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Tawfiq Abu Soud, executive director of Drake and Scull Water and Power.

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Power demand around the Gulf spikes in summer, as air conditioning systems hit full capacity. Each year this spike brings a wave of questions about regional power capacity, focusing attention on the strength of the networks and grids that deliver power and water to a development.

Demand is high. In Saudi Arabia demand for power and water is growing by around 8% annually and, according to figures from Banque Saudi Fransi, the country needs to boost its investment in the power and water sectors by a third – to approximately US $266 billion – through 2025 to meet demand.

Elsewhere Qatar has earmarked more than $1 billion, just to help it meet future power demand, handing out a collection of contracts to a host of European and Asian infrastructure specialists.

The direct relationship between power and water infrastructure works and construction projects generates a natural demand. This natural demand has been boosted by water and power related authorities in the region not anticipating the rapid growth of the construction market.

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Initially unable to keep up, as the number of new construction projects has decreased, infrastructure projects are still on the rise due to an existing gap in supply.

Building networks is primarily a government authority concern, but getting the actual work done is a lucrative business and an area still seeing regular contract awards, despite indications that tendering periods have increased.

“In the tendering process we are now witnessing longer project development cycles,” said Tawfiq Abu Soud, executive director of Drake and Scull Water and Power (DSWP). “In the past, the tendering cycle would not take more than three to four months, whereas now it can last for up to one year. This is leading us to tender for more projects and since we are in the design and build industry, this can result in increasing overheads.”

There has also been a shift in the way developers approach infrastructure work, in terms of initial development and maintenance.

“The developer, in the past, wanted to own and operate the utilities that are not supplied by the government, such as district cooling, power, water and wastewater treatment,” said Abu Soud. “But now, they are trying to outsource that, due to the lack of funds that are needed to operate such utilities. The dilemma arises from the utilities companies also being unable to raise the funds.”

The market conditions have played out well for DSWP of late, as the company recently won a contract for the entire development works at the residential compound located in Khalifa A City, Abu Dhabi. The firm was awarded the district cooling works at the same compound and will begin work on infrastructure, such as sewer lines, irrigation, telecommunications services, fire fighting, sub stations and all related civil works.