Spanish contractor Acciona’s turnover has grown by double digits for seven years in a row, an impressive feat for a firm that only entered the GCC a decade ago, Jesús Sancho, managing director for the company’s Middle East operation, tells Construction Week.
While the company is a relative newcomer in the region, its history stretches back to the 1860s, when it built a railroad in Spain from Medina del Campo to Zamora. More than 150 years later, Acciona, or Ciz Mzov as it was known in the early days, has become a global business with a presence in 65 countries across five continents. Its projects span heavy infrastructure, ports, roads, tunnels, desalination plants, hydroelectric dams, solar farms, and oil and gas megaprojects. But in all these years, one thing remains unchanged – Acciona continues to build railways.
Acciona’s years of rail-building competence is finding new life in the Gulf’s modernisation plans – and one of the major projects the company wants to crack in 2019 is Etihad Rail, Sancho tells Construction Week.
“For Etihad Rail, we’re talking about more than 800km of rail in different phases,” he explains. “Acciona will be active in the mountainous terrain because there will be tunnels, viaducts, and passes. Some areas will be quite challenging, but Acciona is, along with some consortium partners, targeting Etihad Rail as one of the key projects for 2019.”
Also known as Union Railway, the network will stretch 1,200km across the UAE upon completion, and also connect to the GCC Railway. The regionally integrated GCC Railway aims to link all Gulf countries together to become an alternative mode of transport for people and goods. It is also another infrastructure project Sancho is “eager to participate in”.
With both of these projects in Sancho’s line of sight, it makes sense that Acciona’s largest ongoing construction project in the Middle East is a rail scheme.
“The largest [project] we have is the Route 2020 extension of the Red Line in Dubai,” says Sancho. “This contract was awarded two years ago and we have to deliver it before summer 2020 – before [Expo 2020 Dubai] starts in October 2020.
“We have delivered the tunnel, which is almost 3km-long [and was] built using a tunnel boring machine. We encountered very good terrain, so we actually delivered that part [of the project] ahead of time. The rest [of our scope] is viaducts, and this will be finished before the end of 2018, so the basic infrastructure will be [ready soon]. From now on, our key focus will be on the stations. If you drive along Jumeirah Golf Estates or Discovery Gardens [and the] Ibn Battuta Mall area, you will see the different stations all the way to the expo [site].”
Route 2020 is the 15km extension of Dubai Metro’s Red Line, being implemented by the emirate’s Roads and Transport Authority (RTA). Sancho says construction work on most of the seven stations – which include an interchange, three above-ground facilities, two underground ones, and the marquee Expo 2020 Dubai station – is progressing well. Some of them, including the underground facilities, have already noted progress of between 40-50%.
In 2016, RTA awarded a $2.8bn (AED10.5bn) contract for Route 2020 to Expolink Consortium, which comprises Acciona, France’s Alstom, and Turkey’s Gulermak Heavy Industries Construction & Contracting Company. Acciona and Gulermak’s scope for Route 2020 includes heavy construction and civil infrastructure.
However, Route 2020 is not Acciona’s only expo-related project. In November this year, Emaar Properties and ASGC Construction selected Acciona Producciones y Diseño (APD), part of the contractor’s global services business group, to deliver technical development and exhibition implementation works for the Expo 2020 Dubai Sustainability Pavilion’s exhibition zone. The zones span 9,625m2 across two floors, and APD’s scope includes managing the technical operation of the pavilion, which will produce 4GWh of clean electricity per year and produce up to 22,000 litres of water per day using recycled grey water, in addition to a humidity harvesting system to absorb moisture from the air.
While Acciona has its roots in rail, sustainability is central to its work. Sancho says this is reflected in the trust that Dubai’s government agencies have placed in the contractor to carry out Route 2020, as well as another one of the emirate’s most ambitious billion-dollar projects, Mohammed bin Rashid Al Maktoum Solar Park (MBR Solar Park).
“We are building 800 megawatts (MW) of photovoltaic panels and [implementing] the project in phases,” he says. “The first phase of 200MW has already been delivered on time. Phase 2 and 3, [with a capacity of] around 300MW for each of them, will be delivered in 2019 and 2020. This is a big challenge for us, because the solar park is in the middle of a desert and the conditions are hard, especially in the summer. But we are on track and very confident that we will deliver on time.”
