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Across the GCC of late, states have been gearing up to match supply with demand in the energy sector. Long-term growth predictions, mega-projects and housing shortages have all contributed to the need for the region’s flagship cities to work together to overcome concerns raised by power supply.
In Doha, it is no different. As skyscrapers continue to rise along the corniche and development continues on the city’s prominent master developments including The Pearl and Lusail, Qatar is set to to connect its grid to that of Saudi Arabia, Bahrain and Kuwait, with the UAE expected to join the network in 2011.
“The agreement is between transmission system operators, power procurement companies and the GCC Interconnection Authority (GCCIA) for the sole purpose of exchanging and trading electrical power,” said GCCIA chairman Yousef Janahi.
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With the combined natural resources of Qatar, Saudi Arabia, Kuwait and, to a lesser extent, Bahrain, the connection of the respective national grids will go a long way to spurring confidence in businesses in the ability of GCC cities such as Doha to support large-scale development initiatives.
Among the most ambitious projects in Qatar is the Friendship Bridge. The world’s longest fixed-link marine crossing was last week given the green light, with work on the construction of the multi-billion-dollar causeway linking Qatar with Bahrain earmarked to start early next year.
Construction will be undertaken by Germany’s Hochtief and France’s Vinci, with Danish, Qatari and Greek companies also involved. The project will provide a commercial boost to the Qatari interior, improving connectivity and trade with its GCC neighbour. Although final specifications are not likely to be revealed until October, earlier estimates concerning the project cost came in at US $3 billion (QAR10.9 billion).
On the rails
Doha’s construction industry has remained buoyant, driven by the reinvestment of hydrocarbon dollars. The industry has in turn attracted interest on a global scale from firms looking to invest in projects or secure contracts, particularly those companies based in countries that have been hit by the slowdown.
Korean contracting giant Samsung Engineering has been eyeing the GCC’s fledgling rail sector for some time now.
“We want to participate in the railway projects in the GCC and the North Africa region,” Samsung business development manager for the Mena region, Muntae Suh said, naming the Doha Metro project among the projects in the firm’s sights.
Of all the GCC metro projects that are yet to break ground, the Doha metro is the most advanced. “The total investment will be huge,” Doha-based Barwa president of strategy and investment Dr Yousif Al Horr, who is familiar with the project, said. “Part of the grid will run underground which will resolve a lot of the traffic issues now faced in Qatar.”
There is nothing new about multinational giants seeking work outside their domestic markets, but there is also evidence of Doha’s ability to draw firms that have, until now, had no base outside of their home country.
Last week, power cable firm Ducab announced its plans to set up a plant in Qatar – its first outside of the UAE – by early 2010 at the latest. “We have a manufacturing licence [for Qatar],” Ducab managing director Andrew Shaw said. “It will be set up in the second phase.”
Ducab, which is jointly owned by the Dubai and Abu Dhabi governments in the UAE, has already set up a 100%-owned subsidiary, Ducab Qatar, which launched a distribution and logistics centre on July 15. Shaw said that Qatar’s location made it attractive as it was closer to raw materials suppliers, and added that Ducab planned to take a 10% – 15% share in the local market in the next few years.
Domestic investment
According to the government figures, the population of Doha stood at 420,000 people in April. Yet, despite a relatively small population, investment from domestic firms remains significant, with more strings
to Qatar’s economic bow than foreign
direct investment.
Last week, the Doha-based Gulf Warehousing Company (GWC) announced the launch of the 1 million m² Logistics Village Qatar, with work on the project set to begin next month.
The site will be developed in three phases, with the first phase costing $69 million, scheduled for completion in the third quarter of 2010. GWC has signed a letter of intent with four Qatari companies to construct the buildings and provide power infrastructure.
The four companies are Power Action Gulf, Lexus Engineering and Contracting, Al Alia Trading and Contracting, and Al Bader Construction and Steel Works.
The world continues to eye Doha as holding vast potential in the construction sector, with a growth trend that looks set to continue, backed by the economic safety net represented by 200 years worth of proven natural gas reserves, according to the Oxford Business Group report Qatar: 2009.
Though nowhere is immune from the financial crisis, and Qatar has been forced to review its growth predictions like all GCC states, it is pressing on with the vast majority of its projects. And its not only small scale, regional companies, but multinational firms, that are paying attention.
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