MEED_141212_M

www.meed.com 

12-18 December 2014 

Vol 58 No 50 

CONSTRUCTION 

CH2M Hill and Mace to 

oversee Dubai Expo site 

KUWAIT 

Firms submit prices for 

Al-Zour new refinery 

INTERVIEW 

GDF Suez on its Middle 

East growth strategy 

SPECIAL REPORT 

Banking: Club lending 

gains favour in the GCC 

AGENDA 

Balancing the books 

Budget overruns spell end to low-cost contracting 

PULL-OUT SUPPLEMENT: MIDDLE EAST SMART CITIES 

BAHRAIN 6.000 dinars SAUDI ARABIA 60.00 riyals 

JORDAN 11.40 dinars UAE 60.00 dirhams 

KUWAIT 4.750 dinars UK 10.00 pounds 

QATAR 60.00 riyals US 16.00 dollars 

Registered at International Media Production Zone

HOW TO SUBSCRIBE: 

Get full print and online access to MEED 

Visit www.subscription.co.uk/meed/AAWW 

Call +44 (0)1858 438 837 and quote Priority 

Code AAWW. 

12-18 December 2014 Vol 58 No 50 

MEED HEAD OFFICE 

Al-Thuraya Tower 1, 20th Floor, Offi ce 2004, 

Dubai Media City, PO Box 25960, Dubai, UAE 

Tel +971 (0)4 818 0200/0300 

Fax +971 (0)4 368 8025 

Email: fi rstname.surname@meed.com 

EDITORIAL 

Editorial Director 

Richard Thompson +971 (0)4 818 0256 

richard.thompson@ 

Editor (MEED magazine) 

Elizabeth Bains +971 (0)4 818 0240 

elizabeth.bains@ 

News Editor 

Colin Foreman +971 (0)4 818 0238 

colin.foreman@ 

Supplements Editor 

Austyn Allison +971 (0)4 818 0241 

austyn.allison@ 

Banking & Finance Editor 

Rebecca Spong +971 (0)4 818 0255 

rebecca.spong@ 

Power & Water Editor 

Andrew Roscoe +971 (0)4 818 0237 

andrew.roscoe@ 

Reporter 

Philippa Wilkinson +971 (0)4 818 0368 

philippa.wilkinson@ 

Construction Reporter 

Hossam Abougabal +971 (0)4 818 0250 

hossam.abougabal@ 

Energy & Industry Editor 

Kevin Baxter +971 (0)4 818 0246 

kevin.baxter@ 

Energy & Industry Editor 

Mark Watts +971 (0)4 818 0248 

mark.watts@ 

Energy & Industry Reporter 

William Crisp +971 (0)4 818 0242 

William.Crisp@ 

Tenders Writer 

Jane Bishop +44 (0)20 7728 4830 

jane.bishop@ 

Production Editor 

Ken Campbell +971 (0)4 818 0245 

ken.campbell@ 

Sub Editor 

Ananda Shakespeare +971 (0)4 818 0235 

ananda.shakespeare@ 

Sub Editor 

Sneha Abraham +971 (0)4 818 0259 

sneha.abraham@ 

Art Editor 

Martin Staniszewski +971 (0)4 818 0249 

martin.staniszewski@ 

DIGITAL 

Head of Content Development 

Robert Jones +971 (0)4 818 0257 

robert.jones@ 

Digital Support Executive 

Lara Golden +971 (0)4 818 0247 

lara.golden@ 

ADVERTISEMENT SALES 

Sales Support and Europe Enquiries 

Monica D’Souza +971 (0)4 818 0334 

monica.dsouza@ 

Saudi Arabia Enquiries 

Islam A Kareem +966 (0)1 479 7692/ 

+966 (0)54 772 1600 

islam.hafez@ 

MEED INSIGHT 

Head of MEED Insight 

Sari Razzak +971 (0)4 818 0258 

sari.razzak@ 

TOP RIGHT GROUP HEAD OFFICE 

The Prow, 1 Wilder Walk, 

London W1B 5AP, UK 

Tel +44 (0)20 7715 6000 

For a full list of reader services, editorial and 

advertising contacts visit www.meed.com 

Member of the Audit 

Bureau of Circulation 

All rights reserved © 2014 MEED Media FZ LLC, 

An EMAP Service – part of Top Right Group 

Printed by Headley Brothers Ltd, UK 

Registered as a newspaper with the Post Offi ce 

ISSN 0047-7238 

AGENDA page 18 

SPECIAL REPORT page 27 

SPECIAL REPORT page 37 

Cover: Shutterstock 

Quote of the week 

“Low oil is going to 

change the world, 

and, of course, 

change the Middle 

East. People will do 

things differently” 

Lucas Hautvast, GDF Suez Energy 

International, Interview page 23 

MEED sponsored by 

COMMENTARY 

4 Choosing the right model 

Contractors are becoming 

more reluctant to participate 

in aggressive bidding on projects 

Expo award to lift sentiment 

Dubai’s recent Expo-related 

award should boost confidence 

5 Falling oil price stumps 

utilities The decline in oil prices 

has created uncertainty over 

future power projects 

Abu Dhabi gets breathing 

space The revision of population 

estimates means cuts in 

investment are likely to follow 

Security situation uncertain 

in GCC Recent terror attacks 

show it will be hard to prevent 

threats to Western interests 

NEWS 

7 CONSTRUCTION CH2M Hill and 

Mace win Dubai Expo deal 

ENERGY & INDUSTRY 

8 ENERGY Saipem and Essar bid 

low on Al-Zour refinery package 

PETROCHEMICALS Oman 

prequalifies firms for Liwa project 

9 ENERGY US could overtake 

Qatar gas exports by 2020 

PETROCHEMICALS Tebodin 

wins UAE oil and chemical 

design deals 

ANALYSIS Non-Opec producers 

to dominate crude capacity 

10 INDUSTRY GCC metal projects 

stall due to shift in focus 

INDUSTRY Egypt steel demand 

set to grow by 11 per cent 

CONSTRUCTION & 

INFRASTRUCTURE 

11 CONSTRUCTION Firms to offer 

revised bids for Aramco stadiums 

TRANSPORT Dubai to award 

first part of airport expansion 

12 CONSTRUCTION Optimism 

dampens across GCC industry 

CONSTRUCTION Work starts 

on Omniyat maritime city project 

WATER Arcadis wins Mecca 

water management contract 

13 CONSTRUCTION Firms invited 

for Abu Dhabi shopping mall 

ANALYSIS Masdar pilots 

sustainable desalination 

15 WATER Black & Veatch wins 

Jeddah desalination deal 

WATER Abu Dhabi to spend 

$1.6bn on treatment units 

POWER More than 40 firms vie 

for Masdar solar power project 

FINANCE & MARKETS 

16 ECONOMY Poorer Egyptians face 

huge barriers to access finance 

MARKETS Dubai Parks & 

Resorts lists on DFM 

GOVERNMENT & ECONOMY 

17 GOVERNMENT Concerns grow 

over GCC terror threat 

GOVERNMENT Bahrain prime 

minister appoints new cabinet 

AGENDA 

18 Energy A period of less 

aggressive bidding is arriving 

in the Middle East 

ECONOMY 

21 Regional Low crude prices 

will provide an economic boost 

for oil importers 

INTERVIEW 

23 Lucas Hautvast GDF Suez’s 

new Middle East head on how 

financing models are changing 

in the private developer market 

PROJECTS 

42 Market update Little change 

as states remain cautious 

SPECIAL REPORTS 

BANKING & FINANCE 

27 Comment Loan books are 

steadily expanding in the region 

28 Lending Project owners are 

increasingly choosing club deals 

30 P r o fi l e National Commercial 

Bank is looking towards a fully 

sharia-compliant future 

32 Interview The chairman of 

Bank of Palestine on the strong 

investment climate in the 

Palestinian Territories 

34 Microfinance Microfinance 

has got off to a slow start in the 

Middle East 

HEALTHCARE 

37 Comment GCC healthcare is 

transforming into a free market 

38 Spending The Middle East is 

the fastest-growing region in 

terms of consumer spending 

40 Recruitment Governments 

across the GCC are looking to 

recruit more medical personnel 

Next week’s Special Report: 

SAUDI ARABIA 

www.meed.com 

12-18 December 2014 | MEED | 3

Commentary 

energy 

Choosing the 

right model 

Clients are bracing for higher 

bids as contractors become 

more reluctant to participate 

in aggressive bidding on projects 

Middle East: Offers incredible opportunities for firms 

The rise of South Korean contractors in the 

region’s hydrocarbons process plant projects 

market was meteoric and despite a 2013 

that shook most of them to their foundations, 

many are still winning large contracts across 

the region. 

What 2013 proved was that when something 

looks too good to be true, it usually is. Some of 

the bids for projects between 2009 and 2012 

were too low and it was not surprising when 

several South Korean firms posted huge losses. 

It is hard to pin blame on anyone in this situation. 

On one hand, you can say clients should 

have voiced concerns about the low prices. On 

the other, you cannot blame them when a contractor 

is prepared to take the full risk of deliv- 

ery while also shaving a few hundred million 

dollars off the original budget. 

Lump-sum turnkey (LSTK) is a clientfriendly 

model of carrying out project work 

and if the scheme is finished early and on 

budget, it can offer astonishing returns for the 

contractor. It is when delays kick in that the 

problems start and the losses rack up. 

Over the past five years, the Middle East has 

offered contractors incredible opportunities 

across the hydrocarbons value chain. If a contractor 

passes the client’s prequalification criteria 

in terms of technical ability and commercial 

stability, then it is up to them to submit a 

sensible offer for the work. However, there is a 

counter argument that says by allowing a lot of 

contractors to bid on projects clients were fostering 

a climate of aggressive competition. 

Despite the recent problems, it is still likely 

LSTK will remain the favoured model for the 

region’s hydrocarbons projects. The same contractors 

that racked up losses in 2013 made massive 

profits in the preceding few years and there 

remains few opportunities in other markets. 

Moving forward, clients are braced for 

higher prices as firms are now reluctant to 

engage in such low-ball bidding, but LSTK still 

offers them the lowest risk option to build a 

large process plant. 

■ Agenda page 18 

uae 

expo award to 

lift sentiment 

Contractors in Dubai are less 

optimistic about the future as 2015 

approaches, but the recent Exporelated 

award should lift their spirits 

When Dubai was selected to host the 2020 

World Expo in November 2013, the decision 

was met with great enthusiasm by the 

emirate’s construction sector. 

At the start of 2014, firms were expecting a 

bevy of new projects and almost guaranteed 

growth in the run-up to the event, and at long 

last, they hoped to consign Dubai’s real estate 

crash and debt crisis to history. However, 

much has changed in the year that followed 

and the memories of the past are starting to 

haunt contractors once again. 

Although there has been planning behind 

the scenes, construction work directly related 

to the Expo is still some way off from being tendered. 

In the meantime, new regulations have 

cooled Dubai’s overheating property market, 

oil prices have fallen sharply, the stock market 

has slumped and concerns about the emirate’s 

ability to fund its future projects grow stronger. 

The recent appointment of the US’ CH2M 

Hill and UK-based Mace Group as the programme 

management team and the selection 

earlier this year of HOK also of the US and Arup 

also of the UK for the design of the development 

for Dubai Trade Centre Jebel Ali, which contains 

“next year, work on 

the masterplan will 

be completed and 

construction on the expo 

site can begin in earnest” 

the Expo site, should convince companies that 

while construction has not yet begun, the preparations 

for the event are moving ahead. 

Next year, work on the masterplan will be 

completed and construction on the Expo site 

can begin in earnest. By then, the enabling 

works will have started for the $33bn expansion 

of Al-Maktoum International airport, 

along with other projects in the Dubai World 

Central district and the Jebel Ali area. 

Delivery will be the yardstick for success in 

2015 and 2016. If these schemes move forward 

according to schedule, they will reverse the 

decline in sentiment that the market has experienced 

during the course of this year. If they are 

delayed, the doubts will only grow stronger. 

■ News page 7 

photograph: DrEaMstiME 

4 | MEED | 12-18 December 2014 www.meed.com

Q 

“many will welcome a 

return to less aggressive 

bidding [in the middle east]” 

Agenda page 18 

regional 

Falling oil price 

stumps utilities 

governmenT 

Security situation 

uncertain in gCC 

The decline in oil prices has created 

uncertainty heading into 2015 over 

future power generation projects 

Recent terror attacks in the region 

show it will be hard to prevent 

threats to Western interests 


The sharp drop in oil prices in 2014 has created 

an interesting conundrum for governments 

and utilities regarding their future power 

strategies moving into 2015 and beyond. 

While the Middle East’s developing power 

sector has lagged behind other regions in introducing 

renewable capacity, in the past couple 

of years, there has been a commitment from 

most governments for alternative energy programmes 

on some scale. 

The push to utilise renewable energy was 

driven by high oil prices, with exporters seeking 

to benefit from maximum returns from 

hydrocarbon reserves and importers seeking to 

reduce rising fuel bills. As a result, most utilities 

began to introduce renewables programmes, 

and some began exploring the 

nuclear power option as part of efforts to meet 

rising demand while reducing fuel costs. 

Since 2010, Abu Dhabi and Dubai have 

started and completed solar energy schemes 

and Saudi Arabia has launched plans for one 

of the world’s most ambitious renewables programmes. 

However, the sharp drop in oil 

prices since June has raised questions over 

how governments will proceed with future 

power generation projects. 

If oil prices remain at current levels or 

fall even further, it could result in clients having 

less impetus to move ahead with more 

expensive renewable and nuclear power projects. 

Conversely, with governments seeking 

to balance budgets, selling fuel on the market 

at lower price such as $60 a barrel is still 

much higher than providing it for domestic 

power generation. 

With no signs of oil prices returning to more 

than $100 a barrel any time soon, governments 

and utilities will have a lot of major decisions 

to make in the coming year about how to proceed 

with power programmes. 

■ Interview page 23 

Abu Dhabi: Lower population growth than forecast 

eConomy 

abu Dhabi gets 

breathing space 

The downwards revision of 

population estimates means cuts 

in investment are likely to follow 

abu Dhabi’s Urban Planning Council (UPC) 

expects the capital to have 700,000 fewer 

residents by 2030 than originally projected. 

This downwards revision will have a ripple 

effect on investment across the emirate. 

In 2007, the UPC’s Vision 2030 plan set out a 

strategy to guide Abu Dhabi’s development in 

a sustainable way. The original plan was based 

on a population projection of 3.1 million residents 

in the city, with contingency plans for up 

to 5 million. Seven years on, the current population 

of Abu Dhabi has reached an estimated 

2.5 million, with 1.5 million in the capital, up 

from 809,000 in 2005, according to the Statistic 

Centre Abu Dhabi. However, this boom is set to 

slow and the capital’s population is only 

expected to reach 2.4 million in 2030. 

Up to half of the investment envisaged in the 

past decade may no longer be needed. This will 

primarily hit housing, healthcare and education 

investment, and civil infrastructure. It will also 

dampen an already slow real estate market. 

Programmes to increase water and power 

capacity will also be affected. Abu Dhabi had 

been facing serious shortfalls in water supply by 

2015. But these revisions suggest further capacity 

will not be needed as urgently as thought. It 

also grants some breathing space for strained 

power generation capacity until the Baraka 

nuclear power plant comes online in 2017. 

The government will be giving a sigh of relief, 

but this is not good news for firms hoping for an 

expansive project pipeline in the emirate. 


on 4 December, the UAE’s Interior Ministry 

released a video of the police operation to 

arrest the suspected killer of Ibolya Ryan, an 

American primary school teacher who was 

stabbed to death in an Abu Dhabi shopping 

mall in what has been called a “personal terrorist 

act” by the authorities. 

In the video, armed police officers are 

briefed by officials before they burst into a residential 

compound and arrest the suspect. 

Despite the footage demonstrating how wellequipped 

and efficient the UAE police force is, 

it may not have done enough to fully reassure 

foreign companies doing business in the GCC. 

The murder in Abu Dhabi comes after a 

series of attacks on Westerners in Saudi Arabia, 

including a shooting that has been claimed by 

supporters of the jihadist group Islamic State 

in Iraq and Syria. 

In the wake of these attacks, risk consultancies 

have reported increased demand from 

concerned firms for security briefings on countries 

in the region. 

Analysts say the threat level in the GCC 

remains low compared with elsewhere in the 

Middle East, but it may well worsen due to the 

large number of fighters that are returning from 

jihad in Syria, and increased government military 

action against Islamists in Syria, Iraq, 

Libya, Yemen and Egypt. 

The GCC’s well-funded security forces mean 

large-scale attacks on high-profile targets are 

unlikely, but opportunistic attacks on Western 

interests carried out by individuals or small 

groups will be harder to prevent. 


www.meed.com 


Stay informed 

Download the 

MEED app today 

Updated throughout the day 

Comprehensive analysis of all the latest news, data and deals 

Access MEED every day on your smartphone or tablet 

Don’t know your log-in details 

Email CustomerService@meed.com 

and a customer service representative will help you.

i a n C 

a n a l 

E77 

E66 

Construction 7, 11, 12, 13 

Economy 16 

Energy 8, 9 

Government 17 

Industry 10 

Water 15 

News 

CONSTRUCTION UAE 

CH2M Hill and Mace win Dubai Expo deal 

US/UK team to manage development of Dubai Trade Centre Jebel Ali 

COLIN FOREMAN 

Dubai World Trade Centre has 

appointed a team of US-based 

CH2M Hill and UK-based Mace 

Group for the programme management 

of the Dubai Trade Centre 

Jebel Ali development, which 

includes the site that will be used 

for the 2020 Expo. 

The appointment is the most 

significant step yet in Dubai’s 

preparations for the Expo. The 

announcement on 27 November 

2013 by Paris-based Bureau International 

des Expositions (BIE) that 

Dubai had been selected to host 

the event provided an immediate 

confidence boost to the emirate’s 

economy and since then, firms 

have been eagerly waiting to win 

work on the preparations, including 

construction projects. 

Expo costs 

It is estimated the Dubai Expo 

2020 event will require e6.45bn 

($8.8bn) of investment for the 

development and operational 

costs until the end of the event. 

Both CH2M Hill and Mace, 

together with UK-based Laing 

O’Rourke, were part of the programme 

management team for 

the preparation of the 2012 London 

Olympics. For Dubai Trade 

Centre Jebel Ali, CH2M Hill and 

Mace will be managing the development 

of a 4.4-square-kilometre 

site that includes a 1.68-sq-km 

ticketed area for the Expo event. 

EXPO LOCATION 

Dubai Metro Red Line 

Expo 2020 venue 

Sources: MEED; RTA 

Al-Maktoum 

International 

airport 

This will be both an open and 

enclosed space, and will comprise 

700,000 square metres of pavilions 

and other venue space that the 

182 Expo 2020 exhibitors, including 

nations, international organisations 

and businesses, will build 

themselves or which will be built 

by the Expo delivery company. 

There will also be three relatively 

large arenas for cultural 

events and 500,000 sq m of permanent 

structures including apartments, 

malls, hotels and warehousing. 

At the heart of the Expo 

site will be an open plaza called 

Al-Wasl, meaning ‘the connection’ 

and which is also a historical 

name for Dubai. 

Branching out from the plaza, 

there will be three main zones that 

symbolise the bid’s sub-themes of 

sustainability – intelligent sources 

of energy and water; mobility – 

new systems of logistics and transportation; 

and opportunity – new 

paths to economic development. 

The country pavilions will reflect 

these themes. These structures 

will be temporary and are not 

expected to be built until the 

months ahead of the start of the 

event in 2020. 

Solar centrepiece 

The centrepiece will be a huge 

photovoltaic fabric structure that 

will shade the plaza and capture 

solar energy, providing 50 per cent 

of the Expo’s power requirements. 

The masterplan is being worked 

on by a team of US-based HOK 

and the UK’s Arup, which was 

appointed in August to further 

develop the preliminary masterplan 

that the team worked on for 

the Expo bid. The programme 

management role also involves 

coordinating with other major 

developments in the Jebel Ali area 

and other schemes in Dubai that 

will support the Expo and the new 

exhibition centre. 

The most significant project taking 

place close to Dubai Trade Centre 

Jebel Ali is the expansion of 

Al-Maktoum International airport. 

The estimated cost of building 

the first phase of that scheme is 

AED120bn ($33bn), making it the 

largest airport construction project 

ever undertaken in the world. 