The lion’s share
Sancho thinks the GCC economy is starting to thrive again due to a “resuscitation of oil prices” and says his focus is on the region’s two largest economies: “Saudi Arabia and the UAE take the lion’s share of the market for contractors and, basically, transportation, infrastructure, and power and water are the key sectors that are going to grow in the next few years.”
While these projects have been among the most popular in the Middle East since construction started to boom in the region, it is the format of implementing them that Sancho says will see an overhaul. Tendered projects are likely to shift from the traditional engineering, procurement, and construction (EPC) approach to a public-private partnership (PPP) model. Sancho says the PPP or concession-based approach will see private and foreign investors pump equity into long-term projects that they may be committed to for up to 30 years.
“The PPP way is [here] and we have to keep an eye on Saudi Arabia and the UAE as the larger markets in the region for these type of project formats,” he says.
“PPP projects will be in transportation infrastructure, roads, and bridges, railways, and metros. You will have hospitals, as well as power and water, and because the population in the GCC is growing very fast, [so] power and water is the first need,” he adds.
Acciona is bidding on four water desalination and sewage treatment plants located in Saudi Arabia that will be implemented under a PPP model, Sancho adds: “Saudi is launching huge desalination plants and sewage treatment plants in the PPP format. Acciona is very active in those [areas] and we have just bid for four of the largest PPP projects.”
The sewage treatment plants and water desalination facilities are located in Rabigh, Shuqaiq, Dammam, and Jeddah Airport. Sancho expects similar schemes in Yanbu, Taif, and Ras Al Khair to become available in the near future too. This will complement Acciona’s ongoing work in the region, which includes a 210,000m³ seawater reverse osmosis desalination plant in Al Khobar that is one of the largest in the kingdom to use reverse osmosis technology. The project will become one of the largest desalination plants in the country when it is built, and is part of a wider shift in desalination technology.
Sancho believes the industry is moving from a system of boiling seawater using fossil fuel to the more “efficient and environment-friendly” reverse osmosis technology, which requires electricity: “Desalination technology is shifting from the traditional thermal desalination, called multi-stage flash or multi-effect distillation.
“This is the future and it is coming. It can easily be coupled with renewable technologies. Together with the vision of our leaders here in the UAE, and in Saudi Arabia through the Vision 2030 National Transformation Programme, the technology is setting the pace for more environment-friendly and sustainable development in this part of the world.”
Innovation investment
Acciona likes to accelerate the pace of change, Sancho says, adding that the company invests 5% of profits into research and development every year. It is currently exploring dozens of innovations, including how to create new construction products using biomaterials and natural figures. Innovation in the heavy construction space has been stagnant for the last 50 years, but Sancho says the advent of building information modelling, virtual reality, augmented reality, and 3D printing will “take centre-stage for construction businesses”.
Acciona is “proud” to be developing solutions for 3D printed concrete with unnamed technology partners, Sancho says, adding that the company has already created what he calls the “first ever” 3D printed passenger footbridge in Spain, which is around 20m long.
He wants to bring the technology to the GCC, and is “looking forward” to contributing towards Dubai’s 3D Printing Strategy, which aims for 25% of buildings in the emirate to be built using 3D printing technology by 2030. This initiative “is a big challenge”, Sancho says, but one that he believes is doable: “We are investing in this field heavily and hopefully next year we can bring this technology to the UAE and the rest of the GCC.”
Projects such as the Route 2020 extension, MBR Solar Park, Etihad Rail, and desalination and sewage treatment plants across Saudi Arabia, as well as a handful of other regional developments, suggest Acciona does not baulk at big challenges. This is also visible in the company’s financial growth, with its turnover increasing by double digits year-on-year for the last seven years. Acciona now employs more than 2,500 people in the GCC, and expects its regional turnover to be valued at approximately $650m (AED2.3bn) this year.
This strong performance helped Sancho break into Construction Week’s Power 100 list for the first time in June 2018. All the signs look good for Acciona as turnover continues to rise at the company, which Sancho believes will help the GCC stay on track for sustainable construction in the future.
