Infrastructure Middle East June 2015 by Infrastructure ME

ISSUE 016 | JUNE 2015

In Focus

ANALYSIS

New Master Plan Reem Island gets a makeover

Airlines profit Low oil prices to the rescue

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2015 SEMINAR SERIES

THE EFFICIENCY IMPERATIVE Focusing on energy efficiency in the context of Expo 2020 build-up

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INTRODUCTION

Chasing energy efficiency GROUP GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP COO GINA O’HARA

EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 6830

ADVERTISING & MARKETING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 971 4 375 6842

DESIGN HEAD OF DESIGN GLENN ROXAS DESIGNER JOHN MAGNO

CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH NAIR rajeesh.nair@cpimediagroup.com +971 4 375 5682 Production Manager JAMES THARIAN james.tharian@cpimediagroup.com +971 4 375 5673

n 2014, the final instalment of our seminar series titled ‘Green Building Codes and Beyond’ discussed the challenges and opportunities facing the region’s green building sector. For our new series in 2015, we decided to focus on the growing energy demand in Dubai in the context of build-up to Expo 2020. With 70% of the visitors to Expo 2020 expected to come from outside the UAE, the spotlight is on Dubai’s retail and hospitality sectors. Whether it is green field projects or expansions, both sectors are surely experiencing heightened business activity as recent announcements attest. The flip side is the steep increase in energy consumption that accompanies such build ups. Moreover, energy is also the highest operating cost incurred by hotels and retail establishments, and their fastest growing one as well. The Dubai Plan 2021 emphasises tourism as one of the top five priority economic sectors for the emirate; it also emphasises sustainable use of resources in terms of consumption, efficiency, and management, and renewable energy. The Dubai Integrated Energy Strategy goes even further, aiming to reduce demand for energy by 30% by 2030 and thereby, ensure that economic growth and sustainability go hand in hand. This convergence of sustainability and economic priorities means the tourism sector – led by hospitality and retail segments – will have to more than double their efforts to fit into the sustainable economic model that will eventually underpin Dubai’s future growth. Thus, the aptly titled the ‘2015 Seminar on Energy Efficiency and Management,’ held last month at the Habtoor Grand, Dubai Marina. Three panel discussions dedicated to Hospitality, Retail and Rooftop Solar respectively looked at how energy efficiency/management challenges are best tackled in new-build as well as retrofit environments keeping economic feasibility and Return on Investment in mind. For this issue’s cover story, we put together highlights from the panel discussions and the brilliant keynote address by Eng. Abdulla Rafia, Assistant Director General, Dubai Municipality, who honoured us with his presence at the event. The objective here is to amplify and disseminate the information and insights from the seminar to our GCC-wide readership. We went through reams of transcripts to come up with this three-part cover story, and the end-result is now in your hands.

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June 2015

INFRASTRUCTURE MIDDLE EAST

CONTENTS

016 June 2015 28

COVER STORY

REGULARS

The efficiency imperative

06 Regional update

Focusing on energy efficiency in the context of Expo 2020 build-up

Dubai RTA announces the timeline for Route 2020; Kuwait’s new airport terminal retendered

10 Sector update

Top 10 FEATURE

Qatar infrastructure projects Qatar continues to be the fastestgrowing economy in the GCC as the country presses ahead with one of the world’s most comprehensive infrastructure programmes

Siemens completes turbine delivery for Egyptian power plant; Ar-Riyadh Development Authority (ADA) awards Yuksel Insaat Riyadh BRT project

15 Global update Chinese railway giants merge; Brazil outlines $64bn infrastructure package

16 Quote Board Compilation of industry comments

21 Infrastructure tenders 43 Events

INdustry sectors in focus

executive insights

17 Growth plan for

41 Shifting economics of solar

Al Reem Island Abu Dhabi Urban Planning Council grants approval for the Al Reem Island Integrated Concept Master Plan

Mohamed Alammawi, Vice-President of Sales, MENA, Manz AG, outlines the technological developments driving the competitiveness of solar power

analysis

events

18 Airline profitability

42 2015 IDA World Congress

strengthens Consumers benefit from lower oil prices with lower fares, more routes, and spend 1% of world GDP on air transport, says IATA

San Diego to host the biggest gathering of global desalination industry

transport

infrastructure milestones

40 Dealing with uncertainty

44 Largest engine

Malcolm Dowden, Consultant, Charles Russell Speechlys on the risks that railway projects in the region should take care to avoid

power plant

INFRASTRUCTURE MIDDLE EAST

June 2015

Internal combustion engines have staked their claim in the region’s utility power generation market, with tri-fuel capability to boot

Online

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EDITOR'S CHOICE

READERS' COMMENTS

New UAE property regulations ‘prevent overheating in Dubai’

Egyptian national killed in Qatar crane collapse At least three others were injured in fatal incident on busy highway in Doha.

