UAE energy sector contracts triple to $8.8bn

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By Sona Nambiar  www.business24-7.ae

The value of total construction contracts awarded in the UAE in the energy sector almost tripled to $8.8 billion (Dh32.32bn) for the period of January to May this year from $3bn against the same period in 2009, according to Ventures Middle East, a project tracker and analysis provider.

Construction contracts awarded in the sector rise from $405m in May 2009 to $3bn this year. (EB FILE)
Construction contracts awarded in the sector rise from $405m in May 2009 to $3bn this year. (EB FILE)

Meanwhile, construction contracts awarded in the UAE’s energy sector shot up dramatically from $405 million in May 2009 to $3bn in May this year, it added. The UAE is the world’s third-largest oil exporter and has the world’s fifth-largest gas reserves.

In line with Abu Dhabi’s aim to achieve its seven per cent target for renewable energy use by 2020, the capital’s alternative energy company Masdar said last Wednesday that it would partner with French oil firm Total and Spain’s Abengoa Solar to build “the world’s largest” concentrated solar power plant in the UAE.

Shams 1 world’s largest

The consortium will own, build and operate Shams 1, a $600m plant in Madinat Zayed, which “will offset 170,000 tonnes of carbon dioxide annually”, according to Masdar CEO Sultan Al Jaber. Construction of the plant, which will cover an area of 2.5 sq km (one sq mile) and have a 100 megawatt capacity, will begin in the third quarter of 2010 and be completed in approximately two years. It will be followed by Shams 2 and 3.

“In 2008, during the boom period, we saw many design and build contracts taking place and developers signing long-term agreements with contractors since they wanted to avoid the tendering process and wanted to have contractors in place for their projects. But in 2009, we saw a return to the traditional tendering method in the market,” Mibu John, Syndicated Research Director at Ventures Middle East told Emirates Business.

Additional data from the firm showed that the total value of construction contracts in the UAE dropped by 18 per cent to $5.4bn in May 2010 from $6.6bn in May 2009 as against a 26.5 per cent drop in the Gulf Co-operation Council (GCC) states in May this year to $9bn from $12bn in May 2009, according to Ventures.

Positive feeling

Meanwhile, the total value of projects dropped by 10.51 per cent in the GCC to $43bn for the period January to May this year from $48bn for the same period in 2009, as against an 18 per cent drop in the UAE to $17.4bn for January to May 2010 from $21.3bn from January to May 2009, it added.

“When you compare 2009 with 2010, we see the most contracts being awarded in April 2010. There is a positive feeling in the market and we will hopefully see a shift in the situation by the second half of 2010,” added John. “The industry feedback is that more contracts will be awarded in the second half of 2010 compared with the same period in 2009. But it all depends on the clients and their final decisions. If the positive attitude continues, then one can expect a steady growth of 10 per cent to 15 per cent in the market by end 2010. ”

Abu Dhabi road projects

However, apart from the major expected contract awards on the Presidential Palace and the Mafraq Hospital project in Abu Dhabi, the Municipality of Abu Dhabi will also open a number of significant bids for road projects by the third week of June.

It has currently invited bids for the construction of various roads at Mussafah East and West and Mohammed Bin Zayed Residential City. The last date for purchase of the tender documents is June 17 and bids’ opening day is June 21. It has also invited contractors to bid for minor project works in Abu Dhabi City. The last date for purchase of the tender documents is June 24 and bids’ opening day is June 28.

Additionally, it has invited bidders for the landscaping of the outer area of Al Raha Residential Parks District. The last date for purchase of the tender documents is June 17 and bids’ opening day is June 21 . Each bid must be accompanied by an initial deposit in the form of a bank guarantee amounting to Dh1 million and valid for acceptance for 120 days from the bid’s opening date.

Musanada invites bids

Musanada, an Abu Dhabi-owned company, has invited licensed companies in the field of topographic surveying works in the UAE to bid for work on its relevant projects in Abu Dhabi. Interested firms must submit tenders by June 20 at the Musanada offices in Mohammed Bin Zayed City office.

“I see renewed confidence in Abu Dhabi and new projects are being put on track such as the Masdar solar project, Khalifa University, Zayed University, Mafraq Hospital, Cleveland Hospital as well as large projects such as the Khalifa Stadium and Abu Dhabi Airport,” George Berbari, CEO at DC Pro Engineering, told this newspaper.

“We see that the Abu Dhabi government is positive about the future and we are again seeing some big projects in the market. We also see the master planning of the metro in Abu Dhabi and the impending UAE rail,” Berbari added.

20 per cent growth

The “UAE Construction Industry Outlook to 2012” report by RNCOS, an industry intelligence provider, said that the UAE construction industry is expected to grow at a compounded annual growth rate (CAGR) of around 20 per cent during 2010-2013.

“The UAE accounted for nearly 20.3 per cent of the total construction industry in the region, followed by Saudi Arabia, Algeria and Egypt in 2008,” said an excerpt from the report.

Despite the sluggish growth in 2009 amid the global financial distress, the construction industry managed to record strong growth during 2007-2009 and contributed an approximate eight per cent to the country’s gross domestic product in 2009. “Rapid economic development is the major factor driving construction activities and infrastructure development in the UAE,” the report pointed out.

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