory Board of the
EMPOWERING WOMEN
With regard to empowerment and employment of women, Khashoggi feels that the situation has taken a turn for the better
Vibrant economy Private sector is funding research work at Saudi universities like KAUST
all-female Effat University in the Kingdom, Khashoggi finds that female students are great learners and hold tremendous potential to be taught scientific and engineering skills. Making up half of society means Saudi women should be given more opportunities for employment. “We have been doubling the number of women working in Zahid over the past six years,” he says. “They work in administration, finance, IT and HR and we are expanding opportunities for them to work in technical and engineering positions. Last summer, at our group company Altaaqa Alternative Solutions, we had four electrical engineering students from Effat University interning the whole summer in the field, and they were impressive. We hope they will join us full-time when they graduate.” He is also hopeful that Saudi Arabia’s push to transition from an oil producer to an energy producer will not only create more job opportunities but also centres of knowledge and R&D facilities. “The development of alternative and renewable energy industry will also lead to the improvement of scientific education in the Kingdom,” he notes. “We already have private sector companies funding research work at illustrious universities like King Abdullah University of Science and Technology (KAUST), whereby they are able to use many of the patents and turn them into business opportunities. A country’s economic vibrancy is measured by the level of patent applications filed, which is increasing in our universities.” Towards the end of our discussion, Khashoggi reiterates that Saudi Arabia’s progress should be looked at in the context of the level of stability and prosperity it has achieved at a “tender age” and in relation to other countries that started out similarly. “In the past 40 years, we have accomplished a lot, owing to the visionary governance of the leaders of Saudi Arabia,” he notes. “In order to keep pace with the trends of today’s world, however, we must recognise that more ground needs to be covered and that more work needs to be done. We are making inroads into adopting educational, professional and environmental best practices, but we should not rest on our laurels. We Saudis should never stop aiming for our nation to be greater than it was and it is. But, aggressive as we are, there is still merit in growing incrementally, which is gradually but surely.” October 2014
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UTILITIES
DISTRICT COOLING
Positive gains Jasim Husain Thabet, CEO of Tabreed, the oldest district cooling company in the GCC, speaks to Climate Control Middle East’s B Surendar about the sector and the best practices being evolved by the company in its endeavour to create new benchmarks unit for cooling plants for the military. And, as an organisation, I’m in discussions with Abu Dhabi entities to make sure that we can tap into the TSE available in Abu Dhabi. So, it’s not only the power efficiency, but also the TSE. Do you feel the market, as far as the district cooling industry in the GCC is concerned, has come of age? I ask this in the context of what we saw in 2005 and 2006, when there was a lot of frenzied activity, and people were talking big numbers like 15m TR by 2015 in the GCC. We didn’t quite see that because of the global economic downturn. But do you see a more mature, wiser industry?
Dubai Metro Tabreed provides district cooling for the world’s largest driverless and automated metro network
L
ooking at efficiency in district cooling, what is the industry benchmark? Is it efficiency against standard load? Chillers? What is the true measure of efficiency?
We are one of the biggest district coolingcompanies in the world, and looking at benchmarks, many people take benchmarks from us when it comes to efficiencies for complete systems – not benchmarks for standalone chillers, but the overall plant. And we continuously aspire to exceed the bar. We have some plants, which are at 0.82 kW/TR, 0.83 kW/TR, and we take it on ourselves to beat our best plant year on year. So it’s an internal KPI or benchmark. And we are also looking at other ways to improve efficiencies with some technology providers. And you are in collaboration with Masdar?
Masdar is more our end user. We are looking
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October 2014
more at some short-term technology providers. And it’s not only the efficiencies – there’s the power element. There’s also the water element, and we need to look at the bigger picture of district cooling. So, Tabreed has been using Treated Sewage Effluent (TSE) from the early days, since 2006 in Dubai. And now again, we are re-engaging… in Dubai. We are installing another TSE unit for one of our cooling plants. In Fujairah, we are working to install a TSE
“Have we thought about publishing a best practices guide on district cooling in Tabreed? Well, not yet. But I think it’s a good point, and I think we should think of that” JASIM HUSAIN THABET, CEO, TABREED
I believe district cooling is a much stronger sector. Developers are starting to re-appreciate the benefits of district cooling . Do we still see numbers of one million tonnes in two years? Yes, we see those numbers. In terms of how the market perceives district cooling, it perceives it as not only a more efficient way of cooling, but also as a corporate responsibility. Companies want to have the most reliable and cost-effective way of cooling. That’s always been there. But now the trend is, developers and big organisations want to be able to participate in, as an organisation or as an entity, in the UAE or in the GCC, by contributing to reducing carbon footprint. We see mature organisations do that. However, district cooling all over the GCC is different. Kuwait is different than Abu Dhabi, or Saudi is different than Qatar. We can’t really generalise. But is there an overall perception that district cooling is the way forward?
Yes, district cooling is the way forward. I can speak about one example. Now in Abu Dhabi, all the government entities who require new facilities, new buildings – project management is being carried out under Estidama and Musanada. And these entities have sent out instructions that for your new facility, you
UTILITIES
have to connect to district cooling as a cooling option. We see that there is a push from the government towards district cooling. Do you see better engineering and management practices in the industry compared to prior to the downturn?
Absolutely. As a regional district cooling company, we have built over 66 plants across the region, and there are a lot of lessons learnt and best practices we have developed. And there is a responsibility, as one of the biggest district cooling companies, to ensure that the sector grows in a healthy way. So, as a company, and also as a leader in district cooling, we have an obligation, when we see a certain developer or a certain project evaluating district cooling. If it is not making economic sense for the end user and the developer, where we don’t have the right density in place and the cost is tremendous, we don’t recommend district cooling. It’s not only about having strong contracts back to back, it’s also about having the moral obligation to support district cooling and to apply it wherever it makes sense. So, do you tell the developer, “Maybe DC is not the best option for you”?
Yes, absolutely. We have an obligation. In the end, these cooling assets will be there for 25-30 years. And we have to make sure that the developer that is going to use these assets, that it makes sense for him in the long run.
Jasim Husain Thabet, CEO of Tabreed
“The trend is, developers and big organisations want to be able to participate in, as an organisation or as an entity, in the UAE or in the GCC, by contributing to reducing carbon footprint. We see mature organisations do that” JASIM HUSAIN THABET, CEO, TABREED
So, you would probably suggest that you are far better off having your own watercooled chiller as an internal system?
Yes, if we don’t have the economy of scale for it, then we will suggest that. It’s not only about making the bucks, right? Also, other than that, like I said, we have built over 66 plants. And in the past, we were building relatively at a higher cost. Now, we are rethinking how we can phase out, and how we can tackle the developments and how we deploy CAPEX, and how as a company, we are able to build the most cost-effective Dirham per RT plant, because, in the end, any savings that we can provide in terms of building a more cost-effective project can be transferred to the government organisations we provide cooling to. You obviously have a lot of expertise built over the years. As part of the leadership, have
you ever thought of coming up with your own best practices and sharing the findings?
Yes, we have our own Tabreed standards in terms of district cooling. And I think that’s one of the strengths of Tabreed. And we have been passing on our best practices to our sister companies. Have we thought about publishing a best practices guide on district cooling in Tabreed? Well, not yet. But I think it’s a good point, and I think we should think of that. You have a footprint in the region. But does Tabreed have any expansion plans beyond the region, into the Middle East, the Far East or into the Subcontinent? Also, in light of Empower’s acquisition of Palm Utilities and Palm District Cooling, are you also looking to consolidate, to acquire and be a larger entity, as opposed to growing organically?