Atkins makes key appointments in Middle East property division British consultancy announces senior architectural roles for Janus Rostock, David Tripney and Mark Kelly.

Futuristic bridge to Dubai’s Bluewaters Island gets green light A $130m contract has been awarded for bridge linking $1.6bn island that is set to become home to world’s largest Ferris wheel.

PHOTO GALLERIES

Dubai’s theme-park megaproject under construction MEConstructionNews.com paid a visit to the Dubai Parks and Resorts project near Jebel Ali. See photo galleries at: meconstructionnews.com/photos

- SIMON CROMPTON, Comment to the story, ‘Mental health of construction workers needs more thought’ READER POLL

Dubai outlines tender timeline for Route 2020 metro line Construction of 15km route serving Expo 2020 site is scheduled to begin early next year, the Roads and Transport Authority said.

Are Gulf governments doing enough to ensure fire safety?

12% 12%

Chinese construction firm builds 57-storey skyscraper… in 19 days Broad Sustainable Building Company says it also wants to build world’s tallest skyscraper in just three months.

It is probably true that the UAE mortgage cap and registration fees have had a limited impact on the Dubai property market. But what is really causing prices to come down is fear of another property downturn and negative sentiment in the market. I’d characterize it as a ‘decline’ rather than a limit on the market ‘overheating’.

VIDEO

Volvo Trucks launches auto traction control in FMX model System will be standard on all FMX trucks sold in the Middle East with front-wheel drive capability. See videos at: meconstructionnews.com/videos

Yes: All construction firms should provide access to psychiatrists

Yes: Contractors could voluntarily do so, but they shouldn’t feel forced to

No: Addressing such issues is up to the local government

No: This isn’t a major problem, there are more pressing issues

31% 43%

Log on for the latest from across the Middle East construction sector. Write to the editor at contact@meconstructionnews.com 04

INFRASTRUCTURE MIDDLE EAST

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regional UPDATE

UAE Dubai’s Roads and Transport Authority (RTA) has announced the timeline for the construction of Route 2020. The project starts off at Nakheel Harbour & Tower Station on the Red Line and extends 15 km (11 km viaducts and four km underground) to the Expo 2020 site. It includes seven stations (5 elevated, and 2 underground stations) and a future plan to construct three stations to serve Al Maktoum International Airport. The project will be tendered on a Design-Build (DB) basis, with RTA planning to prequalify the consortiums on June 30, following Request for Qualification (RFQ) on May 31. The tender documents will be released on July 2 and proposals will be submitted to

Route 2020 Nearly 100 rail contractors from 34 countries attended the RTA briefing

the RTA starting December 6. The winning consortium will be announced on January 28, 2016. Dubai Electricity and Water Authority (DEWA) has opened bids for the first phase of the Hassyan clean-coal power plant, which is based on the Independent Power Producer (IPP) model.

The first phase of the 1,200MW project is expected to be operational by 2020. Four global bidders have been shortlisted after opening the bids. The lowest price among the bids that DEWA received is $4.9 cents/kWh. The Dubai Integrated Energy Strategy 2030 aims to generate 7% of the emirate’s energy requirements from clean coal.

Oman Oman Rail has floated tenders for the construction of an additional 1,207km of railway lines linking Sohar, Duqm and Salalah ports with the GCC Railway. Through back-to-back tenders, Oman Rail aims to complete three further segments of the ninesegment national rail network, Oman Daily Observer reported. Segments 2, 3 and 4 cover the distance from Hafeet on Oman’s border with the UAE all the way down to Salalah in Dhofar Governorate, via Haima and Duqm while Segment 1 extends from Sohar Port to Buraimi on the UAE border. The contract for the 207km Segment 1 is expected to be announced in the third quarter of this year.