Covering an area of 56 sq km, 

the upgrade will take the airport’s 

capacity to 130 million passengers 

a year, and a second phase 

will increase the capacity further 

to 255 million, with five runways, 

another terminal building 

MEED on mobile 

All the latest news and 

analysis direct to your phone. 

www.MEED.com 

and more concourses. The work 

is due to be completed by the end 

of 2021. 

Other entities have started work 

preparing plans for new transport 

infrastructure for the Expo, 

including a new metro line that 

will link to the Dubai Marina area 

on Sheikh Zayed Road. 

■ www.meed.com/construction 

PHOTOGRAPH: HOK 

ENERGY & INDUSTRY CONSTRUCTION & 

FINANCE & MARKETS 

GOVERNMENT & ECONOMY 

Saipem and Essar bid low on 

Al-Zour refinery package four 

Italian/Indian consortium submits 

low price of $1.4bn for package 

on new refinery project 

Pages 8-10 

INFRASTRUCTURE 

Dubai plans to award first part 

of $33bn airport expansion 

Contract covers enabling works at 

Al-Maktoum International airport 

Pages 11-15 

Low-income Egyptians face huge 

obstacles to access finance 

Government needs to engage with 

unbanked population to improve access 

to basic financial services 

Page 16 

Concerns over the rise of GCC 

terror threat after recent attacks 

Companies seek extra security 

after Saudi Arabia shooting and 

Abu Dhabi murder 

Page 17 

■ www.meed.com/energy ■ www.meed.com/construction ■ www.meed.com/finance ■ www.meed.com/economy 

www.meed.com 


Energy & Industry 


Economy 16 

Energy 8, 9 

Government 17 

industry 10 

Water 15 

From meed.com 

energy kuwait 

saipem and essar bid low on 

al-Zour refinery package four 

Italian/Indian consortium submits price of $1.4bn 

Abu Dhabi carbon capture 

project on track for early 2016 

Abu Dhabi expects its first carbon 

capture usage and storage 

project to come on stream in the 

first quarter of 2016, according 

to the project manager. The facility 

will have the capacity to capture 

800,000 tonnes a year of 

carbon dioxide. 

www.meed.com/3197754.article 

Egypt announces deal with 

Algeria for six gas shipments 

Egypt has announced a deal with 

Algeria to import six shipments 

of liquefied natural gas between 

April and September, in an effort 

to ease its worst energy crisis in 

decades. The contract is expected 

to be signed in Algeria before 

the end of the year. 


Ruwais refinery expansion in 

Abu Dhabi nears completion 

The expansion of the Ruwais refinery 

in Abu Dhabi is expected to 

reach full production at the start 

of 2015, according to a manager 

from project owner Abu Dhabi Oil 

Refining Company (Takreer). The 

project aims to double the processing 

capacity of the refinery. 


Design complete for gathering 

centre 32 in southeast Kuwait 

UK consultancy Amec Foster 

Wheeler has completed front-end 

engineering and design work for 

gathering centre 32, a project 

commissioned by upstream operator 

Kuwait Oil Company to deal 

with increasing crude sourness 

from the country’s Burgan field. 


Wil Crisp 

State-owned upstream operator 

Kuwait National Petroleum Company 

(KNPC) has announced that 

a consortium of Italy’s Saipem and 

India’s Essar has submitted the 

low bid for package four of the 

Al-Zour New Refinery Project. 

The joint venture’s bid of 

KD406m ($1.4bn) came in KD96m 

lower than the second-lowest bid, 

submitted by South Korea’s Daelim 

Industrial. 

South Korea’s GS Engineering & 

Construction prequalified for the 

contract, but did not submit a bid. 

Package four was tendered on 

13 April with an original bid 

deadline of 9 September. This was 

then postponed to 7 December. 

The package consists of storage 

tanking, piping and underground 

works for the planned refinery, 

which will be built on the Kuwaiti 

petrochemicals oman 

Oman prequalifies firms for Liwa complex 

Oman has completed the first stage 

of prequalification on its $3.6bn 

Liwa Plastics Project in Sohar. 

Contractors have been prequalified 

for one or more of the four 

engineering, procurement and 

construction (EPC) packages that 

are set to be tendered in the first 

quarter of 2015. 

The first phase of prequalification 

focuses on individual firms, 

which have been split between 

‘tier 1’ and ‘tier 2’ contractors for 

each package. The second phase 

will focus on the formation of consortiums 

led by ‘tier 1’ groups. 

bidders For package Four 

■ saipem (Italy)/Essar (India): 

KD406,905,688 

■ Daelim industrial (South Korea): 

KD503,437,332 

■ Daewoo Engineering & Construction 

(South Korea): KD560,825,709 

■ petrofac (UK)/Hyundai Heavy 

industries (South Korea): 

KD623,319,246 

source: MEED 

scope oF work For package Four 

■ Five floating-roof tanks 

■ 28 fixed-roof tanks 

■ Two dry slop tanks 

■ Two wet slop tanks 

■ A plant fuel oil tank 

■ A continuous flushing oil tank 

■ An intermittent flushing oil tank 

■ Four crude pipelines 

■ Two imported fuel gas lines 

■ Three low-sulphur fuel oil pipelines 

■ A new liquid petroleum gas line 

■ A new low-sulphur diesel line 


“the second phase 

[of prequalification] 

will focus on the 

formation of 

consortiums led 

by ‘tier 1’ groups” 

The scheme is the biggest petrochemicals 

project in the sultanate’s 

history, and is expected to be 

completed by the end of 2018. 

The front-end engineering and 

side of the Divided Zone that lies 

between the borders of Saudi Arabia 

and Kuwait. 

The bid deadline for the first 

three packages of the Al-Zour refinery 

project is 13 January. Earlier 

in September, KNPC said it had 

pushed back the deadlines for bids 

for the packages, after prequalified 

firms asked for more time. 

The bid deadline for the marine 

package, known as package five, is 

6 January. KNPC recently pushed 

back the date for bid submission 

from 7 December. 

The new refinery is key to 

Kuwait’s hopes of meeting growing 

power demand. The 615,000 

barrel-a-day (b/d) facility will supply 

225,000 b/d of low-sulphur 

fuel oil for power generation. The 

scheme will be one of the largest 

single-phase refineries ever built. 

■ www.meed.com/energy 

design study is being carried out 

by US-based engineering group 

CB&I, which is also the technology 

provider for the steam cracker, 

while Engineers India has been 

appointed as project management 

consultant. 

The cracker will use a combination 

of feedstocks including natural 

gas liquids extracted from natural 

gas, liquid petroleum gas 

from the Sohar refinery and aromatics 

plant, dry gas from the 

Sohar refinery, and condensates 

from Oman LNG. 

■ www.meed.com/petrochemicals 

photograph: shuttErstock 


Q 

“If 

[Gulf states do not cut] 

back on employment then 

remittances will continue” 

Economy page 21 

ENERGY QATAR 

US could overtake Qatar 

gas exports by 2020 

MARK WATTS 

The unconventional gas boom 

in the US could push the country 

to replace Qatar as the 

world’s largest liquefied natural 

gas (LNG) exporter by 2020, 

according to the head of global 

commodities research at US 

bank, Citigroup. 

The US is on track to reach an 

export capacity of about 9 billion 

cubic feet a day (cf/d) by 2020, 

Edward Morse told the Middle 

East Crude Summit in Dubai on 

9 December. 

“The shale revolution began in 

natural gas, and surging US shale 

PETROCHEMICALS UAE 

Tebodin wins UAE oil and 

chemical design deals 

Netherlands-based Tebodin has 

been awarded three early-stage 

contracts on oil and gas projects in 

Abu Dhabi, according to a source 

familiar with the projects. 

The company was awarded a 

study by Abu Dhabi Gas Industries 

(Gasco) to look into technologies 

for carbon dioxide recovery 

and acid gas enrichment. 

Tebodin’s study will prepare 

the potential project for the frontend 

engineering and design phase. 

The contract was awarded in 

November and will take six 

months to carry out. 

Tebodin has also won a subcontract 

on an engineering, procurement 

and construction package 

from Ireland-based Tyco on fire 

risk mitigation on Das Island. Tebodin 

will supply detailed engineering 

and documents review activities 

on the project, which is being 

www.meed.com 

gas production feeds into rising 

pipeline exports to Mexico and 

LNG exports,” said Morse. 

“The US is likely to be the 

world’s largest LNG exporter by 

the end of the decade,” he added. 

The US’ closest rivals would be 

Qatar and Australia. 

Qatar, which is currently the 

largest exporter, is unlikely to significantly 

increase exports by the 

end of the decade due to a moratorium 

on expanding operations 

on the offshore North Field, 

where the vast majority of its gas 

is sourced. 

■ www.meed.com/energy 

developed by Abu Dhabi Marine 

Operating Company (Adma-Opco). 

Das Island is the base for Adma- 

Opco’s oil processing facilities for 

its offshore fields. 

Abu Dhabi Polymers Company 

(Borouge) awarded a nine-month 

detailed engineering contract to 

Tebodin for four plant modification 

projects. They include: a pellet 

water tank water overflow recovery 

project; a pressure transfer system 

for the catalysts in the second polypropylene 

plant; and a skimmer pit 

water pump. 

Borouge is the UAE’s largest 

petrochemicals producer, based in 

Ruwais in the west of Abu Dhabi. 

The Hague-based Tebodin, 

which in 2012 was acquired by German 

engineering and construction 

group Bilfinger, won several UAE 

gas design deals earlier in the year. 

■ www.meed.com/petrochemicals 

ANALYSIS 

Non-Opec to dominate crude capacity 

Oil producers outside Opec are expected 

to dominate crude capacity 

expansions to the end of the decade, 

with only Iraq set to undergo 

a significant increase in capacity. 

Growth in crude production from 

non-Opec sources, such as the US 

and Canada, has been a key factor 

in the price of oil falling more than 

40 per cent in the second half 

of 2014. 

The Paris-based International 

Energy Agency (IEA) forecasts that 

global oil production will increase 

by 9 million barrels a day (b/d) between 

2013 and 2019 to reach 

105 million b/d by the end of the 

decade. Over this time, the Middle- 

East-dominated Opec will only increase 

its capacity by about 2 million 

b/d to about 37 million b/d, 

losing significant market share to 

other producers. 

Iraq is expected to provide 

60 per cent of this capacity increase, 

with about 1.3 million b/d 

added. Smaller volumes are forecast 

to be added in the UAE 

(550,000 b/d), Angola (350,000 

b/d) and Venezuela (250,000 

b/d), but capacity is set to decline 

in Algeria and especially Kuwait 

(-400,000 b/d). 

“Opec production capacity 

growth is at risk following the Islamic 

State in Iraq and Syria (Isis) campaign,” 

says Keisuke Sadamori, the 

IEA’s director of energy markets and 

security. “Worsening political stability 

and security issues add downside 

risk in Iraq as well as Libya.” 

Although the market is well supplied 

in the short term, Sadamori 

says that over the long term, the 

world’s reliance on crude from Iraq 

and the rest of the Middle East will 

increase. This makes instability in 

the region a major risk to oil market 

stability over the coming decades. 

US oil production is expected to 

peak in the first half of the next decade 

and slowly decline, leaving the 

Middle East, Brazil and Canada as 

the world’s fastest-growing suppliers 

to the market. The IEA forecast 

that as much as 10 million b/d of 

new capacity could come on stream 

in the Middle East between 2020 

and 2040. 

“The short-term picture of a wellsupplied 

market should not obscure 

future risks, as demand 

rises to 104 million b/d and reliance 

grows on Iraq and the rest of 

the Middle East,” says Sadamori. 

The IEA predicts trade in crude oil 

is going to shift further east. By 

2019, two out of every three barrels 

of crude traded will be destined for 

Asia – an increase of 2.6 million b/d 

to 22.1 million b/d by 2019. 

The Americas, where capacity 

is rapidly growing from unconventional 

plays in the US and Canada, 

and deepwater offshore projects 

in Brazil, is set to become a net 

exporter by 2019. 

MARK WATTS 

INCREMENTAL OPEC CRUDE PRODUCTION CAPACITY 2013-19 

(MILLION BARRELS A DAY) 

1.4 

1.2 

1.0 

0.8 

0.6 

0.4 

0.2 

-0.00 

-0.2 

-0.4 

-0.6 

Source: IEA 

Iraq 

UAE 

Angola 

Venezuela 

Ecuador 

Saudi Arabia 

Iran 

Qatar 

Libya 

Nigeria 

Algeria 

Kuwait 

■ Read MEED’s latest market analysis at www.meed.com/energy 


Energy & Industry 


economy 16 

energy 8, 9 

Government 17 

industry 10 

Water 15 

From meed.com 

Morgan Stanley says crude 

could fall to $43 a barrel 

The US’ Morgan Stanley has cut 

its forecast for Brent crude for 

2015, reducing its base-case prediction 

from $98 to $70 a barrel 

and saying prices could drop to 

$43 a barrel.“Without Opec’s intervention, 

markets risk becoming 

unbalanced,” the firm said. 


Egypt cabinet approves land 

for Al-Ghurair sugar plant 

Dubai-based Al-Ghurair Group has 

been given the green light by the 

Egyptian cabinet for the land 

rights for a new sugar factory to 

be built in the Minya governorate 

of Upper Egypt. About 60,702 

hectares of land is understood to 

have been provided for the plant. 


GCC steel producers call for 

measures to keep market fair 

Speaking at the Metal Bulletin 

Middle East Iron & Steel Conference, 

GCC steel producers have 

called for greater tariffs and quality 

control checks on imports to 

address what they consider to be 

unfair market conditions. 


Algeria says Opec may hold 

emergency meeting before June 

Algeria’s oil minister, Youcef Yousfi, 

has said Opec could hold an 

emergency meeting before the 

next summit in June. “We will continue 

efforts to remove a surplus 

[of about] 2 million barrels a day,” 

Yousfi said on state television. 


Kuwait predicts oil will stay at 

about $65 for next six months 

The price of oil is likely to remain 

at about $65 a barrel for 

the next six or seven months, 

according to Nizar al-Adsani, 

the head of Kuwait Petroleum 

Corporation, Kuwait’s national 

oil company. 


industry regional 

Metal projects stall as focus 

shifts from capacity expansion 

Three of the GCC’s largest steel schemes remain on hold as industry consolidates 

industry egypt 

Steel consumption set to grow by 11 per cent 

tric arc furnace at Jubail. However, 

the two steel facilities planned by 

Sabic for Saudi Arabia are set to 

remain on hold while feasibility 

studies are carried out. 

MEED reported in July that the 

projects, with a combined capacity 

of 2.5 million tonnes a year (t/y), 

were on hold. One scheme is a 

Jubail-based plate mill with a 

capacity of 1.5 million t/y. The second 

is a cold mill planned for Rabigh 

on the Red Sea coast. The 

greenfield plant is aimed at providgCC 

steel projeCts on hold 

Project Owner Budget Country 

rabigh steel plant Sabic $1.7bn Saudi Arabia 

Jubail steel plant Sabic $2.5bn Saudi Arabia 

Phase 3 expansion ESI $1bn UAE 

Yanbu steel plant Atoun Steel $300m Saudi Arabia 

Sohar pelletising plant Vale $1bn Oman 

Source: MEED Projects 

Kevin Baxter 

Two of the largest steel producers 

in the GCC have said there will be 

no greenfield projects in the near 

future as the industry moves 

towards greater consolidation and 

an emphasis on quality rather than 

capacity expansion. 


Middle East Iron & Steel Conference 

in Dubai on 8-10 December, executives 

from Emirates Steel Industries 

(ESI) and Saudi Basic Industries 

Corporation (Sabic) admitted that 

the large steel projects they are 

planning are still on hold. 

Ismail Shar al-Sulby, general 

manager of long products at Sabic 

Metals, said his firm was enhancing 

current facilities and growing 

its product portfolio. The company 

is now self-sufficient in billets after 

the full commissioning of an elec- 

“egypt has come 

a long way since its 

recent turmoil and 

this will be reflected 

in growing demand 

for steel products” 

George Matta, Ezz Steel 

ing raw materials for use in several 

downstream industries, including 

automotive and electrical. 

Saeed al-Romaithi, CEO at ESI, 

said his firm was also looking to 

forge greater ties with customers by 

providing enhanced products and 

quality rather than competing with 

exports. He said a lack of gas allocations 

meant there would be no 

greenfield building, indicating the 

expansion of ESI’s facilities would 

not go ahead in the near future. 

■ www.meed.com/industry 

Egypt expects steel consumption 

to grow by 11 per cent in 2014 

and reach 10.4 million tonnes 

a year (t/y) by 2017. 


Middle East Iron & Steel 

Conference held in Dubai on 

8-10 December, George Matta, 

marketing director of the local 

Ezz Steel, said the new government 

has brought stability and 

this will drive spending in both 

the private and public sectors 

over the next three years. 

“Egypt has come a long way 

since its recent political turmoil 

and this will be reflected in growing 

demand for steel products,” 

Matta told delegates at the event. 

Egypt’s steel sector has not 

enjoyed a particularly good year, 

as output declined 7 per cent to 

6.3 million tonnes due to gas outages. 

Exports also dropped by 

50 per cent due to oversupply in 

the market. 

Imports increased to 1.5 million 

t/y, leading Cairo to impose tariffs 

of 7.3 per cent to curb low-cost 

steel coming in from China, Turkey 

and Ukraine. 

“Some of the steel coming into 

the market was $45 a tonne 

cheaper than what was being produced 

locally,” Matta said. “However, 

the tariffs imposed should see 

the percentage of imports scaled 

back from 12 per cent of total consumption 

to 4 per cent in 2015.” 

■ www.meed.com/industry 


Construction & Infrastructure Q 

“Whether it is 2015, 16 or 17, 

i think the renewables 

programme will happen” 

Interview page 23 

construction sauDi araBia 

Bidders to submit revised 

offers for aramco stadiums 

Building programme is one of the largest in the region 

From meed.com 

Colin Foreman 

Oil major Saudi Aramco has invited 

firms to submit revised offers by 

15 December for the deals to build 

11 stadiums across the kingdom. 

The stadiums are one of the 

largest building programmes in 

the region, and with estimated 

costs of $500m for each stadium, 

the total cost could exceed $5bn. 

Awards for the fast-tracked 

project are expected by the 

end of December. Aramco had 

planned to appoint contractors 

in November, but it is understood 

the scale and complexity of the 

scheme, together with updates 

to the volume of work required, 

have delayed the signing of deals. 

The stadiums will be located 

in Medina, Al-Qassim, the Eastern 

Province, Asir, Tabuk, Hail, 

the Northern Borders, Jizan, 

contractors inviteD to BiD 

■ Consolidated Contractors Company 

(Athens-based)/Strabag 

(Austria) 

■ Saudi Binladin Group (local)/ 

eiffage (France) 

■ al-muhaideb Trading & Contracting 

establishment (local)/Six 

Construct (Belgium) 

■ nesma & Partners (local)/Salini 

impregilo (Italy) 

■ nasser al-Hajri (local)/Vinci 

(France) 

■ Bouygues (France)/almabani 

General Contractors Company 

(local)/Huta Group (local) 

■ Samsung C&T (South Korea)/ 

azmeel Contracting (local) 

■ Baytur (Turkey)/Clark Construction 

(US) 

■ el-Seif engineering & Contracting 

(local)/Bam (Netherlands) 


BiDDers For project management 

■ Dar al-Handasah (Lebanon) 

■ Faithful+Gould (UK) 

■ Hill international (US) 

■ Jacobs (US) 

■ Khatib & alami (Lebanon) 

■ SnC lavalin (Canada) 

■ WorleyParsons (Australia) 


Najran, Baha and Al-Jouf. The 

oil company issued a select list 

for each stadium, with a maximum 

of two contracts awarded 

to each consortium. 

The stadiums are planned to 

be built simultaneously and 

are scheduled for completion in 

June 2016. 

Aramco is also appointing firms 

for the programme’s project management 

consultancy contract. 


Qatar’s Ashghal awards $1.5bn 

of infrastructure contracts 

Qatar’s Public Works Authority 

(Ashghal) has signed infrastructure 

contracts totalling QR5.4bn 

($1.5bn). The largest project 

awarded was the QR1.5bn design, 

build, operation and maintenance 

deal for the Al-Dhakhira 

sewage treatment works. 


Abu Dhabi’s Shams 1 solar plant 

meets production target early 

The Shams 1 solar power plant, 

developed by Abu Dhabi’s 

Masdar, has already produced 

210 gigawatt hours of electricity, 

enough to supply 20,000 homes 

in the UAE capital. This fulfilled 

the facility’s production targets 

for 2014 by mid-November. 



transport uae 

Dubai to award first part of airport expansion 

Dubai Airports Engineering 

Projects (DAEP) is preparing to 

award the enabling works for the 

first phase of the expansion of 

Al-Maktoum International airport 

by the end of this year. 