We are not a local company based in one
emirate. We are a regional company – a publicly traded company. And we have over 20,000 shareholders, and we grow, not for the sake of growing, but in a healthy and gradual manner. We provide cooling to critical constructions in the UAE, and across the region. We provide cooling to the entire UAE Armed Forces. You can imagine the entire Armed Forces relying on one company to provide their cooling. That says something. And on a regional front, we have a good footprint in Saudi Arabia. I never dreamt five or 10 years [ago] that Tabreed would be providing cooling in the Holy City of Makkah. And we have the right partners in Qatar. And in Oman it’s relatively small, but growing very healthy and gradually. It’s about gradual, small, healthy steps for a utility company. We are not a real estate company. It is not a one-time EPC contract where you make oneoff gains and walk away. We are out there. And in terms of going outside the GCC, I think the market is very healthy here. So, at this point of time, our focus is on the GCC. We see tremendous opportunity in the region. And as an organisation, we continue to evaluate other opportunities. And if the right opportunity arises in the Far East, we will explore it. Absolutely. And as for consolidation, I see it as a very positive development. We see Empower acquiring Palm District Cooling as a positive thing. I mean, the governments and the country – it shows their belief in district cooling. Talking about us, as an organisation, we always look at organic and inorganic opportunities for growth. Maybe I can break up our growth in three chunks. We have three pies. To put things in perspective, our first pie is connecting existing assets that we have. If we have a plant on the Corniche in Abu Dhabi and another not too far away, we look at connecting the two existing plants. It’s already available, and it gives us higher yield and we are sweating the assets. It creates better cooling for the customers. The second opportunity we look at is building new plants. We continue developing. We are in the final stages now of building several plants. And the third pie is the inorganic growth. We continuously look at acquiring opportunities in utility companies and cooling plants. We are in very close stages of acquiring some assets in the region. And once we close them, we will announce them. October 2014
INFRASTRUCTURE MIDDLE EAST
41
UTILITIES
ENERGY EFFICIENCY
Better generation Derek Duggan, Local Business Unit Manager, UAE and Regional Execution Centre Manager, Arabian Peninsula, Southern Gulf and Pakistan, ABB, speaks to Infrastructure ME about making power plants more energy-efficient
G
iven the load patterns and the age of power generation plants in the region, what is the scope for improving their energy efficiency and performance?
ABB can help industrial and utility customers improve energy efficiency in two ways: • By providing specialists capable of appraising and monitoring how energy is used and identifying areas for improvement. • By providing equipment, systems and solutions to reduce energy consumption and losses, improve productivity and manage equipment and processes more effectively. We can also work with customers on alternative business models such as performance-based financing to help make energy efficiency a reality. What is ABB’s approach towards helping power generation plants improve energy efficiency and optimise performance?
ABB applies a broad portfolio of technology, expertise and solutions throughout the power industry. These include variable frequency drives; high-efficiency motors; generators and transformers; power quality systems; advanced process controls; instrumentation; electrical switchgear and motor control centres; and advanced power factor management solutions. Our process for energy efficiency improvements consists of three phases: Plant Assessment; Master Plan; Implementation Each phase delivers the information needed to progress to the next phase with confidence, completing an energy efficiency improvement programme that delivers real and sustainable energy savings, with substantial return on investment (ROI).
A clean coal power plant Up to 15% of a power plant’s output is consumed by its electrical systems
fuel plants is consumed by the plant’s auxiliary systems. Much of this energy could be saved or sold to generate higher plant revenues. Auxiliary systems are a major part of a power generation facility. Their purpose is to power the plant using a minimum of input energy to achieve maximum output and availability. They include all the drive power applications (pumps, fans, motors, drives), electrical balance of plant and instrumentation, control and optimisation systems. ABB is a market and technology leader in the majority of the products and systems in power plant auxiliary systems. By improving the efficiency of each auxiliary, ABB can reduce the energy consumption of an existing facility, by 10-30% in some cases. Added together – system by system, saving by saving – the reduction in energy consumption and CO2 emissions could be considerable. Output and availability are also improved, as are equipment and system reliability.
Are the savings attractive enough to justify the investments?
Could you elaborate on your solutions portfolio?
Between 7-15% of the power generated in fossil
Our energy efficiency solutions for power plants
42
INFRASTRUCTURE MIDDLE EAST
cover all types of thermal power generation – coal-fired, combined heat and power, waste-toenergy and combined cycle. They cover the four essential areas of energy efficiency enhancement: • Energy efficiency assessments • Application-based solution packages • Plant and process optimisation systems • EBoP upgrade and rehabilitation projects with an energy efficiency focus When we improve the energy efficiency of a power plant or industrial facility, we improve productivity and equipment reliability as well, while reducing the plant’s carbon footprint and securing the stability of the surrounding power network. We do this across a broad range of industries, predominantly in energyintensive sectors like power generation. We have a singularly broad and comprehensive offering in power generation. It covers the complete scope of supply in power plant instrumentation, control and electrical equipment, which ABB integrates into a plant-wide solution called integrated ICE – Instrumentation, Control and Electrical. In fact, integrated ICE is a capability unique to ABB.
October 2014
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FINANCE
ISLAMIC ECONOMY
Sukuk on the rise
Countries, corporates and infrastructure projects are looking to tap sukuk for their borrowing requirements hough relatively small compared to conventional bond markets, the global sukuk market is growing rapidly thanks to an increasing number of sovereigns, corporates, infrastructure projects and banks seeking to tap the expanding pool of Islamic liquidity. Countries beyond the traditional centres of Islamic finance are also beginning to utilise Islamic finance, in order to both raise additional capital and claim a share of the related financial services growth.. The last three years have seen the global sukuk market double, with a CAGR of 30% for the previous 10 years. A recent report by Moody’s indicated that global sukuk issuance will continue to grow this year to reach around $70bn, nearly double the amount issued in 2010. The rating agency’s expectation for 2014 exceeds last year’s figure of around $65bn and brings the market back on track toward 2012’s
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record volume of approximately $82bn. It also forecasts that the majority of issuance this year will come from sovereigns, representing around $30bn. According to Moody’s, market depth is increasing with the emergence of new instruments, such as sukuk with longer-term structures, amortising and more equity-like features, helping to drive the rise in issuance volumes. In addition, the growing base of conventional investors is also supporting secondary market liquidity. At present, the main hubs for sukuk issuance are the Gulf Cooperation Council (GCC) countries and Malaysia, with the former dominating the international market and the latter the domestic market in terms of outstanding issuance. Khalid Howladar, Moody’s Global Head for Islamic Finance, noted that sovereign sukuk issuance is boosted by a number of factors, including: (1) Growing investor comfort with Islamic instruments
(2) A desire for stronger investment links with the faster-growing economies in the Gulf and Asia (3) The increasing financing needs and leverage appetites of some Muslim countries; and (4) The efforts of the governments of Muslim countries to support Islamic banking and finance, in line with the cultural and religious affinity of their native citizens. Given their currency pegs to the US dollar, GCC countries have a much stronger presence in the foreign currency (USD) sukuk market. This trend is likely to continue, given investor demand for Gulf credit coupled with the high growth levels, public spending plans and leverage appetite of many of the region’s borrowers. Within the GCC, Saudi Arabia has the most active domestic sukuk market, owing to its more insular banking system, abundant investment liquidity and large domestic economy. The Kingdom leads its Islamic
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Global Islamic Finance Market Trends Global Islamic Finance Market Trends Investmens Funds 4%
Takaful 1%
Sukuk 15%
2013
Total global Islamic financial assets Banking 80% Sukuk 15% Investment Funds 4% Takaful 1%