INFRASTRUCTURE MIDDLE EAST

Model approach Oman plans to develop integrated housing complexes for its citizens

According to the International Monetary Fund (IMF), the decline in oil prices is expected to push Oman’s fiscal and external current account balances to deficits from 2014-15. Without further fiscal adjustment, fiscal deficit as a per cent of GDP will remain in double digits over the medium term. As part of its annual Article June 2015

IV consultation with Oman, IMF has recommended that on the expenditure side, curtailment of public sector expenditure and subsidies, and on the revenue side, expansion of tax categories and introducing income tax for nationals and expatriates. IMF also noted that taxing outward remittances will not generate significant revenues for Oman.

Abu Dhabi National Oil Company (ADNOC) has signed a 40-year deal with South Korea’s GS Energy, selling the latter a 3% stake in an onshore oil concession to develop the country’s biggest oilfields. This is ADNOC’s second agreement with an Asian company (after Japan’s Inpex Corp, which has 5% stake) and third overall (France’s Total with 10% stake) to develop the oilfields, which produce 1.6m barrels per day (bpd) with the target to raise output to 1.8m bpd from 2017. The $676m deal will be South Korea’s single biggest oil asset, providing around 800m barrels over the 40year period. GS Energy has a 50% stake in South Korea’s second-largest crude oil refiner, GS Caltex Corp.

In line with the Royal Directives of HM Sultan Qaboos bin Said, the Supreme Council for Planning (SCP) has commissioned a study on the establishment of model modern housing complexes at affordable prices for citizens. A Times of Oman report, quoting Dr Ali bin Masoud Al Sunaidi, minister of commerce and industry and deputy chairman, SCP, said the consulting firm implementing the study has started preparing the preliminary legal framework to enable real-estate developers to enter into long-term contracts with the government for the development of integrated housing complexes. The SCP is also open to developing such projects through publicprivate partnerships (PPP).

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regional UPDATE

Kuwait The Central Tenders Committee (CTC) has reoffered the tender to build and maintain Kuwait’s new airport terminal project amongst the five companies who were prequalified earlier, said a report by Kuwait Times. The five are Limak (Turkey), Kharafi (Kuwait), Arabtec (UAE), Astadldi (Italy) and China State Construction and Engineering Corporation. A consortium of Kuwait’s Kharafi National and Turkey’s Limak Holding had submitted the lowest bid for a $4.78bn. However, the bid exceeded the estimated cost of the project by 39% and did not meet technical specifications. CTC has set June 2 as the deadline to receive applications.

Delayed project Kuwait’s new airport terminal project has gone into re-tendering

The revenues of state-run Kuwait Petroleum Corporation (KPC) are projected to nosedive by 36% in fiscal 2015-16 due to the decline in the prices of crude oil. A KUNA report, quoting the Chairman of the National Assembly’s Budgets and Final Account Committee MP Adnan Abdulsamad, said the

consolidated revenues of KPC and subsidiaries would reach $52bn during fiscal 2015-16. Net profit is forecasted to touch $1.6bn while the same for net non-operating profit is $2.3bn. Despite the halted production of the oil well located in the divided zone, KPC’s production of crude oil is expected to grow by 2.7m bpd, the lawmaker said.

Saudi Arabia While Saudi Arabia remains committed to priority infrastructure projects even in a low oil price scenario, rationalisation of spending is under consideration, said the kingdom’s finance minister. Ibrahim al-Assaf told a conference in Riyadh last month that the country has the financial wherewithal to help bolster private sector growth through capital expenditure, adding that the government had committed to almost 2,600 projects valued at $50bn last year. But he also acknowledged that “low oil prices present a challenge for exporting countries, including Saudi Arabia.” The IMF too has cautioned the kingdom of the need to reduce the pace of spending growth, despite its large financial reserves.

INFRASTRUCTURE MIDDLE EAST

Ibrahim al-Assaf The Saudi finance minister has hinted at rationalisation of capex

The National Anti-Corruption Commission (Nazaha) is alarmed that over 672 out of 1,526 government projects (44 % of the total) are running behind schedule. A report in Arab News, quoting Nazaha President Khaled AlMuhaisin, said delays were due to suspected corruption and nepotism, including lack of followup on project implementation. June 2015

“Among problems are using the same bid requirements and specifications for more than one project despite the differences between them and poor efficiency of the government agency’s technical supervision system,” said Muhaisin. He stressed the need to restructure the construction sector in line with the size of projects through studies.