“The contract will be awarded 

imminently,” says a source close 

to the project. 

The bidders are understood to 

include the local Al-Naboodah 

Contracting Company, Ghantoot 

Group and Tristar. 

The expansion programme 

planned for Al-Maktoum International 

will make it the biggest airport 

in the world by 2050, with 

“Dubai airports 

engineering projects 

is preparing to 

award the enabling 

works for the firstphase 

expansion” 

the capacity to handle 255 million 

passengers a year. In early November, 

DAEP told contractors it will 

start tendering deals for building 

work at the airport in 2015. 

The new infrastructure and 

buildings will include a terminal 

building, six concourses connected 

to the terminal by people-movers, 

and three runways. The terminal 

will also be connected to the new 

metro link that Dubai’s Roads & 

Transport Authority is planning. 

The estimated cost of building 

the first phase is AED120bn 

($33bn), making it the largest airport 

construction scheme ever 

undertaken in the world. Once 

complete, it will take the airport’s 

capacity to 130 million passengers 

a year and make it capable of 

accommodating 100 A380 aircraft 

at any one time. 

■ www.meed.com/transport 

Consortium wins Doha Metro 

Red Line North elevated deal 

Qatar Railways Company (Qatar 

Rail) has awarded a consortium 

of Italy’s Rizzani de Eccher, South 

Korea’s Lotte Engineering & Construction, 

and the local Redco 

the $609m contract to build the 

elevated section of Doha Metro’s 

Red Line North. 


Contractors express interest in 

Atlantis Dubai extension project 

The Investment Corporation of 

Dubai has received prequalification 

documents from firms for 

construction work on the $1.4bn 

expansion of the Atlantis resort 

on Palm Jumeirah. The new hotel 

will be known as the Royal Atlantis 

Resort and Residences. 


www.meed.com 


Construction & Infrastructure 


economy 16 

energy 8, 9 

Government 17 

industry 10 

Water 15 

construction regional 

optimism dampens across industry 

Contractors now have a more measured view on prospects in 2015 

Colin Foreman 

Optimism across the GCC’s construction 

sector has been tempered 

over the past year, according 

to UK law firm Pinsent 

Masons’ annual GCC construction 

survey. 

The survey found that although 

the industry remains broadly 

positive about its prospects for 

2015, with 77 per cent of respondents 

stating they were optimistic, 

the confidence has fallen by 

13 per cent when compared 

with last year. 

The drop in positivity may 

partly be explained by overarching 

macroeconomic factors and 

changes in the dynamics of the 

construction market. 

gcc construction awards 

($bn) 

120000 

100000 

80000 

60000 

40000 

20000 

0 

2010 

2011 

2012 

2013 

2014* 

*=To date. Source: MEED Projects 

The fall in oil prices has dampened 

confidence and is expected 

to, at the very least, slow down 

the decision-making process 

on large-scale government projects. 

For the industry, a highly 

competitive market combined 

with a softening in the rate at 

which order books are growing 

and concerns about the cost of 

accessible capital have caused 

optimism to wane. 

This year’s survey indicated 

that 33 per cent of respondents 

were expecting an upswing in 

their order books of 10 per cent or 

more, which compares with more 

than 40 per cent last year expecting 

that level of growth. 

In Dubai, the construction 

sector now has a more measured 

view about the positive impact 

Expo 2020 will have on the 

sector. Less than 10 per cent 

of respondents thought the 

UAE’s Expo project would pro- 

vide a dramatic upswing for construction 

companies between 

2014 and 2016. 

“These results offer an insight 

into how the GCC construction 

market is shaping up for the year 

ahead,” says Sachin Kerur, managing 

partner, Gulf region at Pinsent 

Masons. “Optimism clearly 

remains high, but there is a 

marked cooling compared with 

last year, when Expo fever was 

at its height.” 

The cooling of optimism in the 

UAE means Saudi Arabia is 

expected to be the best-performing 

market, with 40 per cent of 

respondents saying it will be the 

strongest market in 2015. 


construction uae 

Omniyat maritime city 

project gets under way 

water saudi arabia 

arcadis wins Mecca water 

management contract 

Dubai-based developer Omniyat 

Group has started work on its latest 

project in Dubai Maritime City. 

Anwa will be a 48-storey luxury 

residential tower with a sea view 

and retail amenities. The Omniyat 

development will be one of 53 

mixed-use projects, hotels, shopping 

centres, restaurants and 

parks planned for the Dubai Maritime 

City area. 

According to Mahdi Amjad, 

executive chairman at Omniyat 

Group, the project will cost 

AED600m ($163m) and is scheduled 

for completion in 2017. 

The finance for the scheme 

will not be dependent on offplan 

sales, although Amjad confirmed 

units would go on sale 

on 10 December. 

The funding package for the 

project will consist of equity from 

Omniyat’s shareholders, banking 

relations and the group’s own 

budgets, according to Amjad. 

Local contractor Kele has been 

awarded the main construction 

contract, and the local Al-Ghurair 

Contracting & Engineering has 

been appointed as the specialist 

for the enabling and piling work. 

This will be the first residential 

and retail development in the 

area. Speaking at the press conference 

announcing the project, 

Khamis Buamin, chairman of 

Dubai Maritime City, said: “This 

project will play a key role in positioning 

Dubai Maritime City as an 

ideal location for modern living.” 


Saudi Arabia’s National Water 

Company (NWC) has awarded 

Netherlands-based Arcadis a contract 

to prepare a water infrastructure 

masterplan for Mecca. 

The 18-month deal involves 

developing a water, wastewater, 

treated sewage effluent (TSE) and 

asset management masterplan. 

Arcadis will work with NWC to 

prepare a database study of their 

water and wastewater infrastructure 

assets; develop an integrated 

water, wastewater and TSE masterplan; 

and prepare a capital 

investment plan for 2015 to 2050. 

This will enable future planning 

of water infrastructure for 

residential and industrial use 

over 35 years, including emergency 

works. 

The population of Mecca 

increases from a base of 2 million 

people to 6 million during the 

annual hajj pilgrimage, placing 

a strain on water infrastructure. 

Currently, only about 65 per 

cent of the populated area of 

Mecca has water service coverage 

and the wastewater service coverage 

is less. Existing treatment 

plant capacity is not sufficient to 

treat the additional flow and load. 

NWC has allocated SR10.7bn 

($2.9bn) to invest in water services 

in Mecca and Taif before 2017, 

while investment in the sector 

will reach SR50bn across the 

country. This is to meet growing 

demand for water and wastewater 

services across the kingdom. 

■ www.meed.com/water 


Q 

“Sharia 

committees have 

changed, there’s much more 

pragmatism these days” 

Special Report page 30 

CONSTRUCTION UAE 

Contractors invited to bid 

for Abu Dhabi shopping mall 

Gulf Related’s shopping mall will be built on Al-Maryah Island 

COLIN FOREMAN 

Contractors have been invited 

to bid by 15 January for the contract 

to build Gulf Related’s $1bn 

Al-Maryah Central retail complex 

in Abu Dhabi. 

The 170,000-square-metre retail 

centre will be built on Al-Maryah 

Island in Abu Dhabi next to Gulf 

www.meed.com 





Related’s 35,000 sq m The Galleria, 

which opened in late 2013. 

Al-Maryah Central is planned to 

open on 1 March 2018. Work on 

the main contract is expected to 

POWER UAE 

Masdar pilots sustainable desalination 

Abu Dhabi Future Energy Company 

(Masdar) will begin evaluating 

various techniques for desalination 

using renewable energy at 

four pilot desalination projects 

from early 2015. 

After firms showed keen interest 

in the tender in 2013, the pilot 

plants were awarded to Spain’s 

Abengoa, France’s Degremont and 

Veolia, and the US’ Trevsi Systems. 

The facilities are already under 

construction and will be completed 

in early 2015. The evaluation 

will take place over 18 months 

and will be completed in late 2016. 

Masdar will then present its results 

FIRMS INVITED TO BID 

■ Alec (local) 

■ Al-Futtaim Carillion (local/UK) 

■ Arabian Construction Company 

(local/Lebanon) 

■ Arabtec Construction (local) 

■ Brookfield Multiplex (Canada) 

■ Habtoor Leighton Group (local/ 

Australia) 

■ Six Construct Abu Dhabi (local/ 

Belgium)/Oger Abu Dhabi (Saudi 

Arabia) 

■ TAV (Turkey) 

Source: MEED 

start in early 2015. A groundbreaking 

ceremony was held on 

10 November. 

The mall has two US-based 

department stores already leased. 

Bloomingdales will open its second 

store in the UAE, and Macy’s 

will open its first store outside the 

“The Abu Dhabi 

government’s 

future vision is to 

power desalination 

through 

renewables” 

Alexander Ritschel, Masdar 

US. Al-Tayer Group, which sponsors 

the two department stores in 

the UAE, will also operate more 

than 20 other stores representing 

about one third of Al-Maryah Central’s 

total leasable space. 

The mall will be one of the biggest 

in the UAE and the largest in 

central Abu Dhabi. On top of the 

mall will be two towers. The first 

will be a residential tower with serviced 

apartments, the second will 

be a hotel with 200-330 rooms. 

The project management consultant 

is US-based Aecom. 

The cost consultant is the UK’s 

Faithful+Gould. 

The client is GR Sowwah Retail, 

which is a special purpose vehicle 

created by Gulf Related, a joint 

venture of Saudi Arabia’s Gulf Capital 

and US-based Related. 


to the government and advise it on 

selecting technology for utilityscale 

renewables-powered desalination 

plants. 

“The Abu Dhabi government’s 

future vision is to power desalination 

through renewables, so they 

requested that we explore the 

options,” said Alexander Ritschel, 

senior manager for special projects 

at Masdar, speaking at 

MEED’s Abu Dhabi Energy, Industry 

& Infrastructure Conference on 

9 December. 

Abu Dhabi’s existing desalination 

capacity was built several decades 

ago and prioritised reliability 

and water quality over energy efficiency. 

While capacity is robust and 

reliable, technological advances 

mean major improvements can be 

made in energy consumption. 

■ www.meed.com/power 

From meed.com 

Abu Dhabi nuclear project on 

schedule for first power in 2017 

The first unit of Abu Dhabi’s 

5.6GW nuclear power project is on 

schedule to come online in 2017, 

Mohamed al-Hammadi, CEO, Emirates 

Nuclear Energy Corporation, 

told MEED’s Abu Dhabi Energy, Industry 

& Infrastructure Conference 



UAE could achieve 10 per cent 

renewables share by 2030 

The UAE could achieve a 10 per 

cent renewable energy share of 

its power generation resources by 

2030, said Steven Griffiths, executive 

director of institute initiatives 

at the Masdar Institute at 

MEED’s Abu Dhabi Energy, Industry 

& Infrastructure Conference. 


Abu Dhabi focuses on holistic 

town planning for the city 

Abu Dhabi’s Urban Planning Council 

(UPC) is focusing on holistic 

planning, said Yasmeen al-Rashedi, 

acting programme manager at 

UPC’s sustainability department, 

at MEED’s Abu Dhabi Energy, Industry 

& Infrastructure Conference 


Dubai nears completion of 

Al-Lusaily reservoir project 

Dubai Electricity & Water Authority’s 

AED246m ($67m) Al-Lusaily 

reservoir project is nearing completion. 

The two reservoirs each 

have a capacity of 60 million imperial 

gallons a day of desalinated 

water. 


Visitor numbers to Yas Island to 

double to 10 million in 2015 

Visitors to Abu Dhabi’s tourist 

development Yas Island could 

double to reach 10 million visitors 

in 2015. Detailed designs 

for the expansion of the Yas 

South Island development, are 

also under way. 




Economy 16 

Energy 8, 9 

Government 17 

Industry 10 

Water 15 

Construction & Infrastructure 

WATER SAUDI ARABIA 

Black & Veatch wins desalination deal 

Fourth-phase expansion will bring plant’s capacity to 400,000 cubic metres a day 

PHILIPPA WILKINSON 

Saudi Arabia’s Saline Water Conversion 

Corporation (SWCC) has 

awarded a contract to the US’ 

Black & Veatch to provide engineering 

and design consultancy 

services on the fourth-phase 

expansion of its Jeddah desalination 

plant. 

The reverse osmosis (RO) 

plant’s capacity is planned to 

be expanded by 400,000 cubic 

metres a day (cm/d). The contract 

will be tendered on an engineering, 

procurement and construction 

(EPC) basis. 

Phase three of the project, 

which added 243,000 cm/d, was 

completed by a joint venture of 

South Korea’s Doosan and the 

SAUDI DESALINATION BALANCE 

(MILLION CUBIC METRES A DAY) 

10 

8 

6 

4 

2 

0 

2012 

2020f 

Installed capacity Peak demand 

f=Forecast. Source: MEED Insight 

local Water & Environment Technologies 

Company (Wetico). 

Phases 1 and 2 each have a capacity 

of 48,848 cm/d, and were 

commissioned in 1989 and 

1994 respectively. 

The plant replaced a 40-yearold 

multistage flash desalination 

facility and was the largest RO 

facility in the kingdom. It has been 

surpassed by the Ras al-Khair 

desalination plant, which has 

a capacity of 1.1 million cm/d. 

SWCC has also received the 

main bids for the Haql 3, Duba 4 

and Al-Wajh 4 RO desalination 

plants, which will all have a 

capacity of 9,000 cm/d. An award 

is likewise expected soon for the 

72,800-cm/d phase two expansion 

of the Shoaiba multi-effect distillation 

desalination facility. 

The company is also studying 

a massive expansion of the Rabigh 

RO desalination plant to 

600,000 cm/d. 

Total water consumption in 

Saudi Arabia reaches about 24 billion 

cubic metres a year (cm/y), of 

which desalinated water provides 

about 1.3 billion cm/y, from 

30 plants. However, the kingdom 





will require more than 4 million 

cm/d of additional capacity to 

meet demand and reserve margin 

needs by 2020. 


WATER UAE 

Abu Dhabi to spend $1.6bn 

by 2019 on treatment units 

POWER UAE 

More than 40 firms vie for 

Masdar solar power project 

Abu Dhabi Sewerage Services 

Company (ADSSC) is planning to 

spend AED6bn ($1.6bn) between 

2015 and 2019 to improve and 

expand the emirate’s sewage treatment 

plants and infrastructure. 

Speaking at MEED’s Abu Dhabi 

Energy, Industry & Infrastructure 

Conference on 9 December, Malcolm 

Haddock, department manager 

for planning and forecasting at 

ADSSC, said the expenditure 

would include network contracts 

and new treatment plants, subject 

to approval from the Abu Dhabi 

Executive Council. 

Haddock said capital spending 

on sewerage projects in 

2015 would likely be between 

AED400m and AED475m. This 

will include the Strategic Tunnel 

Enhancement Programme (STEP) 

odour control project, which is currently 

out for tender. 

The conference earlier heard 

that the 41-kilometre tunnel 

for the STEP programme was 

finished, and that construction 

work on the major Al-Wathba 

pumping station was 40 per 

cent complete. 

Construction work on the link 

sewers is also still under way. The 

41km bore runs from Abu Dhabi 

Island, where it is 24 metres below 

ground, south to the mainland, 

where it descends to 80 metres. 

ADSSC is currently developing 

a new sewerage masterplan for 

Abu Dhabi, to replace the existing 

2006 masterplan. 


More than 40 companies have 

submitted expressions of interest 

(EoIs) for Abu Dhabi’s planned 

100MW photovoltaic (PV) solar 

power project, according to 

sources close to the scheme. 

MEED reported in October that 

project owner Abu Dhabi Future 

Energy Company (Masdar) had 

revived the scheme and had 

invited EoIs. 

According to sources close 

to the solar scheme, Masdar 

has not given an indication of 

when the request for proposals 

will be issued for the engineering, 

procurement and construction 

contract. 

The project will consist of 

100MW of PV panels and will be 

located to the east of Al-Ain city 

in the Al-Aflaj area. It is the first 

phase of three Noor solar projects, 

for which land has already been 

allocated. 

The scheme was originally tendered 

in 2011, with a projected 

completion date in late 2013. 

However, problems arose related 

to Masdar’s insistence on using 

solar panels of its own manufacture 

for 50 per cent of the project. 

This requirement has been 

dropped from the new tender. 

PV solar technology has 

advanced since 2011, which has 

brought costs down. Masdar is 

confident it “can secure more 

optimised prices” with a new 

round of bidding, according to 

a spokesperson from the firm. 

■ www.meed.com/power 

www.meed.com 


Finance & Markets 

construction 7, 11, 12, 13 

economy 16 

energy 8, 9 

government 17 

Industry 10 

Water 15 

From meed.com 

economy egypt 

Low-income egyptians face 

huge barriers to access finance 

Government needs to engage with unbanked population 

Abu Dhabi buys New Scotland 

Yard building for redevelopment 

Abu Dhabi has bought the New 

Scotland Yard building, the headquarters 

of London’s Metropolitan 

Police Service, in a bid to redevelop 

the site into another GCCfinanced 

luxury real estate complex 

in the UK capital. The total investment 

was about $580m. 


Abu Dhabi Global Market sets 

up panel to oversee regulations 

Abu Dhabi Global Market, the financial 

free zone being set up on 

Al-Maryah Island, has established 

a panel of experts to oversee the 

development of a draft regulatory 

framework. A total of 16 international 

financial institutions will 

consult on the regulations. 


Rebecca Spong 

The large sections of Egypt’s 

population that earn low 

incomes are still struggling to 

access financial services such 

as basic bank accounts. 

With banks requiring large initial 

deposits from customers to 

even open a simple current 

account, many people in poorly 

paid jobs are barred from using 

mainstream financial services. 

“These conditions imposed 

by the banks are massive obstacles,” 

says Amro Abouesh, 

chairman and CEO at local 

microfinance firm Tanmeyah 

Microenterprise Services. 

“Banks are not geared up to 

deal with low-income people,” 

he adds, speaking to MEED during 

a recent conference held in 

Abu Dhabi. 

citizens with bank accounts 

(percentage) 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

global average 

source: global Findex 2012 

Qatar 

UaE 

turkey 

Morocco 

lebanon 

tunisia 

iraq 

Egypt 

With limited or non-existent 

access to mainstream sources of 

finance, many Egyptians resort to 

street lending, often paying exorbitant 

rates of interest for shortterm 

loans. 

The country’s banking sector 

is missing out on boosting its 

deposit base and diversifying its 

sources of revenue by not tapping 

into the low-income population. 

The government is beginning to 

see the potential in bringing the 

unbanked elements of society into 

the conventional system. The 

recent $8.5bn raised by Cairo in 

September using investment certificates 

to fund the Suez Canal 

expansion attracted the interest of 

many Egyptians who were previously 

outside the banking sector. 

According to the Central Bank, 

a significant chunk of the certificates 

were paid for by money that 

was not kept in conventional 

banks or the post office, potentially 

taken from “under the mattresses” 

as some commentators 

said at the time. About 82 per cent 

of the certificates were bought by 

Egyptian citizens. 

■ www.meed.com/economy 

Abraaj and Kellogg continue 

battle for Egypt’s Bisco Misr 

UAE investment company Abraaj 

Capital and US firm Kellogg continue 

to battle it out to take over 

Egyptian cake and biscuit producer 

Bisco Misr, a fight that 

suggests foreign investor appetite 

in the North African country 

is beginning to return. 


Emaar the Economic City inks 

new $333m funding deal 

Emaar the Economic City, the 

master developer of King Abdullah 

Economic City has signed 

a SR1.3bn ($333m) murabaha 

loan agreement with the local 

Alinma Bank. The eight-year 

sharia-compliant loan was signed 



markets uae 

Dubai Parks & Resorts lists on DFM 

Dubai Parks & Resorts, a subsidiary 

of UAE developer Meraas 

Holding, listed on the Dubai 

Financial Market (DFM) on 

10 December. 

It opened at AED0.9 ($0.3), 

below its initial public offering 

(IPO) price of AED1. The firm’s 

AED2.5bn IPO was launched last 

month and featured two tranches: 

a qualified institutional tranche 

and a UAE portion. 

The qualified institutional 

offering represented 60 per cent 

of the shares and was oversubscribed 

65 times, attracting about 

AED100bn in bids. Investors 

“the firm’s 

aeD2.5bn initial 

public offering 

was launched 

last month and 

featured two 

tranches” 

included Kuwait Investment 

Authority and Qatar Investment 

Authority. The UAE tranche represented 

40 per cent of the IPO, and 

was 10 times oversubscribed, 

attracting AED10.9bn in bids. 