80% Banking assets counterparts in Qatar, Indonesia, Malaysia, the environment for Islamic finance and boost UAE and Turkey in terms of Islamic banking sukuk offerings, in an effort to position the assets, with an estimated value of about $285bn as aand hubMIFC for the sector. To further Source: Dubai Chamber basedemirate on UKIFS in 2013 compared to $245bn in 2012. boost Shari’ah-compliant trade flows through While sukuk issuance volumes are expected the city, Dubai is also seeking to establish the to remain concentrated in regions that have a world’s first fully Islamic export-import bank. natural cultural affinity with the sector, 2014 This institution is expected to support the may mark the beginning of a new chapter, with investment needed in the run-up to the UAE the UK issuing its inaugural sukuk, followed by Expo 2020. Hong Kong and South Africa. “Dubai is powering ahead with the creation “All three are major non-Islamic countries of its recently announced ‘Capital of the Islamic and indicate a significant change in the Economy’ initiative,” said Ashruff Jamal, PwC potential size, depth and liquidity of this Global Islamic Finance Leader. market,” said Howladar. “A number of the building blocks of this initiative, spanning seven key pillars, are already in place as the emirate eyes the $8tn CAPITAL OF ISLAMIC BANKING global Islamic economy, which accounts for According to a Dubai Chamber research note, approximately 11% of global gross domestic sukuks will play an important role over the next product. This will inevitably position Dubai decade in securing funds for the substantial as the global destination of choice for Islamic line-up of new projects in the emirate. products, finance and services, encourage Authorities in Dubai published new public-private partnership in this rapidly legislation in 2014 to enhance the regulatory growing sector as well as attract local and foreign investments as the emirate ramps up IN NUMBERS for Expo 2020.” The Dubai Chamber research note also pointed out that global financial assets are dominated by Islamic banking assets, which Cumulative annual growth in sukuk accounted for about 80% of the total assets bond issuance from 2001-2013 in 2013, while sukuk made up just 15% of the market. However, the good news is that sukuk bond issuance has significantly grown over the last decade. Global sukuk market issuance in 2013 The Dubai Chamber report, citing data from Rasameel Structural Finance, shows that the issue of sukuk bonds registered cumulative annual growth rate of about 47% over the Size of the global Islamic economy period 2001-13.
47%
$119.7bn $8tn 46
INFRASTRUCTURE MIDDLE EAST
October 2014
The upward positive momentum is more pronounced from 2010, when the global sukuk market, having overcome the initial shock of the financial crisis, had a very successful run. In 2012 it crossed the $100bn mark with issues valued at about $137bn; and in 2013, it surpassed $100bn for the second consecutive year, despite slowing down 12% compared to 2012 with issues worth $119.7bn. The slowdown, which was evident during the first three quarters of 2013, has been mainly attributed to the Federal Reserve announcement in May 2013 to cut back on the US monthly stimulus programme. The report observes that the announcement by the Fed had a profound effect on the global bond market, which saw prices of fixed-income instruments, including sukuk, falling sharply as fears spread that reduced bond purchases by the Fed would push investors to higher-yielding assets in an improving US economy. Now, with the Fed’s aggressive bond-buying programme tapering since January 2014, sukuk issuance may again be impacted in 2014.
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INFRASTRUCTURE SUKUK
As sukuk instruments become increasingly popular as an alternative funding source, they are also being considered for infrastructure projects. What could drive this trend are the new Basel III rules, which have lowered the attraction quotient of bank financing for longterm infrastructure projects. As these projects generate revenue from tangible assets, they are consistent with the Islamic finance rules of creating economic value and are particularly appropriate for sukuk. However, the key issue for sukuk, as for any bond-like structure, is volume. The region’s bond markets haven’t demonstrated enough potential volume to bring bond sizes to a level where they are cost-effective. In terms of issuance criteria, sukuk have similar characteristics to bonds, so that once an appropriate volume is reached, they could become a viable structure. Stable regulatory frameworks and standard debt structures and rules are needed, as are more instruments apart from widely prevalent Murabaha and Ijarah structures. According to Dubai Chamber, existing instruments also need to be refined, as some sukuk structures are yet to gain wider acceptance. The market is also struggling with legal uncertainty over regulatory disparity in different countries.
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TRANSPORTATION
MULTI-MODAL
Hub strategy Frost & Sullivan’s Srinath Manda provides a strategic insight into the transportation infrastructure in the Gulf Cooperation Council (GCC) region
Top transport mode Almost 99% of the cargo volume of non-surface transportation in the GCC goes via the sea
he existing transportation infrastructure in the Gulf Cooperation Council (GCC) countries largely comprises road, sea and air transport networks. Except for the Kingdom of Saudi Arabia, none of the other countries boast rail networks. Though the UAE has a metro network in Dubai, it is not suitable for cargo transport. Currently, surface-based cargo movement across borders within the GCC primarily takes place through roads, and almost 99% of cargo volume of non-surface transportation goes via the sea. Only urgent, valuable or perishable goods are sent by air. When comparing the available infrastructure by mode across the countries, several interesting findings emerge. Due to their large area, both Saudi Arabia and Oman have longer road networks; however, in terms of road density, Bahrain and Qatar lead the GCC. In terms of marine transport, the UAE has the most seaports as well as marine vessels, but Kuwait, a smaller state, has more ports than the much larger Saudi Arabia. However, the Kingdom has the second largest marine vessel fleet after the UAE in terms of marine trade volume. In the area of air transport infrastructure, Saudi Arabia leads the group in terms of number of airports, followed by the UAE and
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Oman. With regard to pipeline networks, Saudi Arabia and Oman lead the group, followed closely by the UAE. Within the rail transport mode, only Saudi Arabia has a rail network for cargo transport. RAIL TRANSPORT INFRASTRUCTURE
In the absence of railways, which enable movement of large volumes of cargo safely and economically, the transport industry in the GCC has had to rely primarily on road networks for movement of goods. However, movement by road involves huge costs and long transit periods, which poses major hurdles for transporters that provide services to end users. Like the cargo transportation industry, passenger transportation services are also limited to either road or air, the costlier mode, due to lack of rail transport facilities. Passengers are compelled to use air travel
even for short trips between two neighbouring countries in the GCC. However, towards the end of the last decade, the governments of GCC countries realised the importance of rail, and they are currently focusing on developing rail projects, either for passenger or freight transportation – rail projects worth over $150bn are being developed. The most ambitious transportation infrastructure project is the regional railway network linking each of the GCC member states, known as the GCC Railway. Upon its expected completion by the year 2020, the network is likely to change the face of transport and logistics in the region. It will offer immense efficiencies in transportation, apart from furthering the vision of a closely integrated regional community. To enable integration across nations, the six member states would need to have national rail networks. Driven by this agenda, governments have launched various long-range and urban rail projects. Leading from the front are Saudi Arabia, the UAE, Oman and Qatar. SEA TRANSPORT INFRASTRUCTURE
Within the sea transport segment, the UAE had been a pioneer in modern marine transport infrastructure development and is home to the largest container port in the Middle East, Jebel Ali. However, other countries in the GCC are building similar projects to emulate the UAE’s success. On its part, the UAE is now trying to
TRANSPORTATION INFRASTRUCTURE STATUS, THE GCC, 2013 COUNTRY
AIRPORTS
RAIL NETWORK [Km]
TOTAL ROAD ROAD [Km] DENSITY NETWORK
SEA PORTS
PIPE LINES
MARINE VESSELS
Bahrain Kuwait Oman Qatar KSA UAE
4 4 13 4 82 25
0 0 0 0 1,378 50
4,122 6,608 60,240 9,830 221,372 4,080
2 5 5 3 4 6
74 853 8,185 3,830 10,600 7,738
13 89 20 63 127 314
542.4% 37.1% 19.5% 84.8% 10.3% 4.9%
Source: CIA World Fact Book, Frost & Sullivan analysis
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TRANSPORTATION
CONTAINER TRAFFIC (IN MILLION TEUS) IN THE GCC, 2009-2013 COUNTRY
2009
2010
2011
2012
2013
Bahrain Kuwait Oman Qatar KSA UAE
0.28 0.85 3.77 0.41 4.43 14.43
0.29 0.99 3.89 0.35 5.31 15.18
0.31 1.05 3.63 0.37 5.69 16.78
0.32 1.09 3.29 0.38 6.56 17.21
0.53 1.10 3.42 0.40 6.89 17.90
eight times in five years, Qatar’s volume has almost doubled.