Kuwait’s Ministry of Public Works is currently executing road projects worth $4.96bn to ease traffic congestion and enhance traffic safety across the country. The ministry has scheduled an action plan that includes putting up for bids 40 new tenders for main roads, either for building new ones or developing existing ones. Assistant Undersecretary of the Roads Department at the Ministry of Public Works Eng Ahmad Al- Hassan told KUNA that in fiscal 2014-15, 97% of the allocation for the roads sector (or approximately $794.3 m) was spent, up 14% vis-a-vis the previous two years. Nearly $1.17bn has been appropriated for the roads sector in fiscal 201516, up nearly 50% compared to the previous year.

Saudi Arabia’s Ministry of Housing has invited bids for implementing a housing project, Jeddah Iskan 1, located north of King Abdulaziz International Airport, reports Saudi Gazette. The project would consist of 4,200 housing units to accommodate 23,331 citizens. Speaking at an event in Jeddah last month, the Minister of Housing Essam Bin Saad also unveiled plans to implement a second housing project, Jeddah Iskan 2, near Ameer Fawaz district in south Jeddah. The project aims at constructing 10,630 housing units for 58,358 people. Both projects are expected to be completed within two years. The minister added that bids will be invited for implementing a housing project for 2,500 apartments in Dammam, which will be completed in 24 months from the start of construction.

Regional UPDATE

Bahrain As the slump in the oil price hits the country’s finances, Bahrain’s government has decided to re-direct subsidies on fuel, electricity, water and meat to citizens through cash payments. According to The National, the move will hit subsidies for Bahrain’s expat population of 1.3m. The government expects its budget deficit to climb to $3.9bn this year, equivalent to 11.2% of the country’s GDP. The same is forecasted to increase to 12.4% in 2016. Some $2bn of spending on energy subsidies is included in the government’s estimates. Bahrain needs the oil price to return to $82 per barrel to break even, according to data from Deutsche Bank.

Benefits redirected Bahrain is keen to ensure that subsidies benefit only the citizens

Bahrain had oil reserves of 632.5m barrels at the end of 2014, reported Gulf Daily News. A total of 618.44m barrels were available at the Bahrain Field after 17.5m barrels were produced in 2014, said the report quoting Minister of Energy Dr Abdulhussain Mirza. In addition there were 10.65 tn m3 of gas available,

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with 530bn m3 produced last year. The minister noted that Tatweer Petroleum has invested $3.43bn since its establishment in 2009 to drill more wells, while enhancing production facilities and infrastructure at the Bahrain Field. he pointed out that there are 13 ongoing experiments to improve production.

Construction work is underway on 3,895 houses in two major housing projects, Northern Town and East Hidd in Bahrain, reported Trade Arabia. They are among 25,000 units scheduled for completion within the next four years in five housing projects across Bahrain, which also include East Sitra, Southern and Al Raml. The number of units under construction has reached 3,895 with a completion rate of between 10-90%, said the report quoting Housing Minister Bassem Al Hamar. “The timeframe is in accordance with HM Hamad’s order to deliver 40,000 housing units,” said Al Hamar, adding that he is currently waiting for the government to finalise the national budget.

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Sector UPDATE

Utilities Siemens has completed the fast-track supply and delivery of four E-Class turbines to Egypt’s Attaka Power Plant in collaboration with supply partner ELSEWEDY Power System Projects (PSP). The first turbine has entered commercial operation after a construction period of only five months, making it one of the fastest implementation times for this type of project in the company’s history. Operated by East Delta Electricity Production Company (EDEPC), Attaka Power Plant has an installed generating capacity of 640MW, and is a significant addition to the capability and stability of Egypt’s national electricity grid.

Attaka project Egypt’s electricity minister Dr Mohamed Shaker (centre) at the site

Saudi Electricity Company (SEC) and Bahrain Electricity & Water Authority (BEWA) have confirmed participation as Supporting Utilities of the 13th annual POWER-GEN Middle East Conference and Exhibition. “PGME is the ideal platform to engage in the conversation of power generation, driving

efficiency and long-term sustainability,” said Eng. Hamed AlSaggaf, IPP & Renewable Energy Sector Executive Director, SEC. The 13th PGME will be held at the Abu Dhabi National Exhibition Centre (ADNEC) from 4-6 October 2015, under the patronage of HE Suhail Mohamed Al Mazrouei, Minister of Energy of the UAE.