The IPO was launched to support 

the construction of three 

theme parks, a hotel and a leisure 

resort in Dubai. The park, which 

is currently under construction, 

aims to capitalise on the emirate’s 

growing tourism sector. 

Dubai Parks & Resorts also 

raised commercial bank funding 

last month to support the construction 

of the parks. 

The IPO market in Dubai has 

rebounded this year after several 

years of stagnation. Other offerings 

have included the Emaar Malls 

IPO, which closed in September. 

■ www.meed.com/markets 

photograph: gallo/gEtt yiMagEs 


Government & Economy 

Q 

“banks need to be 

more … a financial 

partner to a community” 


government regional 

Concerns grow over gCC terror 

threat after recent attacks 

Firms seek extra security following Saudi shooting and Abu Dhabi murder 

From meed.com 

Wil Crisp 

Foreign companies operating in 

Saudi Arabia and other GCC 

nations are becoming increasingly 

concerned about the risk of terror 

attacks, in the wake of the shooting 

of a Danish man in Riyadh and 

the stabbing of an American 

teacher in Abu Dhabi. 

Risk consultancy companies 

have reported seeing a higher 

number of enquiries in the wake 

of the incidents. 

“We are seeing more concern 

from our clients,” says Torbjorn 

Soltvedt, principal analyst and 

deputy head of risk consultancy for 

the Middle East and North Africa 

region at the US’ Verisk Maplecroft. 

“We’ve especially seen an 

increase in demand for risk briefings 

on Saudi Arabia recently. 

We’ve also seen from open source 

GCC: Demand grows for risk briefings 

material that companies are taking 

more precautions in considering 

their security arrangements.” 

In recent weeks there have been 

several attacks on Westerners in 

Saudi Arabia and the UAE, including 

the shooting of a Danish citizen 

in Riyadh, which has been claimed 

by the jihadist group Islamic State 

in Iraq and Syria (Isis), and another 

attack on a Canadian. 

In early December, an American 

teacher was murdered in a mall in 

Abu Dhabi. There was also an 

attempted bombing of an American 

doctor by the same attacker. 

The events come after the leader 

of Isis, Abu Bakr al-Baghdadi, 

urged sympathisers to carry out 

attacks in Saudi Arabia in an audio 

message released on 13 November. 

In the message, he told sympathisers 

to specifically attack Shia Muslims, 

government officials and 

Westerners in Saudi Arabia. 

There have also been several 

recent posts on jihadist websites 

encouraging attacks against British 

and other Western interests, 

including teachers and schools in 

the Middle East. 

■ www.meed.com/government 

Population estimates revised 

down for Abu Dhabi city 

Population projections in Abu 

Dhabi city have been revised 

down to show 2.4 million people 

will be living in the UAE capital by 

2030. Projections from 2007 

had estimated that the population 

of the emirate would reach 

3.1 million by 2030. 


Egyptian cabinet reviews 

parliamentary election law 

A draft of a law that will regulate 

Egypt’s forthcoming parliamentary 

elections was reviewed by the 

cabinet on 10 December. The 

long-awaited draft paves the way 

for elections to take place in the 

first quarter of 2015, according 

to official statements. 


photograph: rEutErs; DrEaMstiME 

government bahrain 

Prime minister appoints new cabinet 

Bahrain’s reappointed prime 

minister, Sheikh Khalifa bin Salman 

al-Khalifa, has formed his 

new cabinet following parliamentary 

elections held at the end 

of November. 

The elections were the first of 

their kind since anti-government 

uprisings, mainly by the country’s 

Shia population, began 

in 2011. 

The new cabinet features few 

changes, although King Hamad 

bin Isa al-Khalifa issued a decree 

on 3 December annulling the position 

of minister without portfolio. 

Sheikh Khalid bin Ahmed bin 

“Sheikh Khalifa bin 

Salman al-Khalifa, 

has formed his new 

cabinet following 

parliamentary 

elections held at the 

end of november” 

Mohammed al-Khalifa, the minister 

of foreign affairs, retained 

his position. He concluded a 

defence agreement with the UK 

on 5 December that will see the 

improvement of onshore facilities 

at the Mina Salman port, where the 

UK maintains four warships. 

Shia opposition groups called 

for a boycott of the elections, claiming 

they would serve to strengthen 

the power of the Sunni Al-Khalifa 

ruling family. However, turnout 

was more than 51 per cent, according 

to the electoral commission. 

Shia Muslims account for the 

majority of the Bahraini population 

and many say they are marginalised 

by the Sunni-led government. 

Protests broke out in 2011, 

with demonstrators calling for 

more rights. 

■ www.meed.com/government 

UK signs agreement to establish 

permanent navy base in Bahrain 

The UK signed a deal with Bahrain 

at the Manama Dialogue 

on 6 December to establish a 

permanent Royal Navy base at 

Mina Salman Port. Manama 

will provide $23m to construct 

the base, with London covering 

ongoing costs. 


Standard & Poor’s downgrades 

Oman outlook to negative 

US ratings agency Standard & 

Poor’s has lowered Oman’s outlook 

from stable to negative in response 

to the fall in oil prices to 

below $70 a barrel. However, the 

A/A-1 rating on long- and shortterm 

foreign and local currency 

sovereign credit stays unchanged. 


www.meed.com 


Agenda 

energy 

A new era for contracting 

The recent price dispute at an Aramco project suggests a new period of less aggressive bidding is arriving 

MEED’s reporting in November of massive 

delays and a spiralling budget at 

Saudi Aramco’s $7bn Jizan refinery 

project came as no surprise to those working 

on one of the most challenging schemes in the 

Middle East. 

However, this was then followed by the 

news that Aramco was on the verge of terminating 

SK Engineering & Construction (SK 

E&C) from its contract at Jizan, after the South 

Korean contractor requested an extra $1.2bn to 

complete the crude distillation/vacuum distillation 

unit on the scheme. 

This time, the report sent shockwaves 

through the contracting industry, including 

those working on the project. If SK E&C is terminated, 

it would represent a surprising and 

unprecedented act by Aramco and raise serious 

questions about how the region’s megaprojects 

are currently being executed. 

Market uncertainty 

“There is a lot of uncertainty in the market at 

the moment and the prospect of SK E&C being 

thrown off Jizan is part of that,” says an executive 

from a major international contractor. 

“Many are now assuming that massive budget 

overruns could see clients decide to place future 

megaprojects on hold rather than take a risk.” 

SK E&C’s problems on Jizan are not unique 

and all of the international contractors working 

at the site are putting in claims for additional 

payments due to long delays and changes in 

the scope. However, the additional amount 

Aramco is prepared to pay is $450m less 

than the $1.2bn the South Korean firm has 

demanded and sources have said this is what 

is causing the friction between the two parties. 

Almost all of the region’s megaprojects 

since 2009 have been split into multiple packages 

and awarded on a lump-sum turnkey 

(LSTK) basis. This model means contractors 

assume all of the risk for the engineering, procurement 

and construction (EPC) of each package 

and deliver the work on a fixed-price basis. 

Prior to 2009, due to the buoyancy of the global 

projects market, most foreign firms insisted upon 

the more attractive cost-reimbursable contracting 

model. This is where all costs are picked up 

by the client and an agreed profit margin is then 

Shift: Several multibillion-dollar projects have been retendered in 2014 after prices were deemed too high 

tacked on at the end for the contractor. However, 

the global economic crisis meant projects markets 

across the world collapsed, leaving the 

Middle East as arguably the only region looking 

to make sustained investments on a huge scale. 

The odds were stacked massively in favour of 

the client. 

South Korean contractors were quick to capitalise 

on this opportunity and came to dominate 

the Middle East’s hydrocarbons project 

sector by offering the LSTK model to clients, 

which was backed up by extremely low bids. 

Some of the budget overruns seen today are the 

outcome of this new approach. 

“Everyone working for the South Korean 

firms believed the LSTK model offered them 

the best chance to break into the process plant 

market and that is exactly what happened,” 

says a senior executive from a South Korean 

contractor. “To achieve this, we all knew we 

had to bid with very low prices, and maybe in 

some cases the prices were too low.” 

Other contractors, such as the UK’s Petrofac 

and Italy’s Saipem, followed suit and also 

enjoyed success, but the South Koreans dominated 

the market in 2009-12. 

Huge losses 

The LSTK model depends heavily on being able 

to finish projects ahead of schedule while keeping 

a lid on costs. However, when projects overrun 

and costs go up, which is extremely common 

in the Middle East, the end results can be 

disastrous. Despite winning huge volumes of 

work in the previous four years, several South 

Korean contractors posted huge losses in 2013. 

The majority of these were caused by delays and 

budget overruns on Middle East projects. 

GS Engineering & Construction took a massive 

hit on the Ruwais refinery scheme in Abu 

Dhabi and recorded losses of close to $850m in 

2013. Samsung Engineering fared even worse, 

losing $928m in the year, relating to several 

projects across the Middle East. 

The fallout of 2013 is that many South Korean 

firms are now treading a lot more carefully in 

the regional contracting market. It is clear that 

the bids being made today are much higher than 

photograph: shuttErstock 


Q 

“Microfinance 

is a tool that 

can help enhance access to 

finance to the unbanked” 


in the past. This is reflected in the fact that several 

multibillion-dollar schemes in 2014 have 

been retendered after prices were deemed too 

high. These include Aramco’s integrated gasification 

combined-cycle power plant in Jizan as 

well as the Ras Tanura refinery rehabilitation. 

This new sensibility emanating from Seoul 

could well be one of the reasons why SK E&C 

is demanding so much money from Aramco 

for the additional work at Jizan, although this 

brinksmanship could have dire consequences 

if the firm is terminated from the project. The 

low bids helped the South Koreans gain access 

and experience in the region, but this has 

proven to be unsustainable over the long term, 

particularly in an inflationary environment. 

“The South Koreans wanted to break into the 

Middle East market and that is what they have 

done,” says one Middle East-based executive at 

an European contractor. “They made good profits 

in the first few years that probably outweighed 

the losses in 2013, and all of them have 

become established players now. It looks like 

the really aggressive bidding has gone and this 

“We all knew we had to 

bid with very low prices, 

and maybe in some cases 

the prices were too low” 

Senior executive from a South Korean contractor 

will hopefully equate to an acceptance by clients 

that they have to pay market prices now.” 

The problems from that early part of the decade 

can be witnessed in the Jizan refinery project. 

The contractors have been blighted by cost 

overruns due to the remote location and it looks 

likely that any firms that do remain on site will 

have to be paid a total of about $2bn extra. 

Whatever happens to SK E&C on the Jizan 

project, it is clear a new era is arriving where 

the lines are redrawn regarding what is acceptable 

between client and contractor. 

There have been some subtle changes in the 

way some of the larger megaprojects have been 

awarded in 2014, with several clients showing 

a reluctance to trust one company to carry out 

large volumes of work. 

Kuwait decided to award the $14bn Clean 

Fuels Project to three consortiums comprising 

a total of nine international contractors. The 

government hopes that by spreading the risk 

between several firms in each package, it will 

lessen the likelihood of delays or overspends. 

Qatar is tendering two packages for the 

$6.5bn Al-Karaana petrochemicals complex to 

consortiums, so there will be three to four contractors 

carrying out the work. Compare this 

with the seven packages awarded to seven different 

contractors at the $7bn Jizan refinery. 

“There has always been this tug-of-war 

[between client and contractor], and it begs the 

question as to which is the best way to go,” 

says Sadad al-Husseini, Aramco’s former head 

of exploration and production. “Do you keep 

faith with established partners with a good 

track record or do you let in new companies 

eager to make a good impression in a new territory. 

There are decent arguments for both 

sides, but in the end it is the client’s money 

and therefore their decision to make.” 

Aramco is also making some changes to the 

way it approaches some of its more specialist 

project work. A long-term contract model is 

being rolled out to cover its offshore assets in 

terms of both new schemes and brownfield 

maintenance of existing facilities. Four contractors 

are expected to be selected by early 2015. 

If the offshore deal is successful it could 

mean that Aramco ring-fences some of its other 

key sectors such as onshore oil and unconventional 

gas, and offers contractors the opportunity 

to bid for a long-term deal. 

“There is no question that Aramco wants to 

quickly develop its unconventional gas assets,” 

says the executive from a European contractor. 

“This would indicate a long-term agreement 

with several contractors would be an ideal way 

to do it rather than long tendering processes.” 

Oil crunch 

Across the wider GCC, a huge amount of work 

remains available. Regional projects tracker 

MEED Projects states that schemes worth a 

total of $190bn are at various pre-execution 

phases (not including study). With oil prices 

now well below $70 a barrel it is possible 

many of these projects will not go ahead as 

planned in 2015. Many analysts now say 

$100-a-barrel oil will not be returning for the 

rest of the decade, something that was almost 

unthinkable even six months ago. 

Low oil prices also mean opportunities could 

emerge in the oil and gas contracting market elsewhere 

in the world. This could lead to a return 

to cost-reimbursable deals as the competition 

goes back to pre-2009 levels. However desirable 

this may be to contractors, it is unlikely to be 

accepted unless absolutely necessary. 

Whatever happens at the Jizan refinery project, 

it is likely the scheme will be one of the 

last in the region to attract the type of low-ball 

bidding from the South Koreans that turned 

the industry on its head in 2009. SK E&C may 

end up paying the price by being terminated 

from the scheme, but many will welcome a 

return to less aggressive bidding and more sensible 

contracting practices. 

However, there will probably be an equal 

number that will mourn the passing of one of 

the most exciting building programmes in the 

history of the region’s hydrocarbons industry. 

Kevin Baxter 

www.meed.com 


TANZANIA PROJECTS MARKET 

Grow with MENA and East Africa’s leading projects information provider 

VALUE OF CONTRACTS AWARDED 2010-13 

$m 

6,000 

5,000 

4,000 

Find new business 

Win new contracts 

Grow your business 

Generate more revenue 

3,000 

2,000 

1,000 

0 

2010 

2011 

2012 

2013 

VALUE OF TANZANIA PLANNED AND UNDER CONSTRUCTION PROJECTS 

36% 24% 17% 12% 9% 1% 1% 

Transport 

$36,173m 

Gas 

$23,876m 

Power 

$16,827m 

Industrial 

$12,189m 

Construction 

$9,070m 

Chemical 

$1,470m 

water 

$1,386m 

ACTIVE PROJECTS (planned or awarded) 

$m 

3,126 

15,382 

20,890 

900 

3,971 2,687 

2,349 

MULTI-REGIONAL 

DAR ES SALAAM 

MTWARA 

MBEYA 

IRINGA 

MTWARA 

13,186 

2,321624 

$15.4bn 

48 2,349 

1,556 

3,100 

1,800 

50 50 

= Construction / Transport 

= Oil & Gas / Chemical 

= Power / Water 

= Industrial 

value of contracts 

awarded since 2007 

$5bn 

value of contracts 

forecast to be awarded 

for 2014 as a whole 

8m 

growth in population 

between 2007 

and 2013 

$83.1bn 

value of planned and 

un-awarded projects 

*Compound annual growth rate 

11.4% 

is the GDP CAGR* 

between 2007 and 2013 

532 

major contracts 

awarded between 

2007 and 2014 

$1.2bn 

value of the largest single 

contract awarded for the 

Mtwara – Dar es Salaam 

gas pipeline 

291 

major planned and 

unawarded projects 

Contact us today and find out how MEED Projects can help your business thrive in the MENA and East Africa projects market: 

Tel: +971 (0) 4 818 0288 | E-mail: helpdesk@meed.com | Web: www.meedprojects.com

egionAl 

Q 

“[Abu 

A lifeline 

for oil 

importers 

Low crude prices will 

provide an economic 

boost for energyimporting 

nations in 

the Middle East and 

North Africa region. 

Wil Crisp reports 

Following the November 

decision by Opec to keep 

its production quotas static 

at 30 million barrels a day, oil 

exporters are bracing for a prolonged 

period of depressed 

crude prices and lower government 

revenues. 

But for the Middle East and 

North Africa (Mena) region’s 

energy-importing nations, lower 

prices will provide a welcome 

economic boost. 

Saving billions 

US-based financial services 

company Morgan Stanley has 

cut its 2015 forecast for Brent 

crude from $98 to $70 a barrel, 

and has slashed its 2016 forecast 

from $102 to $88 a barrel, citing 

slowing demand from China 

and increasing hydrocarbons 

production due to the US shale 

gas boom. 

If this prediction is accurate, 

the region’s net oil importers 

should save billions of dollars on 

energy imports and subsidies as 

market prices move closer to the 

discounted prices that are offered 

to consumers through subsidised 

electricity, gasoline and diesel. 

“Importers are the mirror 

image of oil exporters,” says 

Lucio Vinhas de Souza, managing 

director and chief economist 

of the US-based Moody’s 

Dhabi is predicted 

to] need an additional 

3,100 doctors by 2020” 


Current ACCount bAlAnCe, 2014 government Debt, 2014 

(perCentAge oF gDp) 

0 

-2 

-4 

-6 

-8 

-10 

Morocco 

Tunisia 

Egypt 

Jordan 

Lebanon 

Investors Service sovereign risk 

group. “They are going to be positively 

affected and will face less 

fiscal pressures.” 

For the region’s biggest energy 

importers, the price drop could 

be transformative. Ahead of the 

decline in oil prices, Egypt’s central 

bank estimated that the value 

of its petroleum imports for 2014 

would be $13.2bn. 

The Washington-based IMF 

has estimated the figure for 

Morocco also at $13bn, while Jordan 

and Tunisia were expected to 

see energy imports worth $5.3bn 

and $3.7bn respectively. 

If international oil prices 

stay low and domestic hydrocarbons 

prices for consumers are 

unchanged, energy subsidy bills 

in all the Mena oil-importing 

countries will be cut significantly, 

freeing up money to pay 

down debt and invest in infrastructure 

projects. 

There is, however, a danger 

that this window of extra economic 

flexibility could be wasted 

by governments, according to 

Egypt’s EFG Hermes. 

In a November report, the 

financial services firm warned 

that if governments are able to cut 

their subsidy bills without having 

to raise prices for consumers, the 

drop in crude could create complacency 

over much-needed subsidy 

reforms. 

“We assess that those countries, 

mostly notably Egypt, cannot 

afford to delay reforms as fuel 

subsidies remain a major source 

of the structural imbalances that 

are keeping these economies from 

(perCentAge oF gDp) 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Morocco 

Tunisia 

Egypt 

Jordan 

Lebanon 

Sources: IIF; Emirates NBD Research Sources: IIF; Emirates NBD Research 

“importers are the 

mirror image of oil 

exporters. they 

[will] be positively 

affected and face 

less fiscal pressures” 

Lucio de Souza, Moody’s 

restoring macro stability,” the 

report said. 

There have been some moves 

over the past year to reform 

energy subsidies in Morocco 

and Egypt, but more still needs 

to be done. 

Revolution legacy 

The reduction in energy import 

costs and subsidy bills driven by 

lower oil prices will be especially 

welcome due to the difficult economic 

conditions experienced by 

oil-importing nations in the wake 

of the 2011 Arab uprisings. 

Public debt in Morocco has 

surged from 48 per cent of GDP in 

2010 to 66 per cent in 2014 as the 

government has boosted spending 

on subsidies and public 

wages to pacify the population. 

Egypt’s public debt has risen 

from 73 per cent of GDP to 76 per 

cent, while in Tunisia, it has 

climbed from 40 per cent to 

51 per cent. 

As well as seeing budget deficits 

increase post-2011, current 

account deficits have also grown 

due to the disruption to exports 

and a decline in tourism revenues. 

Morocco, Tunisia, Jordan 

and Lebanon all have current 

Economy 

account deficits worth more than 

6 per cent of GDP. 

Government efforts to reduce 

these will be given a helping 

hand by the lower oil prices. 

Although the overriding 

impact of depressed oil prices 

should be positive for oil importers, 

there will be some negative 

implications too. In the event of 

a prolonged slump in prices, 

they could see less aid and 

lower remittances from the 

region’s oil exporters, as well 

as the possibility of greater 

regional instability. 

Since the 2013 military coup, 

the Egyptian government has 

been provided with in excess of 

$15bn in aid from Gulf nations. 

Financial institutions, including 

the US’ Citigroup, have warned 

that lower oil revenues could 

mean GCC nations are less generous 

in the future. 

But Paul Gamble, director of 

the sovereign group at the US’ 

Fitch Ratings, says a drop in 

remittances is unlikely. 