CAGR (2009-2013) 17.0% 6.5% -2.4% -0.9% 11.7% 5.5%
IMPROVING TRANSPORTATION INFRASTRUCTURE
When comparing a nation’s transportation and logistics infrastructure performance, the World Bank’s Logistics Performance Index (LPI) can be used for an effective and reliable comparison across all key parameters. While all the countries in the GCC are focused on building or enhancing their transportation and logistics infrastructure in all segments, in most cases they are trying to match or replicate the success of the UAE. In this regard, Qatar seems to be moving ahead of the others. Going by its rapid rise up the rankings in the World Bank’s LPI between 2010 and 2014, Qatar’s large-scale infrastructure projects seem to have raised the country’s capabilities to take it very close to the leader – the UAE. The high-value transportation projects being developed by the GCC are expected to enhance and consolidate its position as the premier logistics hub in East-West global trade.
cement its leadership with integrated port and free zone projects like the ambitious Khalifa Industrial Zone Abu Dhabi (KIZAD) project. Oman, Qatar, Kuwait and Saudi Arabia have also been enhancing their marine transport infrastructure. Saudi Arabia has embarked on expanding capacities at its major ports in Jeddah, Dammam and Jubail. Oman is enhancing the infrastructure of its two major commercial ports – Sohar and Salalah – and building another multi-purpose port at Duqm. Each of these ports is integrated with free zones to provide added advantage for their growth. Qatar, as part of its long-term development plan, is investing heavily in the New Doha Port project. When completed, the New Doha Port is expected to be the world’s deepest seaport, with a capacity of up to 6m TEU. Kuwait Free Trade Zone (KFTZ) is in Shuwaikh, Kuwait’s leading sea port. With a focus on developing an integrated industrial and logistics zone around KFTZ, Kuwait intends to emulate Dubai’s success. However, in terms of container cargo volume growth, Saudi Arabia and Bahrain have had greater success than other GCC countries.
other transport modes to improve overall logistics infrastructure in the country. Oman, in addition to enhancing its existing airports in Muscat and Salalah, is planning to build a new airport in fast-growing industrial city Sohar. Qatar’s primary airport, Hamad International Airport, also serves as its air cargo hub. Another airport at Al Khor is being developed to complement the Doha airport. Kuwait is also enhancing its premier airport in its capital. However, when one compares the air cargo volume growth of the GCC nations in terms of billion tonne kilometres of cargo transported, Oman and Qatar have grown faster than others. While Oman’s air cargo volume grew almost
AIR TRANSPORT INFRASTRUCTURE
LOGISTICS PERFORMANCE INDEX IN THE GCC, 2007-2014
Even within the air cargo transport mode, the UAE has been the pioneer in developing cargo-friendly infrastructure on a large scale at most of its airports. For example, Dubai has developed a cargo-specific airport at the Al Maktoum International Airport in Dubai. Such developments have enabled the UAE to become the leading hub in the Middle East for air cargo as well. However, as in other segments, other GCC countries have started enhancing their air transport infrastructure to tap opportunities emerging from the UAE or exploit potential future opportunities. Saudi Arabia is enhancing the capacities of its important airports – Jeddah, Riyadh and Dammam – and developing their links with
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October 2014
AIR TRANSPORT FREIGHT (BILLION TONNE KM) BY COUNTRY, THE GCC, 2009-2013 COUNTRY
2009
2010
2011
2012
2013
Bahrain Kuwait Oman Qatar KSA UAE
0.56 0.28 0.04 2.28 1.84 8.96
0.50 0.34 0.11 2.95 1.33 9.77
0.42 0.28 0.17 3.64 1.50 10.44
0.34 0.27 0.24 4.31 1.82 12.03
0.29 0.24 0.25 4.96 1.69 13.99
YEAR
CAGR (2009-2013) -15.5% -3.6% 59.3% 21.5% -2.0% 11.8%
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The right workflow and processes defined, BIM enables organisations to improve the quality of building design
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BIM – Business Enabler or Technology Red Herring? Lorem Systems' Dolor Sitamet explains why it is so important for BIM providers to create systems that will push forward the concepts of simple and effective cooperation between all stakeholders involved in a project Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? The UK government’s decision to require that all suppliers involved in public sector construction projects use Building Information Modelling (BIM) tools and techniques by 2016 is to be applauded. The intention is to drive better value from capital investment and realise a 20% reduction in lifetime costs, whilst supporting environmental commitments by facilitating a more integrated approach to design. It is also about changing the culture between the client and the rest of the supply chain, replacing the traditional, rather adversarial business practices with a collaborative approach that should also drive innovation. However, misinformation is rife. BIM is not just about 3D data but about creating a holistic information resource that also includes 2D data sources, documents, spreadsheets, and more. I believe the key to realising the government’s BIM vision is to create simple, effective cooperation among the design, construction and operation aspects of the infrastructure lifecycle. Overcoming these traditional silos
provides a chance to reduce duplication, minimise errors, streamline processes and facilitate collaboration. However, while the majority of new bids now demand some level of BIM compliance, requirements are often opaque at best. Let’s set the record straight: BIM, when done correctly, is about information sharing enabled by information mobility (across engineering disciplines and the infrastructure lifecycle). It provides contractors and owner operators with access to key design data that can be used to transform effectiveness throughout the construction and operations processes. Yes, it drives better use of 3D across the industry, but not only 3D. 2D data remains important, as does information held in documents, spreadsheets, and other databases, all of which contribute to a holistic BIM approach. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? BIM is ultimately about creating an asset model from day one that can be used consistently throughout the project to drive efficiencies
and improve collaboration. Indeed, BIM also encompasses information management as much as information modelling. It enables a contractor to feed design information into project planning tools and resolve potential conflicts before arriving on site. It also empowers the sharing of space information with facilities management teams before the building goes live to drive effective up-front planning, as well as the sharing of other crucial design, engineering, and construction information that can later be used to help drive cost-effective operations decision making and renovations work. Leveraging a collaborative platform and technology to share and integrate information, within an incremental approach that accommodates all of the specialised design simulation and analysis software best suited for each project role, will best enable the industry to achieve the desired widespread adoption of BIM. The government’s stance on BIM is to be commended. Demanding Level 2 compliance by 2016 is pragmatic and achievable and promotes the very real promise of intelligent infrastructure that is better performing in terms
