Arabtec: Oil and gas regions offer key contracts

CFO of Arabtec Ziad Makhzoumi is a key driving force in Arabtec's expansion across the GCC.

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The CFO of the UAE’s biggest construction firm, Arabtec Holding, has said that the best opportunities for GCC contractors in the current market are in oil and gas-producing regions such as Saudi Arabia, Qatar and Abu Dhabi.

Ziad Makhzoumi told CW that the level of soft and hard infrastructure required in these areas was massive as a result of growing populations and a much slower timeframe for development.

In addition, he explained how the nature of infrastructure projects usually meant they had strong government support, and contractors were more likely to get paid.

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“There is a misconception that construction is purely high rise buildings and hotels. It is not,” said Makhzoumi. “Dubai grew very quickly and did lots of things that many others did not, so in some ways Abu Dhabi is behind, in some ways Qatar is behind, in some ways possibly Saudi Arabia is behind. In Saudi Arabia particularly, you have a massive population, so the infrastructure requirements will be enormously more than they are in Dubai. The projects themselves will also be bigger because you have a big population that’s growing at a very fast rate.

“If you look at the studies that have been produced by the different institutions, they estimate that Saudi Arabia will require about US $ 2.4 trillion worth of infrastructure work in the coming years.”

In reference to government support, he added: “Governments have to spend on building infrastructure, so in theory, the bigger chunk of development is infrastructure and coming from the government, and that will continue to be the case in these oil and gas producing countries where the government is the owner of that revenue and they are the spender of that money. So in Saudi Arabia, all of the infrastructure projects will be government funded.”

He added: “Payment terms are up to the contractor to agree, but as long as the funding is there and the project is important and not cancelled or suspended then there is no reason why the client will not pay.

“For the projects which have been earmarked to be done there will be excess funding, and most will be done in the same timely manner that they have announced.”

Currently, Arabtec is working on the Princess Noura Women’s University in Saudi Arabia.

In the first quarter of 2010 alone, the firm also won two projects in Qatar and two projects in Abu Dhabi.

The full, exclusive interview with Ziad Makhzoumi is featured in next week's edition of Construction Week, released on Sunday 13th June 2010.