“Our assumption is that 

growth across the Gulf is still 

going to be fairly strong because 

governments will continue with 

their capital projects,” he says. 

“If necessary, some will run 

deficits, but we don’t really see 

them cutting back on employment, 

and if they are not cutting 

back on employment then the 

remittances will continue.” 

If, as predicted, oil prices 

stay low for an extended period, 

it will represent an opportunity 

for the region’s governments to 

inject some dynamism into their 

economies and enact long-promised 

reforms. 

“The region is at a crossroads,” 

says Hanan Morsy, lead economist 

for the southern and eastern 

Mediterranean at the European 

Bank for Reconstruction and 

Development. “There are challenges, 

but there is also a chance 

for these countries to break with 

the past.” 

Making the most of this 

opportunity will be the challenge 

for policymakers. 

www.meed.com 


Stay informed 

MEED on your mobile 

MEED.com has been relaunched for your phone: 

Automatically resizes for your screen size 

Streamlined navigation 

Access 20-year archive on your phone 

Forgotten your log-in details 

Email CustomerService@meed.com 

and a customer service representative will help you.

Interview 

Lucas Hautvast 

President and CEO, GDF Suez Energy International 

The new Middle East head of GDF Suez explains how financing models are changing 

in the region’s private developer market. Andrew Roscoe reports 

As 2014 draws to close on what has 

been a relatively lean year for the 

region’s utility developer market, 

one man in the sector who has been 

exceptionally busy is Lucas Hautvast, the 

recently appointed regional head of GDF Suez 

Energy International. 

Since Hautvast took up his new position 

as president and CEO for South Asia, Middle 

East and Africa in January 2014, the UK/ 

French developer has closed financing on 

Abu Dhabi’s Mirfa independent water and 

power project (IWPP) and the Safi independent 

power project (IPP) in Morocco. It has also 

started construction on the Al-Zour North 

IWPP, Kuwait’s first private utility scheme. 

“While for new projects, [2014] has been 

a little disappointing as we haven’t seen 

any new projects getting to the award stage, 

it has still been very successful,” says 

Hautvast. “We have started construction 

on more than 4,000MW.” 

Strong position 

GDF Suez’s success in picking up two of the 

last three major private utility projects 

awarded in the GCC further consolidated the 

group’s position at the top of MEED’s GCC 

developer ranking, with the group now boasting 

a total equity capacity of 7,906MW, more 

than double its nearest rival. 

The group’s dominant position is largely 

the result of the merger of the UK’s International 

Power and France’s GDF Suez in 2011, 

which brought together two of the world’s 

largest utility providers. While the merger 

of previously fierce competitors may have 

seemed a challenge, Hautvast says the integration 

of both firms in the Middle East has not 

been difficult. 

“I think it has been relatively easy, as we were 

both successful developers in the region. They 

both had big portfolios, and were similar companies 

– the cultures weren’t that different. 

www.meed.com 

“Outside the GCC, 

the most interesting 

market is Egypt. [It] 

could be investmentready 

again” 

They had a similar model – both were strong in 

financial structuring, technical competencies 

and asset management” says Hautvast. 

“So bringing it all together was not that difficult. 

And we managed to win two out of the 

three projects tendered after the merger, so we 

managed to keep our share of the projects coming 

to the market.” 

The Middle East and North Africa (Mena) 

region will continue to form a central part of 

GDF Suez’s growth strategy as part of a wider 

corporate focus on emerging markets. 

CArEEr HIGHLIGHts 

Q January 2014 Appointed CEO and president 

of GDF Suez Energy International for South 

Asia, Middle East & Africa 

Q 2009 Moved to Bangkok with GDF Suez to 

become head of strategy and markets & sales 

for the Middle East, Asia & Africa region 

Q 2008 Appointed chief commercial officer 

for GDF Suez in the Philippines 

Q 2001 Joined GDF Suez in 2001 as commercial 

director for the Netherlands of the 

Group’s utility Electrabel 

Q 1991 Began career in 1991 with Anglo-Dutch 

container shipping group P&O Nedlloyd, working 

in countries including South Korea, Hong 

Kong, the UK and continental Europe 

“The strategy of GDF Suez is twofold at this 

moment,” says Hautvast. “The first is to be 

involved in what we call energy transition in 

Europe – there is the transition from thermal to 

renewables, a change in model. The second is 

to grow in emerging markets, and I’d say from 

that side there are three different regions we are 

looking at aggressively: the Middle East; South 

America; and Asia.” He says the Middle East is 

a key growth area for the group. “So we are 

concentrating a lot of efforts and looking at a 

lot of opportunities,” he adds. 

Saudi focus 

Hautvast identifies Saudi Arabia as the utility 

market with the most potential in the GCC, and 

says the wide variety of planned power projects, 

from conventional to renewable and 

nuclear energy schemes, will make the kingdom 

an important area of focus. Following its 

success with Morocco’s Safi IPP, GDF Suez is 

also keeping a close eye on other emerging 

markets beyond the GCC. 

“Outside the GCC, the most interesting market 

is Egypt. We think that it could be on the 

verge of being investment-ready again,” says 

Hautvast. “Things seem to have calmed down, 

and there is a new government working on 

economic reforms, and part of that is making 

sure there is sufficient power. They have had 

blackouts in the past three years, the first for a 

long time – which is not the most popular 

thing. So they are working really hard to put 

gas-fired, solar, coal, wind and nuclear projects 

onto the table to meet the demand.” 

Iran and Iraq could also offer significant 

opportunities in the coming years, but these 

markets, Hautvast says, will take longer to be 

ready for the developer market. 

“Longer term, it could be Iran and Iraq: Iran 

when sanctions are lifted; and Iraq if there is 

stability. But they will not really kick off in the 

next year; it will be three years before we probably 

see any real activity there.” 


24 | MEED | 12-18 December 2014 www.meed.com 

IllustratIon: josIE jaMMEt/hEart

Interview 

photograph: suppliED 

While the emerging markets of the Mena 

region will offer significant opportunities for 

the developer market in the coming decade, 

they also carry considerable economic, political 

and security risks. The long-term nature of 

utility development contracts increases the 

exposure of companies such as GDF Suez to 

market risks, and Hautvast says finding the balance 

between risk and reward is paramount. 

“If you want to win projects, you need to 

take risks. We take it on a case-by-case basis – 

we have assets in South America, which are 

not entirely risk-free countries – but risk free 

doesn’t exist from that kind of perspective. 

From an environmental risk point of view, risk 

should be manageable, so we can protect our 

people sufficiently.” 

However, Hautvast is quick to point out that 

security risk is only one element; the second is 

long-term political and economic stability. 

“It takes us 25 years to get our full returns on 

building a power plant, so we are taking a 

25-year bet on the government, and the ability 

of the government and future governments to 

stand against a promise made 20 years ago by a 

previous government. And this is often the 

much bigger risk,” he says. 

“In somewhere like Iraq, there is not only 

the personal risk, current security risk, but the 

stability risk. Is there a stable enough government 

that can make decisions and agreements 

that are adhered to by a different government 

in six years time For me, Iraq is not quite there 

yet to satisfy the payment risk.” 

Financial barometer 

Hautvast says that a good barometer for judging 

the risk of a project is if the scheme is bankable 

and finance is available. 

“Finance is a very good test. If big local and 

international banks, European banks, Japanese 

banks are willing to put in the money and give 

you a 20-year loan, then that means it is OK; it 

is not just us going in.” 

Due to the complexity and long duration of 

the purchase agreements required to develop 

power and water projects under IPP/IWPP models, 

financing is a central part of the developer 

market. Hautvast says this is the main factor 

when deciding which countries to bid for work 

in. “Egypt will be an interesting discussion – 

will the banks finance Egypt’s new power 

plants If they will, we are willing to start bidding. 

We won’t do full finance without the 

banks and that’s how we manage our risk.” 

Hautvast says GDF Suez prefers to work with 

local rather than international banks. 

“We would prefer to get local banks for every 

deal, if possible, because it gives you a local 

Hautvast: Egypt will be an interesting discussion 

“If big local and 

international banks 

… are willing to give 

you a 20-year loan, 

that means it is OK” 

dimension if they are part of it. Usually, they are 

guaranteed by the local government, and if they 

are lending to you, it gives the status of your 

project more weight and credibility,” he says. 

“But, of course, not all countries have local 

banks that are capable of borrowing or lending 

finance for long-term duration.” 

Emerging project markets such as Egypt will 

raise a number of questions over whether sufficient 

finance will be guaranteed. However, as 

the GCC private power market matures and 

international financial markets tighten regulations 

on long-term lending, clients and banks 

are looking at making the structure for financing 

major utility schemes less rigid. 

Abu Dhabi’s Mirfa IWPP, for which GDF 

Suez signed the final project agreements earlier 

this year, is a prime example of a public-private 

utility scheme that has utilised a more flexible 

structuring for the financing. A mini-perm loan 

structure was used, which does not tie down 

lenders for the entire duration of the project. 

“There was some flexibility from Abu Dhabi 

to allow for that. The advantage is that for the 

banks, they loan for a shorter period, so they 

have an option to get out after seven years if 

they want to,” says Hautvast. “It is an advantage 

for the banks more than the clients. 

Hautvast points to the project bond issue for 

the Shuweihat 2 power plant in Abu Dhabi as a 

further example of how financing major utility 

schemes is becoming more flexible. 

“Project bonds is an avenue we will be 

exploring more, and seeing if we can do it again 

in the future. It is all about finding the optimal 

structure that gives us the best chance of winning 

and the customer the returns and riskreturn 

balance they are looking for,” he says. 

“People will look at it post-construction, and 

once construction risk is out it becomes very 

stable forecast cash flow. So I think the market 

will look more at bonds.” 

Changing technology 

It is not only financing that is changing in the 

Middle East’s utilities sector. As countries seek 

to reduce domestic consumption of valuable 

hydrocarbons and cut gas import bills, governments 

are pushing ahead with elaborate plans 

for alternative energy, including renewables 

and nuclear programmes. 

With GDF Suez already an operator of multiple 

technologies worldwide, from traditional 

thermal plants to nuclear and renewable solar 

and wind schemes, the group is well placed to 

participate in whichever technology clients 

choose to pursue. 

“The country is the customer. If they say 

they want a coal plant, or a solar plant, we will 

follow the customer and participate if the 

opportunity is right,” says Hautvast. 

While he was surprised when first arriving 

in the region at how little renewable energy 

had been deployed, Hautvast says renewables 

will be one of the key themes of the Mena 

power sector in 2015 and beyond. 

“Whether it is 2015, 16 or 17, I think the 

renewables programme will happen,” he says. 

“One day, Saudi Arabia’s KA-Care will make its 

position clear. In Dubai, there is already the 

100MW project, but that is part of a 1,000MW 

[programme], so there is still 850MW of power 

to be done. Abu Dhabi, through Masdar, is looking 

at more projects. Every country is positioning 

themselves on it, certainly in the next year 

or two a lot of clarity will come on the subject.” 

Another trend Hautvast expects to become 

more prominent in the coming years is the 

decoupling of water and power facilities, particularly 

if nuclear programmes are rolled out 

on a large scale. 

“It’s going to be an important issue – in some 

countries they need more water capacity and 

not more power, or the other way round, and 

what used to be integrated will be separate.” 

Hautvast’s third main theme for the region’s 

power sector in the year ahead is the price of oil. 

“Low oil is going to change the world, and, 

of course, change the Middle East. People will 

do things differently, but how, I don’t yet 

know,” he says. 

www.meed.com 


Special Report 

Banking & Finance 

T 

CONTENTS 

28 LENDING Project owners are 

increasingly choosing club deals 

over syndicated loans 

30 PROFILE National Commercial 

Bank is looking towards a fully 

sharia-compliant future 

32 INTERVIEW The chairman of 

Bank of Palestine on the strong 

investment climate in the Palestinian 

Territories 

34 MICROFINANCE Microfinance 

has got off to a slow start in the 

Middle East, but the potential 

for growth is huge 

For a full list of upcoming 

Special Reports, go to: 

www.meed.com/specialreports 

PHOTOGRAPH/ILLUSTRATION: DREAMSTIME 

Q 

Demand for credit is strong across the 

GCC on the back of robust economic 

growth and high levels of public sector 

spending on infrastructure projects. This, 

combined with improved consumer and 

business confidence, has seen both retail 

and corporate loan books steadily expand in 

recent years. 

Credit growth of about 10 per cent is 

forecast for next year, as businesses continue 

to seek financing to support their 

expansion plans. 

There is, however, a noticeable shift in the 

market towards club lending and away from 

syndicated deals. In a club transaction, a loan 

is effectively pre-syndicated, with no bank 

taking on the sole underwriting risk. This is 

part of a wider global trend and reflects the 

continued caution in the market following 

the global financial crisis; club loans tend to 

be smaller and easier to arrange, and are often 

deals based on existing relationships with 

financial institutions. 

But it would be worth remembering that 

the practice of name lending or reputation 

lending has in the past led banks into trouble, 

particularly in Saudi Arabia. 

Rigorous scrutiny is essential for lenders 

to avoid a repeat of past mistakes. Poignantly, 

lenders in the kingdom are still favouring 

syndication, rather than bilateral and 

club transactions. 

www.meed.com 


Special Report Banking & Finance 

lendinG 

Club deals remain in favour 

Demand for credit remains strong across the region, with project owners 

increasingly choosing club deals over syndicated loans to finance their expansion 

JameS Gavin 

Gulf banks have grown accustomed 

to a healthy pipeline of syndicated 

deals in recent years, but 2014 has 

so far seen a dip in these types of 

loans and it seems unlikely 2015 will offer 

richer pickings. 

Despite a healthy project pipeline, the volumes 

of syndicated loans in the Middle East 

and North Africa (Mena) region has fallen this 

year, with the $10.6bn-worth of syndicated 

loans raised in the third quarter down almost 

20 per cent on the $13.2bn raised in the same 

quarter in 2013, according to the UK’s Dealogic. 

For the first nine months of 2014, 

$43.9bn-worth of syndicated loans were raised, 

more than $17bn less than the $51bn-worth of 

deals closed in the same period in 2013. 

There is little sign of large volumes of syndicated 

deals hitting the market in the Gulf or 

wider Mena region in 2015. Instead, it is club 

deals – a structure under which no single bank 

takes the sole underwriting risk – that are now 

the prevalent method of raising funds. 

Growing popularity 

A spate of recent deals underlines the growing 

popularity of club structures. In November, 

Indian industrial manufacturer Jindal Saw 

secured a six-year club facility of AED465m 

($126.6m) with a group of Dubai lenders, to 

finance its regional growth plans. Commercial 

Bank of Dubai, Commercial Bank International, 

Emirates NBD and Mashreq bank were 

the mandated lead arrangers (MLAs) and bookrunners 

on the transaction, providing the funding 

to the company’s regional subsidiary. 

Also in the UAE, the Port of Fujairah is set 

to tap a club deal for a financing that will support 

its expansion plans. A AED754m financing 

facility is being arranged, expected to be 

closed by the end of 2014, on a club basis 

through four banks. This will be used by the 

port to build a breakwater and a jetty for very 

large crude carriers. 

The port raised a syndicated loan to support 

its expansion in 2008, when it secured 

a AED900m facility through MLAs National 

key facT 

Mena=Middle East and North Africa. Source: Dealogic 

The volume of 

syndicated loans in 

the Mena region in 

the third quarter of 

2014 was down 

almost 20 per cent 

year-on-year 

“There’s quite a 

number of club deals 

happening; it’s not big 

underwritings and then 

syndicating it down” 

Qatar-based banker 

Bank of Fujairah and Commercial Bank of 

Dubai. That this latest loan is being arranged 

on a club basis reflects the general shift from 

syndication to club. 

Syndication is still a feature on some of 

the larger deals. In October, Abu Dhabi Water & 

Electricity Authority and a consortium led by 

UK/French GDF Suez International signed a 

$1.8bn project financing deal in support of the 

Mirfa independent water and power project, of 

which $1.2bn of the debt has been raised by a 

syndication of local and international lenders, 

including a large number of Japanese banks. 

Big syndication deals have been thin on the 

ground in other Gulf states. In July, Bahrain’s 

SyndicaTed loanS, Jan-Sep 2013-14 

Arab Banking Corporation (ABC) launched a 

syndication of a $500m loan for general funding 

purposes. The bookrunners and initial 

MLAs on the ABC transaction were the UK’s 

HSBC, National Bank of Abu Dhabi, France’s 

Natixis and Japan’s Sumitomo Mitsui Banking 

Corporation. Several additional banks had 

already precommitted to the deal before it was 

launched into general syndication, giving the 

wider banking market the chance to participate 

in the deal. 

Syndication decrease 

None of that challenges the sense that the balance 

is firmly in favour of club deals, rather 

than syndications. “There’s quite a number of 

club deals happening; it’s not big underwritings 

and then syndicating it down,” says one 

Qatar-based banker. “While there are a few 

syndication deals done by very large players, 

like Bank of America, in-country, it’s mostly 

the club scenarios.” 

In Qatar, there is much anticipation over 

the looming Al-Karaana petrochemicals project 

financing. There is a lot of discussion in 

the market as to when the debt package for the 

$6.5bn olefins and derivatives plant at Ras 

Laffan, a joint venture of Qatar Petroleum and 

UK/Dutch Shell Group, will be launched. 

“Al-Karaana will be a large project financing 

with banks asked to submit their bids on 

the fees and interest rate, and they will be 

clubbed together in one big syndicate,” says 

the banker. 

In Saudi Arabia, there appears to be more 

robust appetite for syndication, at least compared 

with bilateral loans. “There are no signs 

2013 2014 

Number of 

Number of % change in 

Proceeds ($m) issues Proceeds ($m) issues proceeds 

Middle East 49,524.5 70 39,944.5 63 -19.3 

UAE 26,857.5 36 17,298.2 34 -35.6 

Saudi Arabia 14,114.7 13 9,567.4 10 -32.2 

Total world 3,084,227.5 7,198 3,364,500.9 7,470 9.1 

Source: Thomson Reuters 

28 | MEED | 12-18 December 2014 

www.meed.com

Mena syndICated loan voluMes 

($m) 

50000 50,000 

40000 

40,000 

30000 

30,000 

20000 

20,000 

10000 

10,000 

0 

0 

Q1 2008 

Source: Dealogic 

Q3 2008 

Q1 2009 

Q3 2009 

Q1 2010 

Q3 2010 

Q1 2011 

that highlight that the concentration of bilateral 

deals is increasing,” says Talha Nazar, 

senior equity analyst at Saudi-based Aljazira 

Capital. “We believe syndication of loans will 

continue, given it also lowers the exposure 

of a single bank in a single deal.” By the end 

of 2013, syndicated loans in the kingdom 

stood at SR237.3bn ($63.2bn), depicting an 

increase of 35 per cent year-on-year. 

In Saudi Arabia at least, there seems to 

be a preference for sticking to syndication. 

“There isn’t significantly more syndication 

than there used to be,” says one Riyadh-based 

banker. “You do, however, have some borrowers 

experimenting with various structures.” 

Despite the greater appetite among larger 

domestic banks for bilateral deals, these are 

more difficult to assemble on the larger $1bnplus 

financings. However, if it is a corporate 

financing for a project with a tenor not greater 

than five years – particularly if it involves a 

sovereign-rated group such as Saudi Basic 

Industries Corporation (Sabic) – then bilateral 

deals are more feasible, says the banker. 

Strong demand 

Overall, the demand for credit remains strong 

across the region, and the reduced syndication 

levels do not suggest a general slackening 

in the pace of bank lending. Continued economic 

growth and public sector spending, 

coupled with improved consumer and business 

confidence – particularly in the UAE – 

will support solid lending growth at an average 

level of about 10 per cent in 2015, 

according to a comment on the Mena banking 

market issued on 5 December by US ratings 

agency Moody’s Investors Service. 

In the GCC, corporate lending will be more 

robust, on the back of still high government 

spending, says Konstantinos Kypreos, senior 

Q3 2011 

Q1 2012 

Q3 2012 

Q1 2013 

Q3 2013 

Q1 2014 

Q3 2014 

credit officer at Moody’s. “Specific sectors that 

are seeing an increase vary from country to 

country, but common themes include spending 

on infrastructure projects. The recent oil 

price declines should not adversely affect 

lending growth as most GCC governments 

remain committed to diversifying their economies 

away from the oil sector. However, further 

declines and/or a prolonged period of 

low crude prices will affect credit growth, 

especially in countries with high fiscal breakeven 

oil prices, such as Bahrain and Oman.” 