of its energy efficiency, resilience to natural and man-made disasters, safety, and cost-efficiency. However, while industry adoption and interest are positive, it is essential that organisations take a step back and truly assess information requirements. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? BIM is a business process not a technology. With the right workflow and processes defined, BIM enables organisations to improve the quality of building design, reduce costs and achieve the collaborative workflows required to drive true innovation. However, misinformation is rife. BIM is not just about 3D data but about creating a holistic information resource that also includes 2D data sources, documents, spreadsheets, and more. I believe the key to realising the government’s BIM vision is to create simple, effective cooperation among the design, construction and operation aspects of the infrastructure lifecycle. Overcoming these traditional silos provides a chance to reduce duplication,
minimise errors, streamline processes and facilitate collaboration. However, while the majority of new bids now demand some level of BIM compliance, requirements are often opaque at best. Let’s set the record straight: BIM, when done correctly, is about information sharing enabled by information mobility (across engineering disciplines and the infrastructure lifecycle). It provides contractors and owner operators with access to key design data that can be used to transform effectiveness throughout the construction and operations processes. Yes, it drives better use of 3D across the industry, but not only 3D. 2D data remains important, as does information held in documents, spreadsheets, and other databases, all of which contribute to a holistic BIM approach. BIM is ultimately about creating an asset model from day one that can be used consistently throughout the project to drive efficiencies and improve collaboration. Indeed, BIM also encompasses information management as much as information modelling. It enables a contractor to feed design
information into project planning tools and resolve potential conflicts before arriving on site. It also empowers the sharing of space information with facilities management teams before the building goes live to drive effective up-front planning, as well as the sharing of other crucial design, engineering, and construction information that can later be used to help drive cost-effective operations decision making and renovations work. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? Leveraging a collaborative platform and technology to share and integrate information, within an incremental approach that accommodates all of the specialised design simulation and analysis software best suited for each project role, will best enable the industry to achieve the desired widespread adoption of BIM. The government’s stance on BIM is to be commended. Demanding Level 2 compliance by 2016 is pragmatic and achievable and promotes the very real promise of intelligent infrastructure that is better performing.
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Two page profile
$12,000
85
Example of two-page profile advertisement
Distribution, circulation and readership
50,000
copies will be printed and distributed across the GCC in January 2015 with issues of:
URBAN PLANNING
WASTE MANAGEMENT
The circular model Malek Sukkar on moving away from ‘take-make-waste’ to a smarter paradigm ity planning over the past few decades has evolved to focus on sustainable development, especially in light of rapid urbanisation in metropolises across the world. In tandem with this population growth, a global spike in technological connectivity has propelled the once vague notion of smart cities into the forefront of urban mapping. From routing a daily commute to engaging emergency services in times of crisis, the smart city model is a brave new structure that works on the back of instant access and transparency. Enhancing the lives of residents through improved performance, efficiency and functionality, smart cities take on an integrated approach in terms of their infrastructure, following a circular economic model, where resources are streamlined through a cyclical manufacturing and consumption process. Smart technologies enable the waste industry to grow beyond a collect-andtransport role, and become an integrated waste solutions provider, by giving it access to vast amounts of usable data for quality control. An integrated IT system enables a high level of mobility, connecting trucks, drivers and supervisors to amass quantities of analysable data. Managing the waste collection trucks through vehicle tracking, waste management companies are now able to pinpoint specific details of location, speed and behaviour of drivers. Dynamic weighing on lifters relays data on the volume and weight of the collected waste. Radio-Frequency Identification (RFID) technology on bins, trucks and sites notes public behavioural trends in residential, commercial and municipal areas in real time, which is then centrally available for waste management companies and municipal bodies to keep track of volume and type of waste, and how it is being managed, for both quality control and as a platform to build awareness.
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Malek Sukkar, CEO, averda
AN IDEAL WORLD
Waste as a concept arises only in our current ‘take-make-waste’ linear economic model. The laissez-faire archetype followed by the majority of the world plays the forces of supply and demand off each other, leading to manufacturing on a scale that has never been seen before. What happens to products at the end of their useful life? How is the lifespan of products determined now, considering the rapid rate of obsolescence? The circular economic model addresses these questions by moving away from a oneway trajectory, promoting a regenerative system where waste becomes input. In our current scenario, about 4bn metric tonnes of waste is produced around the world, of which only 1bn is turned into energy, materials or compost. Establishing a circular economy would minimise the need for resources and reduce our impact on the environment. Further, this model would introduce cost-effective
methods of production and consumption through a broad variety of innovative solutions, to get the most out of waste. From collecting waste seamlessly and segregating it at the point of collection, to recycling it based on its contents to reintroduce valuable resources like precious metals, paper and plastic, waste management in the smart city model would shift consumption patterns and public behaviour by default, stimulated by the economic incentives surrounding sourcing valuable materials. At the precarious edge of this fantastic future, present-day researchers face massive challenges, particularly in maintaining the quality and value of recycled materials, which starts from clear and conscientious waste segregation. Once materials are tainted by organic waste, their reusability drops significantly. This is where building awareness in this new paradigm is critical. The importance of waste segregation in the context of a smart city will instinctively be recognised by the private and public sectors when it directly relates to the worth of otherwise highly valued raw materials. The depreciation of this value is enough to drive legislation in a top-down socioeconomic model, in order to encourage the separation of waste and recycling processes to extract these resources. In a bottom-up socioeconomic model, the private sector would be the leader of this change, implementing a holistic model for product collection and reintroduction in the manufacturing cycle. If this model sounds too idealistic to be feasible, it may be because the linear economic model is so globally pervasive. In Europe, smart cities like Amsterdam and Barcelona thrive on the circular economic model. Smart cities offer the opportunity to integrate every aspect of development, eradicating the concept of waste as we’ve come to know it in recent history – moulding living, breathing cities that are adaptable, robust and a delight to live in.