Oil & Gas Qatar Petroleum (QP) has issued invitations to a group of leading international oil and gas companies to compete for the future operation and development of Al-Shaheen oil field starting in mid-2017. QP’s existing Al-Shaheen exploration and production sharing agreement with Maersk Oil expires in mid-2017. As the largest oil producing field in the country, Al-Shaheen currently produces around 300,000 bpd. Saad Sherida Al-Kaabi, President and CEO of Qatar Petroleum said: “The future operation and development of Al-Shaheen oil field is of critical strategic importance to the optimum exploitation of the natural resources of the State of Qatar.”

INFRASTRUCTURE MIDDLE EAST

Al Shaheen oil field Existing production agreement with Maersk Oil expires in 2017

Accenture has launched a new centre of excellence in Al Khobar to provide services and skills for petroleum refinery and petrochemical companies in the GCC countries. The Accenture Resources Manufacturing Centre of Excellence will help meet increasing demand for services in the Gulf region including designing, building, deploying June 2015

and operating integrated refinery information systems, manufacturing operations and management systems. The centre’s professionals include engineers who have deep experience in planning, building and running integrated refinery information system/ manufacturing operations management (IRIS/ MOM) applications.

Eversheds has advised Kahramaa on a 25-year power and water purchase agreement with a consortium comprising of the Qatar Electricity and Water Company, Qatar Petroleum, Qatar Foundation and Mitsubishi Corporation as the international developer. The consortium was awarded the construction of Facility D power and desalination plant (See the Top 10 section). The Eversheds team was led by Partner Tim Armsby with Nick Pinder as lead associate. Armsby said: “We are thrilled to be involved in one of the largest power and water projects in the world, which is unique in combining thermal and reserve osmosis (RO) technologies on such a huge scale.” RO is being used for the first time in Qatar.

UAE’s National Drilling Company (NDC) has signed contracts worth $543m to buy 14 new rigs, WAM reported. Out of the 14, one offshore rig and one onshore rig will be built in the UAE. Lamprell will manufacture the offshore rig while National Oilwell Varco will make the onshore rig. Both contracts add up to $203m. The remaining 12 rigs will be supplied by CBTDC (the China Building Technology Development Centre). Abdullah Saeed Al-Suwaidi, Chief Executive Officer of NDC said the contracts fall within the strategic expansion plans being implemented by the company in response to the growing demand from client companies. Established in 1972, NDC is the largest drilling contractor in the Middle East and is a part of ADNOC Group of Companies.

Sector UPDATE

Transport Ar-Riyadh Development Authority (ADA) has awarded Turkey’s Yuksel Insaat the $610m Riyadh Rapid Bus Transit System (BRT) project, reported Arab News. Local Alinma Bank has extended a $232m project financing facility to implement the project. “The project mainly includes road rehabilitation schemes, construction of 21 pairs of Bus Rapid Transit System Stations, 2574 community bus stops and 7 pedestrian bridges in the Saudi capital city,” said Ahmet Halavuk, Yuksel’s general manager. The timeframe to complete the project, which is a key part of King Abdulaziz Transport System plan, is 24 months.

Jeddah Metro Arcadis’ arm Hyder Consulting had worked earlier on the metro project

Saudi business group Nesma and French public transport operator Keolis have signed a MoU to form a strategic alliance committed to developing new public transport systems within the kingdom. Karim Chaiblaine, CEO of Keolis in Middle East, said: “Keolis is committed to

developing public transport systems within the Kingdom of Saudi Arabia, with Nesma complementing the Middle East Teams now located in Jeddah and Riyadh.” Keolis is jointly owned by the French National Railways Corporation (SNCF)and the Canadian institutional fund manager (CDPQ).

ARCADIS’ subsidiary Hyder Consulting has been appointed, as a part of the Foster + Partners team, to develop the architectural vision for a new, comprehensive public transport system in the city of Jeddah. Based on a long-term, sustainable vision, which anticipates the city’s growth, the plan for Jeddah’s transport network is city-wide and includes the design of metro, ferry, bus and cycle services – as well as public spaces and nodes of commercial development. With only 12% of Jeddah’s population currently living within a ten minute walk of public transport it is hoped that the new transport system will increase this to 50% through a process of densification and strategic planning.

Construction Drake & Scull Engineering Oman, a subsidiary of Drake & Scull Engineering, has secured a series of contracts with a combined value of $95.29m. DSE Oman will deliver the MEP works on the Oman Convention and Exhibition Centre in Seeb, two hotels in Saraya Bandar Jissah near Muscat, and an airport hangar related facility. The Oman Convention and Exhibition Centre MEP works are scheduled for completion by 2017 while the hotels are expected to be handed over by 2017 and 2016. DSE is currently working on delivering the New Muscat International Airport and the RGO Complex at Hisn Al Shumookh Extension phase 17 in Nizwa and the Sohar Refinery Improvement Project in Sohar.