Regional banks are well-placed to increase 

their corporate lending exposure. “Mena 

banks generally have capital ratios well above 

the minimum regulatory requirements and 

loan-to-deposit ratios of under 100 per cent, 

which suggests they have capacity to increase 

lending,” says Kypreos. 

Private sector lending is set to continue 

at a brisk pace in Saudi Arabia, the largest 

regional market, as the government will look 

to maintain spending on infrastructure projects. 

“Although oil prices have plunged in 

the past couple of months, we believe the government 

has enough reserves to continue 

spending, which in turn will also support corporate 

lending,” says Aljazira’s Nazar. 

There is little change in the composition of 

lending, whether dollar or local currency lending. 

The former is still preferred for the larger 

deals, says the Qatar banker, with local currency 

transactions restricted to those with 

domestic bank clubs. “As soon as you get international 

banks involved, even if it’s [Dubai’s] 

Emirates NBD participating in a deal, you will 

quickly end up on the dollar side,” he says. 

Dollar lending is not a challenge for the 

GCC, although Moody’s warns that outside 

the Gulf states, widespread use of the dollar 

represents a form of increased funding and 

“In the GCC, corporate 

lending will be 

more robust, on 

the back of still high 

government spending” 

Konstantinos Kypreos, Moody’s Investors Service 

liquidity risk, as a potential shortage of foreign 

currency can hinder banks’ business activities 

while central banks do not offer foreign currency 

liquidity in the event of a banking crisis. 

In Saudi Arabia, there was a preference for 

riyal lending in 2009-10, largely because of the 

volatility in funding dollar books through the 

interbank market – especially with the uncertainty 

that afflicted the large European and US 

banks at that time. That has now changed and 

dollar lending is back in the comfort zone. 

Dollar lending 

Borrower preferences are important in determining 

the currency denomination of loans. 

Export-oriented players such as petrochemicals 

plants “can sleep better if the financing is 

in dollars”, says the Saudi-based banker. 

“They don’t have to worry about any potential 

depegging of the riyal. But others are relatively 

comfortable with riyal/dollar exchange risk.” 

On some deals, Saudi banks have been 

compelled to lend in dollars, for example, in 

power sector financings, where it is required 

Get all the latest news and 

analysis on banking wherever 

you are, whenever you want. 

Download the 

MEED app today 

to fix interest costs for the borrowers. “There’s 

simply no swap market that runs more than 

10 years in riyals, so they have to do it in dollars, 

which can lead to some bizarre scenarios,” 

says the banker. “Utilities are paying in 

dollars, even though they are receiving their 

revenues in the form of riyals.” 

The weaker oil price will doubtless have 

a bearing on lending activity across the region, 

although, in the Gulf at least, government 

infrastructure plans will continue to support 

credit growth. 

www.meed.com 12-18 December 2014 | MEED | 29


Profile 

NCB makes Islamic pledge 

In a move that could have repercussions for the entire local banking sector, the kingdom’s 

largest lender, National Commercial Bank, is looking towards a fully sharia-compliant future 

James Gavin 

Saudi Arabia’s Grand Mufti Sheikh 

Abdulaziz al-Sheikh is not a frequent 

commentator on the bank sector. So 

when the leading religious figure 

voiced disquiet in mid-October at the looming 

initial public offering (IPO) by National Commercial 

Bank (NCB), deeming the share sale 

“haram”, the pronouncement must have sent 

shockwaves through the kingdom’s oldest 

lender’s Jeddah headquarters. 

The highest religious body, the Council of 

Senior Scholars, said the bank had too many 

loans accruing interest for it to be permissible 

for people to invest in – this despite NCB’s own 

board of sharia scholars having given approval 

to the $6bn IPO of 25 per cent of the bank’s 

shares. A statement on the bank’s website said 

that after much thought and deliberation, “the 

bank considers the IPO in the stocks of [NCB] 

to be acceptable from a sharia perspective”. 

The IPO, the world’s second-largest in 2014 

after the offering in Chinese online trader Alibaba, 

went ahead and proved as popular as 

bank officials had anticipated, with 300 million 

shares priced at SR45 ($12) each, attracting 

SR311bn of bids from Saudi investors. 

Another 200 million shares were sold to the 

Public Pensions Agency. 

Damage control 

Even so, the jarring criticism from leading 

Saudi religious scholars is not something the 

bank could easily ignore. The chairman of the 

board at NCB, Mansour al-Maiman, was 

understood to have been taken aback by the 

comments, particularly after its own sharia 

comittee had rubberstamped the IPO with no 

concerns about its religious permissibility. 

The response came swiftly. On 16 October, 

NCB held a meeting of its sharia board with its 

CEO, chairman and other senior officials. The 

fear that the Grand Mufti’s intervention might 

derail the subscription was uppermost in 

their minds. And the result of that meeting 

could have far-reaching consequences for 

both Saudi Arabia’s largest lender and the 

kingdom’s wider banking sector. 

key faCt 

Source: MEED 

“NCB’s decision could 

potentially cannibalise 

the market share of 

other islamic banks 

in the kingdom” 

Talha Nazar, Aljazira Capital 

The sharia board reviewed a plan to convert 

NCB into a full-fledged Islamic bank within 

a period “expected not to exceed five years”, 

the board said in a statement. The bank, it said, 

had a “sincere will” to become fully Islamic, 

citing previous fatwas that deemed it permissible 

to buy shares in a conventional bank that 

would in future become sharia-compliant. 

The plan, then, is to turn the lender – about 

two-thirds of whose assets are considered 

Islamic in nature – into one that is fully 

sharia-compliant within the space of just five 

years. That commitment implies some seismic 

structural changes to NCB’s operations, 

with estimates of some $38bn (out of $116bn) 

of total assets needing to be divested. 

This sudden shift – which had never previously 

figured in the lender’s long-term plans – 

NCB reSultS (Sr thouSaNdS) 

National 

Commercial Bank 

will have to divest 

some $38bn of 

total assets to 

become fully 

sharia-compliant 

is hugely significant, with NCB the secondlargest 

Gulf bank by assets after Qatar 

National Bank. Only three of the kingdom’s 

12 lenders are fully Islamic institutions, the 

largest of them being Al-Rajhi Banking & 

Investment Corporation. 

Placatory move 

Although NCB’s board says 92 per cent of its 

liabilities and 73 per cent of its income is 

sharia-compliant, local banking sources suggest 

it will be a challenge pulling off a conversion 

into a larger version of Al-Rajhi in such 

a tight timeframe. One Riyadh-based banker 

told MEED the pledge appeared to be influenced 

more by the need to placate the Grand 

Mufti and get the IPO out the door. 

The NCB leadership’s surprise was particularly 

acute given that Saudi religious strictures 

regarding banks had grown more relaxed in 

recent years. “This IPO could never even have 

been launched five years ago,” says the Riyadh 

banker. “But now we can do floating-rate deals 

on sharia principles and can charge commitment 

fees on a sharia-compliant basis, which 

we couldn’t do even two years ago. Sharia 

committees have changed, and there’s much 

more pragmatism these days.” 

Until NCB’s hastily drafted plan to go fully 

Islamic, the banking ethos – overseen by central 

bank Saudi Arabian Monetary Agency 

(Sama) – was such that lenders should go 

Islamic where they reasonably could, without 

closing off options to remain in conventional 

areas where this was necessary. 

“NCB has been operating as a globally active 

player with a fairly diverse product portfolio 

and some of these elements of functionality 

were not sharia-compliant,” says one Gulf 

source familiar with NCB’s operations. “There 

2012 2013 Nine months to September 2014 

Total assets 345,259,703 377,280,334 437,911,318 

Total liabilities 305,855,558 334,744,154 391,642,309 

Net income 6,613,326 7,988,976 6,947,725 

Source: NCB 


“There are concerns that 

NCB’s ability to operate 

beyond Saudi Arabia will 

be constrained by its 

conversion plans” 

was never an explicit plan to move away from 

that. The idea all along was to have an Islamic 

‘window’ rather than full compliance.” 

NCB’s quick reaction to the cleric’s comments 

was understandable, but it may challenge 

the board’s strategy of overseeing a gradual 

change to having a more national profile, 

with a stronger presence in the capital Riyadh. 

The bank’s existing hybrid model – with 

both Islamic and conventional capabilities sitting 

alongside each other – was a distinct 

advantage for NCB in its international operations, 

where full sharia compliance might be 

considered a hindrance in certain circumstances. 

It is no coincidence that the three 

fully sharia-compliant Saudi banks do not 

have a significant international footprint. 

Corporate exposure 

“NCB always had a strong corporate exposure, 

with trade finance and other activities 

that have enabled Saudi firms to operate 

across borders, and that meant dealing with 

foreign exchange risk and other issues that are 

more easily manageable through conventional 

means,” says the Gulf source. 

There are concerns that NCB’s ability to 

operate beyond Saudi Arabia will be constrained 

by its conversion plans. And inevitably, 

there will be ramifications for other 

local lenders, given NCB’s colossal market 

presence. But some analysts say that ultimately, 

the conversion will play to the 

bank’s advantage. 

“We believe NCB’s decision to convert into 

a full-fledged sharia-compliant bank could 

potentially cannibalise the market share of 

other Islamic banks in the kingdom,” says 

Talha Nazar, senior equity analyst at the local 

Aljazira Capital. “Secondly, turning into a 

sharia-compliant bank will arouse the interest 

of more investors towards the bank, which 

could potentially result in a higher market 

capitalisation, making it one of the top three 

stocks in terms of investor interest.” 

It was not hard to see why Saudi investors 

were so keen to buy shares in NCB. 

NCB ShAre of SAudi BANKiNg SeCTor, 2013 

(perCeNTAge) 

25 25 

20 20 

15 

10 

55 

0 

Operating income 

Source: NCB 

Net income 

Customer deposits 

NCB Key performANCe iNdiCATorS (%) 

First half 2014 

Return on assets 2.5 

Return on equity 22.2 

Capital adequacy ratio 18.1 

Tier 1 capital ratio 15.5 

Loan-to-deposit ratio 59.7 

Non-performing loan ratio (as 

1.4 

percentage of total loans) 

Source: NCB 

NCB mAjor ShAreholdiNgS (%) 

Net loans and 

advances 

Pre-IPO Post-IPO 

Public Investment 69.3 44.3 

Fund 

General 

10 10 

Organisation for 

Social Insurance 

Public Pension 

0 10 

Agency 

Total 79.3 64.3 

IPO=Initial public offering. Source: NCB 

Al-Maiman has overseen an overhaul of 

NCB’s operations since the financial crisis of 

2009. The bank’s return on equity, at 22 per 

cent, is well ahead of the competition; the 

Saudi average is just 15 per cent. In addition, 

its market share is more than one-fifth of the 

total local banking sector. 

NCB is the largest Saudi bank whether in 

terms of customer deposits, assets or revenues, 

and its branch network – at 329 – is the 

second-largest. It also has a 90 per cent holding 

in investment firm NCB Capital, and a 

two-thirds holding in Turkiye Finans, a Turkish 

sharia-compliant lender. 

NCB has undergone some key changes 

to its operations in the past couple of years. 

For example, it merged its individual and 

consumer finance divisions to create a retail 

banking unit in 2013. The lender’s profit 

performance has been impressive. Net 

income grew almost 22 per cent in 2013, 

to $2.1bn, and in the first nine months of 

2014, it registered a 12.8 per cent increase in 

profit to $1.8bn. 

The US’ Fitch Ratings has highlighted the 

bank’s leading domestic franchise, strong 

profitability and stable funding, although 

it also notes its high lending concentrations 

to large corporate borrowers and higher 

leverage than peers owing to a large investment 

portfolio. 

After the bank’s troubles in the late 1990s, 

which prompted the government to take a 

majority holding in NCB via the Public Investment 

Fund (PIF) – whose interest has now 

been whittled down to 44.3 per cent – this 

represents a turnaround in its fortunes. 

Al-Maiman, who is also the secretary-general 

of the PIF, has won plaudits for his stewardship 

of the lender, although the Gulf 

source cautions that the chairman was also 

fortunate in managing to complete the process 

of going public at the peak of the oil cycle. 

Increased efficiency 

“From the point of view of the bank’s owners, 

Al-Maiman has clearly increased efficiency 

levels and delivered returns to them by taking 

the bank public,” says the Gulf source. “There 

have also been positive changes in terms of 

the bank’s internal culture, and more inclusiveness. 

The management has made a concerted 

effort to pay bonuses to lower-ranked 

employees and correspondingly cut the 

bonuses of senior management.” 

In March, NCB Capital appointed Sarah 

al-Suhaimi as CEO, the first time a woman has 

headed an investment bank in the kingdom. 

Having raised $6bn from the share sale, 

NCB is now looking to boost lending across 

the region to compensate for tighter margins 

on domestic loans. Plans call for more lending 

to be directed to Gulf infrastructure projects 

and aircraft financings. And although there 

may be pressure to divest assets, as part of the 

conversion plan to sharia compliance, the 

bank is also eager to book new assets as part of 

its expansion. 

NCB’s key challenge as it heads into 2015 

is to keep up its strong recent performance 

and not be distracted by the structural implications 

of converting itself to a fully Islamic 

lender. Reconfiguring itself is likely be a 

major challenge, but the Jeddah giant’s strong 

local brand should stand it in good stead as it 

seeks to complete the process without too 

much pain. 

www.meed.com 



InTervIew 

Building on Palestinian success 

Hashim Shawa, chairman and general manager of Bank of Palestine, talks about the strong 

investment climate in the Palestinian Territories and calls for more support for small businesses 

RebeCCa Spong 

The Palestinian Territories, regularly 

rocked by political instability, would, 

superficially, seem to be a no-go area 

for investors. This year, the eruption 

of conflict between Israel and groups within 

the Gaza Strip resulted in some of the most 

destructive violence seen for several years. 

But Hashim Shawa, chairman and general 

manager of Bank of Palestine, wants to counter 

such negative impressions and show the world 

some of the economic and business successes 

that take place in the troubled territories. 

“It is important for the world and the Palestinian 

diaspora to hear about the positive stories 

that you can build on and that can maybe 

give a signal of hope and potential for the 

future,” Shawa told MEED during a recent 

visit to Dubai. 

Continued growth 

The strength of the Palestinian banking sector 

is perhaps one of those success stories as, surprisingly, 

despite the political and economic 

turmoil, it continues to post growth in profits, 

deposits and loans year after year. 

Total banking sector assets reached $11.2bn 

by the end of 2013, a 14.2 per cent increase on 

the year before. Assets stood at $4.4bn in 2001. 

The banking sector comprises 17 institutions, of 

which seven are local and 10 are foreign lenders. 

Bank of Palestine is the largest, with a network 

of 50 branches and assets of $2.6bn. It has 

about 23 per cent market share of deposits and 

loans. The lender posted a net profit of $40.4m 

in 2013, an expansion of 5.5 per cent on the previous 

year. Loan volumes grew by 13 per cent, 

while deposits increased by a similar amount. 

The bank has continued to remain profitable 

in 2014, even if results took a slight dip in the 

third quarter as an inevitable consequence of 

the violence seen earlier in the year. Net profit 

reached $27.7m in the third quarter, compared 

with $29.3m in the same period last year. 

Shawa says the investment climate in the territories 

continues to be strong and Bank of Palestine’s 

performance is evidence of that. “The 

bank is a very good indicator of the business 

Key facT 

source: Bank of palestine 

Bank of Palestine’s 

non-performing 

loan ratio is one 

of the lowest in 

the region at 

2.4 per cent 

Shawa: We haven’t had any disastrous bankruptcies 

environment,” he says. “We haven’t had any 

disastrous credit losses or bankruptcies in Palestine. 

Our non-performing loan [NPL] ratio is one 

of the lowest in the region at 2.4 per cent. 

“This is an incredibly low NPL rate when 

considering the very volatile political situation 

and high unemployment. There is a resilience 

that is not found anywhere else in the Middle 

East or even the world. And it is this level of 

resilience and our ability to innovate and persevere 

that produce solid results.” 

One area in which the bank strives to innovate 

is in the provision of financial support for 

small-to-medium-sized businesses (SMEs) and 

entrepreneurs. Shawa is particularly keen to 

bring more of the Palestinian population into 

the financial sector, by increasing access to bank 

accounts and upping the provision of credit to 

individuals. Indeed, Bank of Palestine was 

founded in 1960 primarily to support small 

businesses, such as citrus fruit farmers in Gaza. 

Alongside agriculture, there are many other 

attractive industries developing today. The 

pharmaceutical, information and communications 

technology (ICT), insurance, industrial, 

and food manufacturing sectors are just some 

of the areas Shawa mentions. “We have a lot of 

bright, young start-ups,” he says. 

The bank is looking at how to support these 

start-up firms, and is currently raising a $10m 

fund that provides capital to entrepreneurs at 

the very early stages of establishing their businesses. 

So far, it has raised at least $8m. 

“The fund is resonating well with people 

here,” says Shawa, adding that it is attracting 

the interest of Saudi, Kuwaiti and Dubai-based 

investors among others. He says Palestine is 

appealing for those investors with appetite for 

high-risk, high-return frontier markets. 

Funds such as the UAE’s Abraaj Capital have 

previously invested in the territories. It worked 

with Bank of Palestine and other entities on the 

Palestine Growth Capital Fund in 2012, which 

provided private equity capital investments and 

management support for SMEs. 

Community partner 

Shawa believes more banks, both regionally 

and globally, should follow in the footsteps of 

Bank of Palestine in supporting small businesses. 

“It protects the industry’s reputation,” 

he says. “Banks need to be more communitydriven, 

more development-driven and be a 

financial partner to a community rather than 

just a service provider,” he says, remarking that 

such efforts could go a long way to tackling the 

image problem the global banking sector has 

acquired in recent years. 

Shawa is hoping to further raise the profile 

of Bank of Palestine and the success stories of 

the territories with the launch of a new representative 

office at the Dubai International 

Financial Centre. 

Due to open in early 2015, the office will aim 

to provide banking services to the Palestinian 

diaspora as well as promote investment opportunities 

back home to a wider range of potential 

investors. 

photograph: gallo/gEtty iMagEs 


British Arab Commercial Bank plc 

8-10 Mansion House Place, London EC4N 8BJ 

020 7648 7777 www.bacb.co.uk 

Middle East and Africa Markets 

nabil.frik@bacb.co.uk 

Structured Trade & Commodity Finance 

john.penn@bacb.co.uk 

Markets & Structured Investments 

danie.marx@bacb.co.uk 

London Algiers Tripoli 

Authorised by the Prudential Regulation Authority and 

regulated by the Financial Conduct Authority and Prudential Regulation Authority


Microfinance 

The small loan opportunity 

Microfinance has got off to a slow start in the Middle East, hampered by a lack 

of regulatory support and government backing, but the potential for growth is huge 

Dominic DUDley 

Microfinance may involve small 

loans, but they can have a big 

impact. Take for example the 

$200m that the UAE’s Khalifa 

Fund for Enterprise Development has agreed 

to provide to Egyptian businesses. The deal 

was signed in Cairo in late November and will 

see Egypt’s Social Fund for Development lend 

the money in poorer and more remote areas of 

the country. 

Hussain al-Nowais, chairman of the Khalifa 

Fund, says it should be enough to support 

100,000 projects and help to provide up to 

120,000 jobs over the next six years. 

The move will add to Egypt’s position as one 

of the leading markets for microfinance in the 

Middle East. There are 77 microfinance institutions 

(MFIs) across the region, according to the 

Washington-based Microfinance Information 

Exchange (MIX). Between them they have 

close to $1.6bn in outstanding loans extended 

to 2.8 million people. Egypt is one of the most 

active markets, with 16 institutions, more than 

1 million borrowers and about $275m in outstanding 

credit. 

Unfulfilled potential 

Despite the impression that such figures give of 

a vibrant industry, the sector is still somewhat 

underdeveloped in the Middle East and North 

Africa (Mena) region. 

“The microfinance sector in the Mena region 

is the most underdeveloped in the world, with 

the lowest active number of borrowers, the 

smallest outstanding portfolio, and the lowest 

number of MFIs per million people,” says 

Mohamed Khaled, Mena programme manager 

for microfinance at the International Finance 

Corporation (IFC), the private sector arm of the 

Washington-based World Bank. 

“Lending by microfinance providers reaches 

only 1.8 per cent of the adult population. This 

is half the rate of South Asia or Latin America 

and the Caribbean. Even in Morocco, the country 

that has made most progress in developing 

the industry, microcredit loans barely exceed 

1 per cent of total bank credit, compared with 

key fact 

Source: Microfinance Information Exchange 

The region’s 

microfinance 

institutions have 

some $1.6bn 

in outstanding 

loans extended to 

2.8 million people 

7 per cent in Latin America and the Caribbean 

and 5 per cent in Africa.” 