Sponsor
NOVEMBER 3, 2014 JUMEIRAH BEACH HOTEL, DUBAI Dubai’s strong belief in sustainability is reflected thorough initiatives such as the enforcement of the new Green Building regulation that aims at improving the performance of buildings. At Bgreen’s Green Building Codes and Beyond seminar a panel of speakers will be discussing; IMPLEMENTING GREEN BUILDING REGULATIONS Progress since the Green Building regulations came into effect Positive response from the industry Opportunities for suppliers, contactors and consultants Challenges and solutions Collaborations with global companies
BOOSTING ENERGY EFFICIENCY
WASTE MANAGEMENT
Technological innovations Developments in building automation Initiatives and campaigns Existing laws and scope for amendments Role of renewables and clean energy Changing public mindset on conservation
Where are we in comparison to the US and Europe with waste management? What have we learned that we can use? What new initiatives does this region offer the world? Key thoughts on what may be in the future
CONFIRMED PANELISTS Aecom - Irene Montserrat, Building Physicist Rotana Hotel Management Corporation PJSC - Muhammad Ihsanullah Qamar, Cluster Director of Environment, Health & Safety Bee’ah - Speaker TBC Dewan Architects - Engi Jaber, Sustainability Manager Emirates Green Building Council - Saeed Al Abbar, Chairman Etihad ESCO - Hany Ayesh, Director
Imdaad LLC - Mark Siddorn, Senior Director – Environment Lootah Biofuels - Yousif Lootah, CEO MAF Dalkia - Francisco S. Marques, Director, Business Development & Marketing Ramboll - Bill Jolly, Director, MEP & Sustainability Aldar Properties PJSC - Antonio Ceci, Manager – Estidama, Architecture & Interior Design, Operations
FOR SPONSORSHIP OPPORTUNITIES, PLEASE CONTACT Jude Slann, Commercial Director // jude.slann@cpimediagroup.com // +971 4 433 2857 Junaid Rafique, Senior Sales Manager // junaid.rafique@cpimediagroup.com // +971 4 375 5716
SPECIAL REPORT
EASTERN PROMISE
Europe’s rising star As the fastest growing economy in the EU, Poland is keen to build its trade ties with the UAE, and the Middle East. Infrastructure ME reports from Warsaw
oland seems to have left its chequered history far behind with 25 years of uninterrupted growth. As Ilona AntoniszynKlik, Undersecretary of State at Poland’s Ministry of Economy, puts it: “In 1989, we flipped our economy upside down.” Except this was not ‘flipping’ in slow motion. Rather, it was a two-year radical and extremely painful ‘shock therapy’ instituted by then Minister of Finance and deputy Premier of Poland Leszek Balcerowicz, where the old socialist-era economic structure was dismantled to make way for the market economy. “We had a very sharp and difficult transition,” admits Antoniszyn-Klik. “However, we had much less social security than in other countries, so there was less support for the dying industries. We didn’t protect what was considered old.” Poland was the only European country left unscathed by the global financial crisis. “We were the only green island in the sea of red the EU was awash with,” she notes. “In fact, Poland is the only country in Europe to
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have not one single year of negative growth for the past 20 years. We have been growing every year, mostly between 3-5% in the best years and by 1% in the worst years.” The fact that Poland was using its own currency instead of the Euro proved to be a huge advantage, making devaluation of the zloty easier when the first signs of the financial crisis appeared on the horizon. The devaluation boosted the country’s competitiveness in the international markets and ensured that exports didn’t become very expensive. Poland thus achieved the distinction of being the only EU member to avoid recession in 2009. This apart, Poland’s relatively big internal market of 40m people also helped check any slowdown in demand. Poland’s GDP in 2013 was $488bn, almost double of the 2003 figure. The Polish economy has grown faster than that of the EU, by 49% since 2003, while the average figure for the rest of the EU is only 11%. Given its strong economic performance so far, will Poland be joining the Eurozone soon? “We are aware of what happened to the countries around us who joined the Eurozone,” says Antoniszyn-Klik. “If you
are not competitive and not exporting a lot, you will be not be able to sustain within the EU or within the Eurozone. We had signed an agreement that said we will enter the Eurozone the moment we join the EU. However, the EU said at the time that we weren’t ready to join the Euro. Right now, it is the other way round but we have told them that we are waiting for the opportune time. When we reach the right level of competitiveness in terms of being able to compete with our neighbours and Benelux countries, we will join the Eurozone. This will be best for the zone as well.” BEATING A NEW PATH
Since 1989, Poland has developed new industries, markets as well as its internal markets. The country’s efforts are now directed towards developing a new perception of Poland around the world, one that emphasises how and why Poland is different from other European countries. “We are very open and competitive,” says Antoniszyn-Klik. “We get Foreign Direct Investments (FDI) based not on public support or funds but on availability of quality labour, relatively low wages and
SPECIAL REPORT
very high competence of our people.” Poland has 450 higher education institutes with approximately 1.8m students, which means every 9th student in Europe is from Poland. The country also has the highest number of people with secondary and tertiary educational attainment (68%) in the labour market. Poland’s huge internal market of 40m people is also a key attraction for international companies looking to set up a base in the EU. “When you invest here, you not only cater to our internal consumption but also to countries in Central and Eastern Europe,” says the Undersecretary of State. “We have become a hub for many industries coming to Poland. We have very high parameters of higher education and have people with wellprepared skills for work. Our financial system is very conservative, which helped ring-fence our banks from the toxic financial products that led to the crisis. Our strong supervision didn’t allow them to get into our market.” Poland’s GDP structure is undergoing a shift with bulk of the growth currently coming from foreign trade rather than consumption. “We are the world’s biggest exporter of apples, a huge exporter of furniture and exceptional traders in mining machinery and cosmetics,” says Antoniszyn-Klik.
IN NUMBERS
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Poland’s rank in the 2013 Global Manufacturing Competitiveness Index
4
Poland’s European rank, forecasted by UNCTAD’s World Investment Report 2013, in the next two years
$30.34bn
Funds for infrastructure and environment from Poland’s share of EU budget for 2014-2020 in these markets through the UAE.” Currently, 75% of Poland’s trade is with the EU, and the government wants to balance that out. “If there is a crisis in the EU, all of Europe is affected at the same time,” says Antoniszyn-Klik. “But if we are able to diversify our trade, we will be able to compensate for that dependence by tapping growth taking place in
WHY THE UAE?
The Undersecretary of State is a keen admirer of the UAE and its achievements. Being Poland’s representative at the Abu Dhabi headquartered International Renewable Energy Agency (IRENA), she is also familiar with the country. “The UAE is doing a lot for the renewable energy industry, and I must congratulate the government for choosing to host such an important world body,” says AntoniszynKlik. “Most importantly, it has an astonishing and highly successful strategy in terms of transforming the country into a trade hub for the Middle East and Africa.” It is therefore not surprising to learn that Poland is looking to the UAE as its gateway into the rest of the Middle East and Africa. She continues: “We have developed very strong relations with the UAE to not only go into the country and the Middle East region but also Africa. We cannot go into all of these markets on our own but we want to strengthen our positions
Ilona Antoniszyn-Klik, Undersecretary of State at Ministry of Economy, Republic of Poland
other markets or countries.” During the transition to market economy, Poland didn’t have sufficient capital, so the focus was on attracting FDI to Poland. This has now changed to a scenario where Polish companies have started investing abroad. “Right now, Poland is in a position to export knowhow and capital,” she says. “We have invested $6.26bn in Germany and $8bn in North America (Canada and the US). Polish companies are also investing in Asia, and we have started seeing African countries too becoming receptive to our companies.” The fact that 98% of companies in Poland fall under the Small and Medium Enterprises (SME) classification gives an interesting context to the investment taking place overseas. Of course, Poland has continued to maintain a substantial public sector in industries that are of “strategic importance” to the country. But the bulk of the company’s industrial base is made up of private enterprises, erstwhile public companies that were privatised and new industries that have been developed from scratch. Antoniszyn-Klik points out that increasingly, the emphasis is on promoting Poland as a global hub in addition to being a partner for the EU and the East and Central European markets. “We are the sixth biggest economy in Europe and the 22nd biggest economy in the world,” she says. “A 2012 survey by the PolishGerman Chamber of Industry & Commerce ranked us number 1 in terms of attractiveness of FDI among all the companies in Germany. An Ernst & Young global survey in 2013 found us the most attractive country for investment in Central and Eastern Europe.” Poland continues to receive EU funding, and the same is being used in tandem with national funds to achieve long-term targets for specific economic sectors. Poland has been awarded nearly $91.39bn from 2014-2020 EU budget pool. “The biggest target for our economy right now is getting more innovation into production,” says Antoniszyn-Klik. “We are very good in assembling, building and creating products that fall in the medium level of innovation. But we want to join the most innovative countries in the world so are spending more money on innovation and R&D in specific areas like biotechnology and energy savings materials, to name a few.” October 2014
