Around the Gulf, supply shortfalls and ageing equipment are providing continued opportunities for contractors in the utility sector.
Although some supply demand projections may have to be revised in the region, as economic conditions have an impact on growth, significant infrastructure requirements remain.
“We can expect opportunities to arise from rehabilitation or phasing out of ageing desalination plants, and the need to develop wastewater networks and sewage treatment plants,” said Vivek Gautam, senior research analyst with Frost & Sullivan, a consultancy.
“Even if we take into account the impact of current economic situation on the demand side, the infrastructure requirements in Middle East countries remain so huge that we can expect significant opportunities in this space.”
Gautam identifies three countries of particular interest – Saudi Arabia, Oman and Qatar – with Saudi Arabia having the most potential. Finding finance remains the big question.
“Developments in the Saudi Arabian utilities sector are interesting. My opinion is that the market there is set for huge growth,” he said. “Considering the current situation, undoubtedly governments in the region will have to play an enhanced role in financing the utilities infrastructure development.
“In the next two years, I see a significant challenge facing the tendering authorities and sponsors in raising finance. On the brighter side, infrastructure projects can expect to see less competition from other sectors in tapping the financing sources.”
Government involvement with project finance will be welcomed by contractors, who see funding as the greatest challenge in utilities.
“In projects with the government, there is no problem with the finance because payment is guaranteed,” said Tawfiq Abu Soud executive director of infrastructure, water and power (IWP) at Drake and Scull International. “However, with the utility providers, we have to ensure that the funding for the projects is available.”