There are several reasons for the weakness 

of microfinance in the Middle East. One is 

political instability, which can dissuade some 

providers from entering the market. Rupert 

Scofield, CEO of US-based microfinance specialist 

Foundation for International Community 

Assistance (Finca), which operates in 

22 countries, including Jordan, says his firm 

was on the verge of expanding into Egypt and 

Syria before the protests broke out there in 

2011. With political stability returning to 

Egypt, Finca is starting to reconsider a move 

into that country, but Syria remains out of 

the question. 

“We’ve worked in countries where there 

have been some guerrilla movements,” says 

Scofield. “That doesn’t trouble us. But we can’t 

operate in a situation of full-scale war.” 

MFIs that were already up and running 

in some of the unrest-hit countries have 

Middle east and north africa Microfinance* 

come under pressure. In Tunisia, for example, 

Enda Inter-Arabe found that many of its clients 

were unable to make payments on time 

during the upheaval. In the end, it turned to 

the IFC, which gave it a local currency loan 

worth $6.5m. 

Role of women 

Cultural issues are another factor. In many 

parts of the world, microfinance has often 

begun with loans to women running small 

businesses. The restricted role of women in 

Arab countries does not preclude that from 

happening, but it can make it harder, according 

to industry executives. 

According to data from Sanabel, a network 

of regional MFIs, the proportion of female borrowers 

is as high as 90 per cent in Jordan and 

above 60 per cent in Bahrain, Egypt, Sudan, 

Tunisia and Yemen. In Iraq, by contrast, the 

proportion stands at just 19 per cent. 

Some lenders are actively trying to target 

female borrowers. Soha Soliman, managing 

director of Egypt’s Social Fund for Development, 

says 25 per cent of the $200m provided 

by the Khalifa Fund will be lent to women-led 

enterprises. And in December 2013, Dubaibased 

Grameen Jameel, which operates in 

10 countries around the region, provided 

a $2m loan to the Microfund for Women in 

Jordan to help it expand. 

However, the biggest single factor explaining 

the limited reach of MFIs in the region is the 

lack of supportive regulation, according to the 

Country Number of MFIs Borrowers Loans ($) 

Number of 

depositors Deposits ($) 

Egypt 16 1,050,694 274,645,785 na na 

Iraq 12 64,237 139,867,131 na 312,510 

Jordan 8 317,455 271,928,337 na na 

Lebanon 6 79,444 82,869,158 na na 

Morocco 11 841,598 605,325,851 na na 

Gaza/West Bank 11 61,290 162,430,396 9,471 197,915,597 

Syria 3 26,957 10,233,947 20,031 9,105,985 

Tunisia 1 242,567 242,568 242,569 242,570 

Yemen 9 81,068 20,840,832 86,212 18,930,944 

*=Data is most recent available; MFIs=Microfinance institutions; na=Not available. Source: Microfinance Information Exchange 


IFC’s Khaled, although he says the situation is 

starting to improve in some places. 

“The inability of MFIs to accept deposits in 

many of the region’s markets, underdeveloped 

financial infrastructure such as credit bureaus 

and asset registries, and low levels of financial 

literacy among potential clients all contribute 

to the limited microfinance outreach in the 

region,” he says. 

“The exception to this is in Syria and 

Yemen, which have more progressive regulatory 

frameworks. It is also in the process of 

changing elsewhere in the region, with regulators 

in Palestine, Tunisia, Egypt and Morocco 

now issuing microfinance-specific laws. However, 

the results of these changes have yet to 

be seen.” 

Lacking support 

Industry executives often echo these criticisms. 

For example, Amro Abouesh, CEO of 

Egypt’s Tanmeyah Micro Enterprise Services, 

told the MEED Invest in Egypt conference held 

in Dubai on 27 November that the microfinance 

sector has struggled to win support from 

the government. 

“We have had frustrating discussions with 

the government about microfinance,” he said. 

“They say: ‘Why do we need to have nonbanking 

institutions in this sector’ We say: 

‘We are best-placed to solicit savings from 

the streets’.” 

Despite all these hurdles, microfinance has 

made inroads into most countries in the region. 

Sanabel has about 90 members in 12 countries, 

from the Abyan Savings & Credit Programme 

in Yemen to Vitas in Lebanon. 

But there are some good reasons why governments 

should offer more support to the sector. 

Among the most important is that it provides 

a useful alternative to banks, which often 

appear uninterested or unable to reach large 

swathes of society. 

As it stands at the moment, the banking 

sector in the region is still often a minority 

pursuit. In Yemen and Sudan, fewer than 

10 per cent of people aged above 15 have 

a bank account, while in Egypt and Iraq 

the proportion is 10 and 11 per cent respectively, 

according to the World Bank Findex 

database. In many other countries, including 

Algeria, Jordan, Lebanon, Mauritania, 

Morocco, Syria, Tunisia and the West Bank 

& Gaza, fewer than half of adults have 

a bank account. 

The situation is different in most Gulf states. 

Saudi Arabia has a banking penetration rate of 

46 per cent, but among the other five GCC 

countries, the proportion varies from 60 per 

population agEd 15+ With bank account* 

(pErcEntagE) 

Yemen 

Sudan 

Egypt 

Iraq 

Mauritania 

Gaza/West Bank 

Syria 

Jordan 

Tunisia 

Algeria 

Lebanon 

Morocco 

Saudi Arabia 

UAE 

Bahrain 

Qatar 

Oman 

Iran 

Kuwait 

0 10 20 30 40 50 60 70 80 90 100 

*=In 2011. Source: World Bank 

0 

10 

20 

30 

40 

50 

60 

70 

80 

90 

100 

“We have had 

frustrating discussions 

with the [Egyptian] 

government about 

microfinance” 

Amro Abouesh, Tanmeyah Micro Enterprise Services 

cent in the UAE to 87 per cent in Kuwait, while 

the figure for Iran is 74 per cent. 

This issue of access to financial services matters 

because otherwise it can be either impossible 

or extremely expensive to gain access to 

credit. That in turn undermines the ability of 

the entrepreneurial poor to launch or expand 

a business and improve their lives. 

“Microfinance is a key tool that can help 

enhance access to finance to the unbanked, 

especially for those segments that are normally 

marginalised, including youth and women,” 

says Khaled. “Expanding access to finance 

through the development of strong microfinance 

sectors can improve household welfare, 

spur household enterprise activity, reduce vulnerability 

and, ultimately, offer greater opportunity 

to low-income households. 

“Microfinance is also critical to expanding 

private sector development. Microfinance can 

address financing gaps, help promote a culture 

of innovation and entrepreneurship among the 

youth, and provide an alternative to the jobs 

they are more accustomed to.” 

Even with the weak levels of official support, 

opportunities for MFIs are improving as a 

result of the spread of smartphone technology, 

which is enabling wider access to financial services. 

In Algeria, for example, just 33 per cent 

of those aged over 15 have a bank account, but 

39 per cent use their mobile phone to receive 

money. In Sudan, the situation is even more 

pronounced. Just 7 per cent of people have a 

bank account, but 45 per cent use their phone 

to receive money and 30 per cent to send it. 

This offers a cheap way for microfinance 

companies to deliver loans and receive instalments 

as a borrower repays the loan. In some 

cases, a user’s phone bill can even provide 

a useful credit reference. For example, US 

and Tanzania-based First Access has developed 

a credit scoring system for customers 

without bank accounts, based on their mobile 

payment history. 

Mobile banking 

“The record of mobile payments can serve as a 

credit history for both seller and buyer, providing 

one of the building blocks needed by banks 

to finance them,” says George Bodo, head of 

banking research at pan-African bank Ecobank. 

“This has enabled SMEs [small-to-mediumsized 

enterprises] to raise microfinancing without 

the need for collateral or bank guarantees.” 

How useful such services are depends to 

some extent on the size of the loan. In many 

instances, microfinance loans are for just a few 

hundred dollars, which can be approved in a 

few days and repaid over the course of perhaps 

a year. In other instances, the loan amounts can 

reach into six figures – a level that might, in 

other contexts, be defined as small business 

lending rather than microfinance. 

“We have identified that there is an opportunity 

in loans for small, family-owned businesses 

in traditional industries such as small 

stores, beauty services and tailoring,” says John 

Yancura, CEO of Finca’s Jordan subsidiary. 

“This is where we’ve achieved a lot of our 

growth in the past couple of years. Currently, 

our maximum loan size is about $28,000. We’ll 

probably try to keep it there for the time being. 

There are other Finca subsidiaries that go over 

$100,000 and that’s still considered micro. It’s 

all about perspective.” 

Should the size of loans available in Jordan 

and other countries start to rise, it will be a sign 

that the industry is growing in a healthy way. 

Other elements to look out for will be greater 

variety of products on offer, including savings, 

insurance cover, money transfer services and 

so on. 

For now, however, the region is still at the 

stage of laying down its foundations. Whether 

it succeeds in meeting its potential in the 

future will be determined to a large extent by 

the ability and willingness of the region’s governments 

to offer enough support and create 

the right regulatory environment. 

www.meed.com 


Book before 

Saturday 20 th 

December 2014 

and SAVE $550 

5-7 MAY 2015 

Madinat Jumeirah, Dubai 

Hotel Development for 

Tomorrow’s Traveller 

Book Online at www.arabianconference.com 

For all enquiries contact 

Rebecca.Cousins@Meed.com 

+971 4 818 0281 

Platinum Sponsors 

Jointly organised by

Special Report 

Healthcare 

T 

CONTENTS 

38 SPENDING Governments want 

to get the private sector more 

involved in healthcare provision 

40 RECRUITMENT Across the 

region, states are seeking to 

recruit more medical personnel 

For a full list of upcoming 

Special Reports, go to: 

www.meed.com/specialreports 

PHOTOGRAPH: DREAMSTIME 

Q 

In November, the first phase of Dubai’s 

new health insurance law came into 

force, and all companies with more than 

1,000 employees were obliged to provide 

medical cover for their staff, if they did not 

already do so. Over the next couple of years, 

smaller firms will be required to follow suit. 

This means the emirate joins Abu Dhabi, 

Saudi Arabia and Qatar in having mandatory 

universal healthcare insurance. 

As well as ensuring healthier citizens and 

residents, this will reduce government 

spending on healthcare. It will also increase 

demand for medical services, as out-ofpocket 

costs cease to be a barrier. This, it is 

hoped, will draw additional private invest- 

ment into the healthcare sector and broaden 

the range of services on offer. 

Healthcare-focused free zones, government 

grants and preferential loans will 

help attract hospitals and associated medical 

services to the GCC. Jobs will be created, 

although governments must now look at 

ensuring their citizens have the skills 

required to fill these roles. 

As the responsibility for medical services 

shifts away from the state, the government’s 

role will become one of regulator and facilitator. 

GCC healthcare is transforming from 

a welfare state to a free market, and universal 

insurance will ensure the critical mass of 

demand that will let this shift happen. 

www.meed.com 


Special Report Healthcare 

spending 

Health services demand on the rise 

Healthcare spending is rising across the GCC and governments are looking to get 

the private sector more involved, as they roll out mandatory insurance coverage 

Austyn Allison 

Across the GCC, healthcare spending is 

rising. In 2011 – the last year for which 

the World Health Organisation (WHO) 

released global figures – healthcare 

spending in the GCC stood at $41.6bn. It has 

expanded at a compound annual growth rate 

(CAGR) of 16.7 per cent since 2007, according to 

a recent report by Dubai-based Alpen Capital, 

and is predicted to continue to grow at a CAGR 

of 12 per cent through to 2018. 

However, annual per capita spend on healthcare 

is still low compared with more developed 

regions, ranging from $598 in Oman to 

$1,776 in Qatar. The GCC median spend is 

$960, compared with $3,609 in the UK, $4,875 

in Germany and $8,608 in the US. 

Demographic drivers 

This means there is a lot of room for further 

growth, and several factors will drive this. The 

GCC’s population is getting larger and older. 

The Washington-based IMF predicts that the 

number of people in the GCC will grow by 

12 per cent a year between 2013 and 2018 and 

will total more than 50 million by 2020. 

Estimates by the Washington-based World 

Bank see the GCC population aged over 65 

expanding from 1.2 million in 2015 to 14.2 million 

in 2050. This is a long-running trend, says 

Alpen Capital: between 1960 and 2011, life 

expectancy in Saudi Arabia increased from 

45.7 years to 75.3 years. In Oman, it rose almost 

40 years, from 42.7 to 76.3, and even in Kuwait 

– which has seen the smallest movement in life 

expectancy – it has risen 14 years, from 60.3 in 

1960 to 74.3 in 2011. 

So more people are alive and needing medical 

care for longer, and they will also need 

more treatment: 80 per cent of a typical person’s 

healthcare demands arise after the age of 

50. A further driver of medical demand is the 

change in lifestyles that has occurred in 

recent years, with the increase in disposable 

income and the adoption of Western eating 

habits and more sedentary behaviour. This 

has led to a rise in non-communicable diseases 

such as diabetes. 

key fAct 

Source: WHO 

The GCC annual 

per capita 

median spend on 

healthcare is $960, 

compared with 

$3,609 in the UK 

UAe heAlth expenditUre 

Percentage 

government 74.4 

Health Ministry 22 

Other government bodies 78 

privAte 25.6 

Out of pocket 66 

Insurance 24 

Non-profit organisations 10 

Source: Health Ministry 

According to the International Diabetes Federation, 

one in five adults in Saudi Arabia has 

the disease – the highest prevalence in the 

GCC. In Oman, the country with the lowest 

prevalence in the GCC, it is still one in 12, or 

8.2 per cent of the population. The only countries 

that have worse rates than Saudi Arabia 

are small Western Pacific territories: the Cook 

Islands; French Polynesia; Kiribati; the Marshall 

Islands; Nauru; New Caledonia; and 

Tokelu. The number of diagnosed cases in all 

those states combined is 115,600. In Saudi 

Arabia, it is 3.8 million. 

At the same time, governments are expanding 

healthcare coverage, and introducing compulsory 

insurance across the region. Saudi 

Arabia was the first to introduce a mandatory 

insurance law in 2006, and in 2013, Qatar followed 

suit. In November 2013, Dubai Health 

Authority (DHA) announced it would be rolling 

out compulsory employer-provided insurance 

across the emirate. 

“Dubai has been working on a law for mandatory 

health insurance, a form of universal 

coverage for the emirate, for some time now,” 

says the man in charge of the design and 

implementation of the roll-out, Haidar 

al-Yousuf, director of health funding at DHA. 

Speaking on the sidelines of the Economist’s 

Healthcare in the Middle East conference in 

October, he tells MEED: “This was basically 

communicated in Dubai’s strategy plan for 

2007-15, where it clearly said the emirate is 

heading towards universal coverage and is 

looking at insurance as a model for providing 

health services for the population.” 

From the end of October, all companies with 

more than 1,000 employees were obliged to 

provide health cover; from 31 July 2015, companies 

with 100-999 employees will have to do 

the same; and those with fewer than 100 staff 

will join on 30 June 2016, making employerprovided 

health insurance universal. 

Controlling costs 

This move towards compulsory insurance 

cover helps keep costs down for governments. 

Currently, in the UAE, the government 

accounts for 74.4 per cent of health expenditure, 

according to the Health Ministry citing 

the WHO. Of this portion, 22 per cent comes 

from the ministry and 78 per cent from other 

government bodies. Of the 25.6 per cent of private 

spend, 66 per cent is out of pocket, 24 per 

cent is insurance and 10 per cent is by nonprofit 

organisations. 

Alpen Capital predicts that across the GCC, 

between 2012 and 2017, the GCC insurance 

industry will grow at a CAGR of 18.1 per cent 

to reach $37.5bn. Non-life insurance, which 

includes health insurance, will grow at a 

CAGR of 20 per cent over the same period to 

reach $35.1bn. 

One danger of mandatory health insurance 

is overuse, and according to Al-Yousuf, since 

mid-2012, DHA has been implementing a coding 

system to track the use and effectiveness of 

healthcare across the emirate. With “[almost] 

a year and a half of really good quality data”, 

the authority can now look out for those abusing 

the insurance system, he says. “If we identify 

certain red flags at the patient level and cer- 


GCC HEALTHCARE spEnd GCC AvERAGE LIfE ExpECTAnCy HEALTHCARE spEnd pER CApITA, 2011 

($bn) (yEARs) ($) 

80 

90 

10000 10,000 

70 

80 

60 

70 

8000 8,000 

50 

60 

50 

6000 6,000 

40 

40 

30 

30 

4000 4,000 

20 

20 

10 

10 

2000 2,000 

0 

0 

2013 

Saudi Arabia 

Oman 

2014 

UAE 

Bahrain 

2016f 

Kuwait 

2018f 

Qatar 

f=Forecast. Source: Alpen Capital Source: Alpen Capital Source: World Health Organisation 

tain areas being overused by patients then the 

law gives us the authority to deal with that. But 

a lot of the behaviour unfortunately takes place 

at certain providers,” he adds. 

Saudi Arabia 

UAE 

Kuwait 

1960 2011 

Qatar 

Oman 

Bahrain 

“If there is still need in 

certain areas and we see 

not enough investment 

in that, the government 

can take that on” 

Haidar al-Yousuf, Dubai Health Authority 

Managing supply 

Before mandatory health insurance started to 

open up healthcare for all, there was often more 

supply than demand, which fed into the problem. 

“There are some abusers because they are 

just abusers, and others because they really 

don’t have enough business, and yet others 

because they just don’t know,” says Al-Yousuf. 

As more of the population gets covered, 

demand and supply should begin to reach 

equilibrium. “So there is a need for more 

investment in the health sector and other 

expansions by existing facilities and hospitals, 

and newcomers to the market,” he says. 

The data DHA has been gathering will help 

the private sector choose where to invest in 

Dubai’s healthcare system. “There are a lot of 

people who want to invest in the health sector 

or existing players want to expand and they 

just need the guidance in terms of where to 

go,” says Al-Yousuf. 

By knowing how many patients are treated 

for which ailments, the DHA data – which will 

be publicly available and updated regularly – 

can steer investors into filling niches. Each cardiac 

centre, for example, needs a population of 

200,000 to both be profitable and ensure doctors 

get enough work to keep their skills up. 

“I think there is a lot of need in diabetic care,” 

says Al-Yousuf. “We really need diabetic clinics 

or allied services.” 

Dubai is not alone in looking for private sector 

investment. Research by the US’ Frost & 

Sullivan has found that around the world, governments 

developing public-private partnerships 

(PPPs) in the healthcare sector have cut as 

much as 25 per cent of their healthcare costs. 

PPP deals have seen institutions such as US 

medical school Johns Hopkins partner with 

Abu Dhabi Health Services Company (Seha) to 

manage Al-Rahba hospital in the emirate. Johns 

Hopkins also launched a joint venture with 

Saudi Aramco earlier this year. Johns Hopkins 

Aramco Healthcare will create a facility at the 

oil major’s base in Dhahran. “It’s one of the newest 

things we’ve engaged in,” John Ulatowski, 

vice-president and executive medical director at 

Johns Hopkins, tells MEED. “It’s a joint venture, 

which is a new model for us as well.” 

He adds that PPPs fit in “very well” with government 

strategies. “Many of our collaborative 

efforts are with governments through health 

ministries or, in the case of Aramco, a leading 

employer and a leading economic driver for the 

country,” he says. “In fact, we are looked upon 

both here in the UAE and Saudi Arabia as a 

quality leader, as an institution that strives for 

excellence and has the capacity for education 

as well as for building foundations of research.” 

The private sector will not replace the government, 

however, says DHA’s Al-Yousuf. 

“Ultimately, if there is still need in certain 

areas and we see not enough investment in 

that, the government can take that on or it can 

0 

US 

Germany 

UK 

Qatar 

UAE 

Kuwait 

Saudi Arabia 

Bahrain 

Oman 

basically incentivise [others] by making a more 

attractive payment model for these.” 

“Some private players wishing to establish 

healthcare businesses, whether alone or with 

the public sector, often secure land and initiate 

construction without first discovering whether 

the healthcare regulator even needs their services,” 

said a 2012 report by the US’ Booz & 

Co. “To avoid such misunderstandings, DHA 

now conducts industry soundings when looking 

into PPP feasibility and is mandated to provide 

assistance to potential investors and to 

collaborate with stakeholders.” 