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CONSTRUCTION
HIGH SPENDERS
GCC invests in medical facilities Saudi Arabia is spending more than $23bn on upgrading its healthcare infrastructure
ontracts for new medical facilities across the GCC are expected to reach $9.53bn by the end of 2014, a 25% increase on 2013. Dubai plans to attract 500,000 patients for treatment by 2020 as part of its drive to become a centre for medical excellence in the region and bring a new stream of visitor revenue, according to the Dubai Health Authority (DHA). To cater for these patients, the DHA said, 18 private and four public hospitals will be built over the next few years. The UAE has doubled its health care budget since 2007 and currently ranks among the top 20 destinations for medical tourism. The country spends 3.3% of its GDP on health care, the third highest in the GCC. According to Alpen Capital Investment Banking, the UAE’s medical tourism sector drew revenue of $1.69bn in 2013. Visa rules in the UAE were changed to help encourage medical tourism, simplifying the process for patients to access the country. Dubai Tourism and Marketing believes this market could be worth as much as $30m a year. “The UAE spends an estimated $2bn a year to send patients abroad for treatment,” said Andy White, Group Event Director of The Big 5, the Middle East’s largest building and construction exhibition. “Gulf countries are spending heavily to ensure they can provide the best treatment inside their country and, in the case of the UAE, encourage medical tourists.” “Rising populations and changing demographics are creating a need for more specialised facilities, and in turn driving demand for more buildings. This is providing yet another opportunity for the region’s construction sector, and firms are getting the chance to work on some of the most exciting health care projects,” added White. Saudi Arabia is among the GCC countries forecasted to triple health care expenditure
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Medical tourism The UAE currently ranks among the top 20 destinations for medical tourism
across the region, according to Frost & Sullivan. The Kingdom is spending more than $23bn on improving its hospitals and medical facilities. One of the most high-profile projects is the $1.7bn King Abdullah Medical IN NUMBERS
$1.69bn
UAE’s medical tourism sector’s revenue in 2013
$2bn
UAE’s annual spend on sending citizens abroad for treatment
$23bn
Saudi Arabia’s current spend on improving its hospitals and medical facilities
$1.26bn
Kuwait’s investment in the New Jahra hospital project
City in Makkah, which will have 1,500 beds in total, 500 allotted for specialist referrals. In Kuwait, the Ministry of Health has awarded local company Sayed Hamid Behbehani & Sons the construction contract for the Farwaniya Hospital expansion. The $938m project involves the construction of three buildings making up a new hospital, including an ER facility. Kuwait is also investing in new facilities, including the $1.26bn New Jahra hospital project, currently under tender for construction. Construction professionals involved in the development of health care facilities will have access to information and products vital to the successful delivery of these medical projects at the conferences and workshops at the Big 5. ‘Effective cost control in construction projects’ will be presented by Reem Murad, Cost Control Manager at Arabtec, whose projects include Al Ain Hospital and Al Ahalia Hospital. Brett Patrick, Technical Manager, Ramboll Façades, who has worked on high-profile health care developments such as Cleveland Clinic Abu Dhabi and King Saud Medical City in Riyadh, will deliver a workshop on highperformance façades from design through delivery. The Big 5 will run from November 17-20 at the Dubai World Trade Centre.
CONSTRUCTION
TECHNOLOGY
Resource planning IFS’ Ian Fleming on why project-based Enterprise Resource Planning (ERP) helps contractors manage projects better ost companies are involved with projects to some extent. Whether or not projects constitute the core of the company’s profitability, most managers agree that efficient project management plays an important role in their business. For a contractor managing projects on a regular basis, integrating projectbased ERP into a company’s core business processes can help improve profitability and give them a competitive edge.
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WHAT IS PROJECT-BASED ERP?
Project-based ERP takes project management to the next level. By focusing on centralising information on project status, resources, product data and customers, project-based ERP supports consistent practices and increases visibility of the entire project. It is important to ensure that the solution chosen is integrated for management of supply and demand for all resources, and for incurred cost to flow up to financials as well as up through the project, so the team can see how each project is progressing over time. Some enterprise application vendors claim to offer integrated project management, but it is often limited to accounting functions and not tied into the rest of the applications within the project. So it is important to look for the ability to connect your project functionality into other areas of the application, from the original contract through design into construction/ manufacture, and all the way to after-sale service, maintenance or decommissioning.
neering and the creation of documents, but also other time-driven costs that are typically considered indirect or overhead costs • Full project enterprise planning: Project-based ERP ensures the functionality is connected into the application’s planning engine, so all production items (if needed) show up on the project plan
“For a contractor managing projects on a regular basis, integrating project-based ERP into a company’s core business processes can help improve profitability” IAN FLEMING, MANAGING DIRECTOR – MEASA, IFS
HOW CAN PROJECT-BASED ERP HELP?
Project-based ERP delivers the following benefits: • Tracking costs: Project-based ERP not only manages front-end costs including engi-
Project-based ERP allows the team to reduce risk
• Standard Plan: This allows items such as fas-
teners to become common to multiple projects. Obviously, the goal of implementing management by project is to allow detailed management and analyse parts of the business as de facto projects; but some parts should still be shared across multiple projects. Standard plan capabilities allow this • Re-use: Organisations often enter into contracts when the final specification is still incomplete. Project-based ERP allows the team to reduce risk and improve the probability of being right the first time, by providing the ability to copy from the template of a similar project • Swap (borrow and pay-back): With project-based ERP, resource items can be moved from one project to another to maximise resource availability, at the same time reducing the cost of holding items that are not required as originally planned, due to changing priorities Many companies are organised in a departmental structure, which can at times be rigid and territorial. Management by project requires human resources from various departments to be on loan for each project, creating a temporary organisation with its own profit and loss (P&L) account. It is also important for the technology to allow management to see whether certain resources in each department might be overloaded and address capacity issues. Project-based ERP is truly opening a whole new world of software that supports the challenging markets of the 21st century. Technology can help facilitate a projectbased approach, but ultimately it is up to the management of each enterprise to take advantage of these capabilities and create a business culture that is agile enough to respond to today’s challenges. Ian Fleming is Managing Director for IFS’s operations in the Middle East, Africa and South Asia regions. October 2014
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EXECUTIVE INSIGHTS
Rene Mayer
“The current cost of steel corrosion in the UAE is estimated to be $12.5bn per year”
Costly corrosion Rene Mayer, Concept Manager–Building Components, Jotun UAE, on how the country can coat its way out of corrosion troubles in concrete structures orrosion of concrete reinforcing steel is a costly and dangerous problem throughout the world; but in the Gulf, the problem is heightened. Here, corrosion is caused by chlorides and moisture penetrating the concrete from sources such as sea water, air and de-icing salts, catalysing the steel corrosion. The products resulting from the reaction occupy a much greater volume than the steel itself, causing intense pressure on the concrete. This leads the concrete to crack and spall, leading to further corrosion of the steel and accelerating the deterioration of the overall structure. With an environment that favours steel corrosion – higher salt content in seawater and elevated levels of air temperature and humidity – research indicates that the service life of buildings in the region can be significantly lower in comparison to other areas. The current cost of steel corrosion in the UAE is estimated to be $12.5bn per year – a result of the lack of protection used on steel infrastructure. And with the number of
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construction projects ramping up ahead of mega events, such as the Dubai Expo in 2020 and the World Cup in 2022, the expense is expected to become even more striking. There are several strategies that can prevent
POLICY PROTECTION A 2001 study, funded by the US Congress with oversight by the Federal Highway Administration (FHWA) and support from NACE International, provided broad research on direct and indirect costs of corrosion for US industry sectors. The results of the study indicated the annual estimated direct cost of corrosion in the US was $276bn. The study led Congress to develop a Corrosion Policy and Oversight (CPO) office within the Department of Defense (DoD). The study also resulted in Congressional support for the launch of the world’s first undergraduate degree on corrosion.