Government support 

The same report found that governments in the 

GCC need to focus on three areas to create a 

favourable environment for healthcare PPPs: 

legal and regulatory; operational; and financial. 

This is coming on with the opening up of data 

sets; the efforts of institutions such as Kuwait’s 

Partnerships Technical Bureau, DHA and others 

to encourage PPP involvement; and 

through financial incentives such as specialised 

free zones and subsidised loans for private 

investors in healthcare. 

One such development is Dubai Healthcare 

City, which provides infrastructure to help 

attract private sector ventures. Many of the 

firms based there are targeting medical tourism 

to ensure visitors from around the Gulf and the 

wider Middle East and North Africa region can 

keep their specialists busy and profitable, and 

their skills up to date. 

Healthcare investment is set to grow in the 

GCC, and states will want to see the private sector 

take on a larger share of this. In a market with 

plenty of potential, private operators and investors 

will be keen to get involved too. But it will 

still need to be steered by the governments. 

www.meed.com 


Special Report Healthcare 

RecRuitment 

On the lookout for more talent 

Governments across the GCC are looking to recruit more medical personnel 

as they expand healthcare coverage and cater to rising healthcare demand 

Paul Melly 

Demand for medical personnel across 

a wide range of disciplines is set to 

continue increasing in the GCC as 

governments seek to broaden healthcare 

coverage at both ends of the scale, with the 

construction of elite specialist hospitals and a 

growing network of primary care facilities at 

the community level. 

Analysis by US-based consultancy McKinsey 

& Company forecasts total demand for 

healthcare to rise by 240 per cent over the 

course of 20 years – and much faster than that 

for some specialisms. 

Of course, projections are inevitably hedged 

with a degree of uncertainty. Future trends 

will, for example, be shaped to some extent by 

the success or failure of public awareness programmes 

to educate people on how to keep fit, 

and it is hard to predict how effective such 

measures will be over the longer term. 

Health insurance 

Another influence will be the spread of 

employer-provided health insurance. This 

year has seen the rollout of legislation making 

it mandatory in Dubai. This is expected to 

drive up demand as insurance will mean those 

on lower incomes can now get treatment they 

could not have afforded on an individual basis. 

The rate of economic growth will also affect 

healthcare demand from locals and expatriates: 

lower oil prices and any consequent slowdown 

in the pace of business activity and project 

development will influence the size of the expatriate 

workforce, whereas the growth of national 

populations will continue in any case. 

With so many uncertainties to factor in, it is 

hardly surprising that projections for medical 

personnel vary. Earlier this year, one estimate 

suggested Abu Dhabi needed to recruit an 

additional 1,500 doctors each year. But the 

Health Authority Abu Dhabi takes a cooler 

view of requirements over the next few years, 

forecasting that the emirate will need an additional 

3,100 doctors by 2020. 

What is clear is that in most GCC countries, 

the number of nationals trained as health 

key fact 

Source: McKinsey & Company 

Total demand for 

healthcare will rise 

by 240 per cent in 

the region over the 

course of 20 years 

professionals is not keeping pace with the 

growth in demand, creating intense competition 

in the region for expatriate staff. Headlines 

tend to focus on the education of doctors, but 

the problem applies across a broad range of 

skilled roles, from nursing to physiotherapy, 

radiography, medical technology engineering 

and health administration. 

Governments are keen to increase local 

employment in the medical sector, but a range 

of factors encompassing professional, material 

and cultural issues makes it difficult. 

There is a generally poor perception of the 

attractiveness of a medical career, with the 

exception of the physician level. But here too 

there are problems. There are limited opportunities 

for doctors who have completed their 

initial qualifications and basic experience to 

then move up a specialist career ladder in a 

particular field – a reflection of the fact that 

most Gulf states have small populations and 

their health systems are therefore small by 

international standards. 

Doctors who are GCC nationals may have to 

be willing to move around within the region to 

take up opportunities for career development 

and climb the professional rungs in their specialism. 

In practical terms, this should be feasible, 

given the region-wide use of Arabic and 

English as working languages, and the fact that 

health employers across the region are accustomed 

to recruiting medical personnel from 

other countries. 

Within the UAE, steps have already been 

taken to create a single labour market for doc- 

tors, through the unification of Dubai, Abu 

Dhabi and national Health Ministry medical 

licences. 

Another problem is pay. Although medicine 

is a respected profession, rates of salary 

increase often fail to keep pace with pay 

growth in the alternative careers available to 

Gulf citizens with high-level scientific or technical 

ability – such as finance or the oil and gas 

sector. And, of course, medicine will always 

struggle to compete with the attractions of regular 

office hours and assured free evenings and 

weekends. Salary levels may be an even more 

significant deterrent factor for other health sector 

professions, such as nursing. 

Cultural complications 

Social issues also come into play. In the UAE, 

for example, two-thirds of those who qualify as 

doctors at the national university’s medicine 

and health sciences school are women; once 

they marry and have childen, many find it difficult 

to cope with the working hours required in 

a career as a hospital doctor. Certainly, a significant 

number of Emiratis who qualify as doctors 

move out of the profession within a few years. 

But it may be that this problem will ease with 

the development of more extensive community 

health facilities, where staff do not have to 

work night and weekend shifts. 

Meanwhile, some GCC citizens interested in 

a medical career may decide against pursuing 

this route if they think they will have to treat 

patients of the opposite sex. Yet in conservative 

Saudi Arabia, nursing has been one of the 

skilled careers that has had some success in 

attracting nationals. 

According to Health Ministry figures 

released last year, 52 per cent of nurses in the 

kingdom are locals. (There is some uncertainty 

over the data, as other ministry figures showed 

nationals accounting for only 26 per cent of the 

“total nursing workforce” as recently as 2010. 

The apparent discrepancy may be explained if 

the overall workforce figure in fact includes 

healthcare assistants and others who are not 

fully qualified nursing personnel.) 


Back in 2009, several clerics and doctors in 

the kingdom wrote to the health minister and 

the Shura council calling for the establishment 

of women-only hospitals. However, the government 

appears to have concluded this would 

be an unrealistic strategy that would require 

a massive injection of additional resources into 

what is already a hugely expensive programme 

to build new hospitals and health centres – 

and would not provide the most effective medical 

care. 

The Health Ministry has argued it is able to 

provide women patients with an adequate 

degree of protection for their privacy within 

the present system. A group of Saudi female 

nurses at a rehabilitation centre in Mubarraz, 

in the Al-Ahsa region, did go on strike in 2013 

to protest at being asked to change catheters for 

male patients and bathe them. But their stance 

met with an uncompromising rebuff from the 

head of the kingdom’s Supreme Nursing Council, 

Sabah Abu Zinadah. 

“Supervisors should take action against 

those ‘ultra-conservative’ female nurses who 

fail to do their job,” she said. “Female nurses 

must deal with male patients as people, not as 

persons of a certain gender. I see no religious 

justification for their behaviour. Even during 

the Prophet’s days there were no male nurses. 

They were all female, and they used to perform 

any duty required of them.” 

While Saudi Arabia has attracted many 

nationals into nursing, developing a domestic 

supply of doctors has proved more difficult: 

only 33 per cent of physicians in the kingdom 

are nationals, according to the Health Ministry. 

Closing the gap 

Kuwait’s track record has shown it may be 

possible to at least contain the reliance on 

expatriate doctors and dentists, even if it is 

hard to increase the supply of skilled nationals 

faster than the overall growth in demand for 

medical treatment. 

In the mid-1990s, the number of foreign dentists 

far outstripped the amount of Kuwaitis in 

the profession, but over the following 10 years 

the gap was almost closed. And although foreign 

medical physicians continued to substantially 

outnumber locals over the same period, 

the number of Kuwaitis kept pace with the 

overall trend of growth. 

However, some specific local factors may 

partly explain this relatively encouraging historical 

performance: Kuwait was one of the 

first Gulf countries to develop a major oil economy 

and this fed through into a development 

head start in several sectors, including medicine. 

Moreover, in Kuwait, public sector 

GCC MediCal sTaff 

(per 10,000 populaTion) 

120 

100 

80 

60 

40 

20 

0 

Bahrain 

Kuwait 

Oman 

Qatar 

Physicians Nurses and midwives 

Sources: World Health Organisation; World Bank 

Saudi Arabia 

“There is a generally 

poor perception of 

the attractiveness of 

a medical career, [apart 

from] the physician level” 

employment is particularly important as a 

source of jobs for nationals, and public servants 

are notably well paid, which may have 

helped to attract nationals to work in the 

national health system. 

Despite these rather specific success stories, 

there is little reason to believe the GCC as a 

whole will become less dependent on expatriate 

medical professionals in the foreseeable 

future. Indeed, that dependence seems likely 

to become more acute, as healthcare needs 

continue to grow and governments continue to 

invest in the hospitals and community facilities 

required to meet demand. 

Social and career factors may also fuel the 

trend. By definition, the supply of national personnel 

can only be slowly increased, as students 

complete long periods of education and 

training, whereas extra staff can be recruited 

from abroad in a matter of months, provided 

pay and conditions are pitched at a sufficiently 

attractive level. 

Whenever a medical professional, whether 

GCC national or expatriate, leaves their job to 

start a family or take up an alternative career, the 

quickest means of replacing them will usually 

be to recruit from abroad. And at a time of rising 

demand, the pressure on hospitals and health 

administrations will be to do precisely that. 

There have been some anecdotal reports 

that it is proving harder to attract recruits 

UAE 

from certain countries where local pay and 

career prospects are improving. That might 

apply to India and some Southeast Asian 

economies; on the other hand, the Arab countries 

that have been experiencing political 

instability and economic slowdown could 

perhaps become more important, particularly 

as exporters of doctors. 

Meanwhile, GCC countries are investing 

heavily in a more sophisticated range of community 

programmes and, particularly, more 

specialist hospitals – to reduce the need to 

send nationals abroad for certain treatments 

and because the health sector is seen as a hightech, 

high-value economic sector where Gulf 

countries can remain competitive despite their 

high cost base. 

Numerous opportunities 

Apart from the broader challenges of training 

sufficient numbers of nationals as doctors, 

nurses and other professionals, it will be particularly 

difficult for GCC states to produce an 

adequate supply of personnel to fill the huge 

variety of increasingly specialist roles that 

today’s modern medicine requires. This opens 

up further career opportunities for expatriate 

recruits from all over the world. Recruitment 

agencies continue to seek international applicants 

for a wide range of specialist positions in 

Gulf health systems. 

In just a few days in mid-October, one 

agency seeking applicants for nursing positions 

in Doha advertised for specialists in 

stroke care and advanced care such as intensive 

care, directors of nursing and nursing 

clinical governance, and nurse managers 

for day procedures and operating rooms. In 

early December, one Riyadh institution was 

advertising 11 nursing vacancies, all of them 

extremely specialist. 

Salaries are not notably high by Western 

standards. Average pay for a staff nurse in 

the UAE was estimated by one agency at 

AED89,005 ($24,233) a year in September, 

although it is higher in Saudi Arabia and Qatar. 

However, the additional benefits are considerable, 

so that the overall value of a package 

can be equivalent to a much higher income 

than in Europe or North America. 

Geneva Healthcare, which recruits for 

employers in several GCC countries, says personnel 

working in Saudi Arabia are offered free, 

furnished accommodation, a tax-free salary, 

free flights to the kingdom and a higher amount 

of annual leave than they would commonly 

expect in their home countries. For those working 

in Qatar who have children, the package 

also includes payment of school fees. 

www.meed.com 


Projects 

Q 

“There has always been 

this tug-of-war [between 

client and contractor]” 

Agenda page 18 

PROJECTS GULF 

Little change as states remain cautious 

Governments are engaging in more strategic planning to counter the impact of falling oil prices 

The Gulf Projects Index recorded 

a decline of 0.1 per cent in the 

week ending 9 December, led by 

losses in Kuwait and Iraq. 

Small gains were seen in Oman, 

Bahrain and the UAE. The impact 

of lower oil prices, which are now 

well below $70 a barrel, could be 

starting to be felt as activity in the 

countries’ projects market reflects 

more strategic, cautious planning. 

Oman was the only country 

whose projects market showed 

significant growth of more than 

$400m, or 0.7 per cent. The government 

continues to invest in 

MEED Projects on mobile 

For all the latest data on Middle 

East & North Africa projects, 

register for a free demonstration at: 

www.meedprojects.com 

utilities and transport infrastructure. 

About 64 new real estate 

schemes also contributed a total 

of $368m. 

The value of Kuwait’s projects 

market fell by 0.3 per cent as project 

delays drag on. This is despite 

GULF PROJECTS INDEX 

VALUE OF PROJECTS PLANNED OR UNDER WAY ($bn) 

1500000 1,500 

1200000 1,200 

900000 

600000 

300000 

0 

Dec 2005 

Dec 2006 

Dec 2007 

Dec 2008 

Dec 2009 

Dec 2010 

the addition of 17 new real estate 

projects worth a total of $251m. 

The UAE’s projects market stabilised 

after recording significant 

losses last week, and gained 

0.1 per cent. The real estate, 

healthcare and hospitality markets 

remain active in the country. 

Saudi Arabia, the largest projects 

market in the region, flatlined 

due to delays on major schemes. 

Qatar’s projects market fell 

0.2 per cent due to stalled oil 

schemes, despite the award of several 

billion dollars-worth of transport 

and infrastructure deals. 

Iran recorded a 0.1 per cent contraction 

as the $400m Qazvin- 

Rasht-Astara railway project was 

completed and no major schemes 

were announced. Clients and contractors 

are still waiting for sanctions 

to be lifted before investing 

in much-needed oil and infrastructure 

upgrades. 

Iraq’s projects market continued 

to suffer amid the takeover of significant 

areas of the country by the 

jihadist group Islamic State in Iraq 

and Syria, losing 0.7 per cent, 

mainly in the oil and gas sector. 

■ www.meed.com/projects 

Dec 2011 

Dec 2012 

Dec 2013 

9 Dec 2014 

UAE 

Saudi Arabia 

Iraq 

Iran 

Qatar 

Kuwait 

Oman 

Bahrain 

For further information visit www.meed.com/gulfprojectsindex 

MEED PROJECTS 

PROJECTS PLANNED OR UNDER WAY ($m) 

9 Dec 14 2 Dec 14 Change on 

week (%) 

10 Dec 13 Change on 

year (%) 

Bahrain 62,066 61,998 0.1 62,301 -0.4 

Kuwait 218,687 219,411 -0.3 193,846 12.8 

Oman 155,758 154,739 0.7 146,207 6.5 

Qatar 289,368 289,811 -0.2 280,600 3.1 

Saudi Arabia 1,217,971 1,218,374 0.0 1,065,821 14.3 

UAE 812,712 811,585 0.1 714,395 13.8 

GCC 2,756,562 2,755,918 0.0 2,463,170 11.9 

Iran 222,882 223,184 -0.1 228,120 -2.3 

Iraq 403,196 406,201 -0.7 516,594 -22.0 

Gulf Total 3,382,640 3,385,303 -0.1 3,207,884 5.4 

For further information visit www.meed.com/gulfprojectsindex 

PROJECT UPDATES THIS WEEK 

Project name 

Project status 

Iran Qazvin-Rasht-Astara railway Complete 

Iraq Development of Al-Kadhimiya holy shrine area Revived 

Oman Al-Amerat wastewater project: Al-Hajer treatment plant New project 

Saudi Arabia Nylon 6,6 and conversion project 

Complete 

UAE Tilal City (Sharjah) New project 

For further information visit www.meed.com/meedprojects 

UPCOMING TENDER DEADLINES 

Client 

Contract 

Submission 

date 

Kuwait Kuwait Gulf Oil Company Nuwaiseed port upgrade 18 Dec 

Qatar Supreme Committee for 

Delivery & Legacy 

Al-Wakrah stadium 

Qatar Qatar General Electricity & Ras Laffan independent water 

Water Corporation (Kahramaa) project 

UAE Dubai Electricity & Water Hassyan power plant 

Authority 

UAE Dubai Electricity & Water Solar innovation centre 

Authority 

For further information visit www.meed.com/tenders 

IN NUMBERS THIS WEEK 

$3bn $2.1bn $368m 

Loss recorded by Iraq’s 

projects market 

Value of transport and 

infrastructure awards in Qatar 

For further information visit www.meed.com/contracts 

21 Dec 

6 Jan 

26 Jan 

29 Jan 

Value of new real estate 

projects in Oman 


For all the latest news and 

analysis on projects, contracts 

and tenders, go to: 

www.meed.com 

NEW RESEARCH FROM MEED INSIGHT 

MEED EVENTS CALENDAR 

Mena Power Projects Market 2015 is out now. The latest research 

report from MEED Insight offers a complete overview, analysis and 

forecast of the conventional power generation, transmission and 

distribution sectors in the Middle East to 2020. 

■ To order your copy of this new research today, please telephone 

+971 (0)4 390 0436 or email insight@meed.com 

Most read on meed.com this week 

Bidders to submit revised 

Aramco stadium offers 

Awards for Saudi Aramco’s 

fast-tracked project to build 

11 stadiums are expected 

by the end of December. 

S&P downgrades Oman outlook Ratings 

agency Standard & Poor’s (S&P) has 

lowered Oman’s outlook from stable to 

negative in response to the fall in oil prices 

to below $70 a barrel. 

GCC steel projects remain on 

hold Two of the largest steel 

producers in the GCC have 

said that there will be no 

greenfield projects in the 

near future. 

Morgan Stanley says oil could fall to $43 a barrel 

US finanical services company Morgan Stanley 

has cut its 2015 forecast for Brent crude 

oil from $98 to $70 a barrel and says 

prices could drop to as low as $43. 

Dubai plans to award first part 

of $33bn airport expansion 

Contract covers enabling 

works for the first phase of 

expansion at Al-Maktoum 

International airport. 

■ MEED content is published first on 

meed.com. Keep up to date with all the latest 

Middle East news, data and analysis by signing 

up for MEED newsletters at www.meed.com 

MEED Middle East in 2030 survey 

Saudi Mining & Minerals 

An international mining and minerals exhibition 

and symposium for exploration, extraction, 

financing and industrial development 

27-28 January 2015 Prince Sultan Grand 

Hall, Al-Faisaliah Exhibition & Convention 

Centre, Riyadh, Saudi Arabia 

www.saudi-mining.com 

Destination Dubai 2020 

Investment and development opportunities 

attached to the emirate delivering Expo 2020 

27-28 January 2015 The Address Hotel, 

Dubai Mall, Dubai, UAE 

www.destinationdubai2020.com 

Construction Opportunities 

in Jubail 

Detailing the $4.86bn-worth of project 

opportunities in Jubail Industrial City and 

the Royal Commission for Jubail and Yanbu’s 

plans for awarding 92 projects 

3-4 February 2015 Fanateer Cultural Centre, 

Jubail, Saudi Arabia 

www.meed.com/jubail 

Qatar Projects 

Opportunities to help deliver Qatar’s National 

Vision 2030 

10-11 March 2015 Grand Hyatt Hotel, 

Doha, Qatar 

www.qatarprojectsconference.com 

Mena Patient Safety Conference 

Showcasing the latest in international patient 

safety policy and best practice 

13-15 April 2015 Venue to be confirmed, 

Abu Dhabi, UAE 

www.menapatientsafety.com 

PHOTOGRAPHS: DREAMSTIME; GALLO/GETTY IMAGES 

What are the most important economic and policy 

trends that will drive business activity in the region 

over the coming 15 years MEED wants you 

to share what you think will be the key factors 

shaping the Middle East of 2030. 

The survey takes only a few minutes to complete 

and the results will be published in an upcoming 

edition of MEED and on meed.com, with full 

analysis of the most important trends expected to 

shape the region over the next decade and a half. 

MEED has drawn together what it considers 

will be the main developments and events that 

will dominate the agenda in the coming years, 

from which you can pick the 10 you think are the 

most important. 

■ Your input will help shape MEED’s focus on 

the Middle East in 2030. To take part, go to 

www.meed.com/2030 

■ MEED events provide unique 

opportunities to catch up on all 

the latest industry trends as well 

as to network with your peers. 

Find out more at www.meed.com/events 

www.meed.com

Kami Rita Sherpa 

LOCAL GUIDE 

GREAT SUCCESS 

COMES FROM 

GREAT SUPPORT. 

At Qatar Financial Centre, we facilitate success. Offering ease of set up, an international legal environment 

and access to growth markets, we’ll give your business the perfect platform for the region. Visit qfc.qa 

Facilitating success.

MEED_141212_M

Create successful ePaper yourself

Delete template?

Save as template?