steel corrosion in these harsh conditions, whilst maximising the lifetime of a structure. One of the most efficient strategies is coating steel with a fusion bonded epoxy powder, which works by preventing harmful substances from reaching the surface of the steel. Fusion Bonded Epoxy (FBE) coatings have proved to significantly postpone corrosion initiation in challenging climate conditions, thus delaying the resulting cracking in the concrete and necessary repairs. This, in turn, prevents the damage of the reinforcing steel and concrete that can compromise the structural integrity of a building. The application of FBE coatings is straightforward and highly standardised, to ensure high quality and reliability of protection. Only adding a fraction of a percent to the cost of a project, FBE coating of reinforcing steel can generate substantial long-term savings – not only through avoiding the cost of repairs but also circumventing the economic impact of closure during essential maintenance. Also, by incorporating an epoxy powder coating into initial specifications, you increase the longevity of the structure and avoid significant financial loss in the future.
EVENTS
mark your diary... POWERGEN MIDDLE EAST 12–14 OCTOBER, 2014, ABU DHABI Attracting delegates and attendees from over 50 countries across the MENA region and around the world, this event is the industry’s leading platform to meet and network with senior executive and industry leaders. Contact: Sue McDermott Tel: +44 1992 656 632 Email: suemc@pennwell.com www.pennwell.com
HAPPENING IN 2015
SAUDI RAIL AND LOGITRANS 25-27 January 2015, Riyadh rganised under the patronage of the Ministry of Transport and the Saudi Railways Organisation (SRO), the Saudi Rail and Logitrans Conference will be held at the Riyadh International Convention & Exhibition Centre (RICEC), co-located with the Saudi Rail and Logitrans Trade Exhibition. Transport infrastructure and transformation of the country’s rail network have become a national priority under Saudi Arabia’s massive $500bn budget, which aims to expand and diversify its economy by 2020. Transportation infrastructure accounts for one fifth of the budget. The Saudi Rail and Logitrans Conference will bring together leading stakeholders involved in Saudi Arabia’s efforts to enhance its transportation infrastructure. The Kingdom’s nationwide programme of investment not only intends to provide faster and more efficient travel networks for the people, but also to create a modern and reliable multi-modal logistics and transportation system to boost the
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nation’s economy. The Saudi Rail and Logitrans Conference aims to serve as a platform for rail and logistics professionals in Saudi Arabia and across the world to discuss the common challenges affecting their projects and solutions to optimise day-to-day operations. Day 1 of the conference will focus on Riyadh Metro, Saudi Landbridge and Makkah Metro projects and rail technologies, while Day 2 will look at topics like connecting rail networks to major ports and inter-modal transportation. Saudi Rail 2015, Saudi Logitrans 2015 and the TRANS 4 SAUDI ARABIA exhibition will take place from January 25-28, 2015 at RICEC. The second edition of the TRANS 4 SAUDI ARABIA exhibition will focus on the key public transport projects in the Kingdom.
Contact: Advanced Conferences & Meetings Tel: +961 5 959 111 Email: nour.naffi@acm-events.com www.saudirailandlogitrans.com October 2014
ADIPEC 2014 10–13 NOVEMBER, 2014, ABU DHABI The 17th edition of the Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC) 2014 will be held at the Abu Dhabi National Exhibition Centre (ADNEC). The event expects to welcome more than 60,000 visitors and over 1,800 exhibitors this year. Contact: dmg events Tel: +971 2 444 4909 Email: clairepallen@ dmgeventsme.com www.adipec.com GULF TRAFFIC 2014 08–10 DECEMBER, 2014, DUBAI Gulf Traffic Exhibition & Conference 2014 will showcase the latest in road infrastructure, traffic management systems and technologies for safe and efficient mobility. This year’s edition will also host the region;s largest parking conference. Contact: Richard Pavitt Tel: +971 4 4072606 Email: richard.pavitt@ informa.com www.gulftraffic.com
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INFRASTRUCTURE MILESTONES
#008 King Fahd Causeway Almost three decades on, it’s clear that building the Arab world’s longest causeway was a farsighted decision s an island nation in the Arabian Gulf, the Kingdom of Bahrain’s sole terrestrial link to any other country is the 25km King Fahd Causeway, which links it to the Kingdom of Saudi Arabia. Set to complete three decades of service in 2016, the idea to build the causeway germinated way back in the early 1960s. It is said that plans began to crystallise officially during a courtesy visit by HH Sheikh Khalifa bin Salman Al Khalifa of Bahrain to the late King Faisal of Saudi Arabia in 1965, when the latter expressed his interest in the project. Three years later, a joint committee was formed by Bahrain and Saudi Arabia to study the feasibility of the project. The World Bank was roped in to suggest the best way to implement such a mammoth undertaking, given its environmental and geographical impact. Nearly a decade and half after
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the idea was first mooted, the longest causeway in the Arab world was opened on November 26, 1986 by the late King Fahd bin Abdul Aziz and the late Emir Shaikh Eisa Bin Salman Al Khalifa. The four-lane King Fahd Causeway is used by 40,000 people every day. In March this year, a new record was set with more than 770,000 people using the bridge during the 10-day Saudi school break. The causeway is a crucial artery for the flow of goods between the two kingdoms, helping re-position Bahrain as a critical logistics hub for the central Gulf region. Cargo transported across the link ranges from consumer goods, fruits and vegetables to cement, steel and building materials. The causeway also serves as a tourist attraction of sorts, thanks to its distinctive series of humpbacked rises and long flat stretches, supported by 12,430m of viaducts and five separate bridges made from 350,000 sqm of concrete and reinforced by 147,000
October 2014
Fast facts Start of operations: November 26,1986 Total project cost: $1.2bn Average daily vehicular traffic: 50,000 Total crossings during 2013: 19m Year-on-year growth: 12%
tonnes of steel. But the causeway is notorious for its traffic congestion due to unorganised queuing, and long waiting periods that stretch into days at times. During Ramadan last year, Ahmed Dhaif, head of the Bahrain Transport Association, told the local press that the waiting time for trucks to cross into Saudi Arabia was five days. Recently, the rulers of both countries agreed to build a second 25-km causeway, incorporating rail lines in addition to roads. Named after Bahrain’s King Hamad, the new $5bn causeway with two rail lines for cargo and passengers will integrate Bahrain into the GCC Rail network. The feasibility study is expected to be completed over the next three months. With the alignment finalised, the focus is on sorting out technical issues, financing and private sector participation. Meanwhile, the long wait for the Bahrain-Qatar friendship bridge continues.
Bringing you Container Terminal 3 at Jebel Ali Port, Dubai • World’s largest semi-automated facility • Capacity of 4 million TEU, taking total capacity at Jebel Ali Port to 19 million TEU DP World, UAE Region P.O.Box 17000 Dubai Tel. +971 4 881 5555 marketing@dpworld.com www.dpworld.ae
• 19 automated quay cranes and 50 automated rail-mounted gantry cranes • Quay length of 1860 metres, 70 hectare storage yard and 17 metres depth
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