INFRASTRUCTURE MIDDLE EAST

Kingdom Tower site Construction sector is set to grow rapidly in the next five years

UAE-based KEF Holdings has announced the establishment of its new facility for prefabrication and off-site construction at Jebel Ali Free Zone. Faizal E Kottikollon, ChairmanFounder, KEF Holdings, said: “Through our newly-launched facility in Jebel Ali, KEF Holdings is keen to provide world-class expertise in design, engineering, June 2015

manufacturing, assembly and project management.” According to Kottikollon, big savings can be made with shuttering-robots being programmed on building information modelling (BIM) to create exact shapes using a system of steel shutters and magnets. The new facility is expected to start operations by end-2015.

According to Timetric’s Construction Intelligence Centre (CIC), the construction industry in the Middle East and Africa will expand at an annual average rate of 6.9% in 2016-2020, an acceleration from 4.9% in 2011–2015. “Much of this will be driven by massive investment in infrastructure, particularly rail networks; both mass transit metro systems in major cities and intra-regional rail links,” said Sina Zavertha, Economist at the CIC. However, multi-million dollar projects in residential and commercial buildings, particularly in Qatar, UAE and Saudi Arabia, will also contribute significantly to the growth in the industry. Key skyscraper projects underway in the region include Kingdom Tower and Lamar Towers in Jeddah, the ADNOC headquarters in Abu Dhabi and Marina 101 in Dubai.

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Sector update

Cities Dubai-based X-Architects has unveiled a masterplan for Makkah, which aims to cater to the requirements of the rising numbers of pilgrims to the city each year. The company, which won a competition to design a new masterplan for the city, envisions a dense mixed-use development providing accommodation and facilities for the pilgrims during Haj. The focus of its masterplan has been on providing safe and streamlined routes for pilgrims. In order to ease movement of pilgrims, X-Architects “proposed a complex network of pedestrian routes on different levels to enhance the movement during the ‘Nafrah,’ the ritual of moving from Mina to Haram and vice versa.

Sharjah Art Museum Sharjah is the second Arab city after Dubai to have Street View

The Sharjah Urban Planning Council recently announced the launch of Street View in Sharjah, making it the second Arab city in the region to have the feature. Launched in May 2007, Google Street View imagery provides users with a rich, immersive browsing experience and allows users to explore world landmarks

or navigate a trip or other points of interest. It is already available in more than 3,000 cities around the world. Shaikh Khalid Bin Sultan Al Qasimi, Chairman of SUPC said: “We welcome the additional convenience it will bring to residents and businesses in Sharjah, to make it even easier for them to navigate the streets of the emirate.”

Finance A consortium led by ACWA Power achieved financial close of NOOR II (200MW) and NOOR III (150MW) IPPs in Morocco. Both projects, with a total value of $2bn, will use concentrated solar power technology (CSP) with storage. They have been funded on 80/20 debt-equity basis, with the debt part entirely financed by the Moroccan Agency for Solar Energy (Masen). The funds were secured from the African Development Bank, the Agence Française de Développement, the Clean Technology Fund, the European Commission, the European Investment Bank, KfW and the World Bank. In March this year, Masen and ACWA had signed 25-year Power Purchase Agreements (PPA) for the projects.

INFRASTRUCTURE MIDDLE EAST

Concentrated Solar Power NOOR III project will use the central tower model

Alternative investment firm Gulf Capital and Egypt’s largest petrochemicals holding company, Carbon Holdings, have signed a debt financing agreement to support three of the latter’s mega-industrial projects in Ain Al Sokhna on the Suez Canal in Egypt. The $25m convertible, fiveyear loan facility was extended June 2015

by Gulf Capital’s credit fund, GC Credit Opportunities Fund I to finance the development and expansion of Egypt Hydrocarbon Corporation, Oriental Petrochemicals Corporation and Tahrir Petrochemicals Corporation. The Egyptian government expects the economic growth to more than double from 2.1% in 2014 to over 4% in 2015.

Dubai’s Roads and Transport Authority (RTA) is running a pilot project involving the use of LED for street lighting in Al Barsha South. Through the use of LED technology in street lights, RTA is aiming to generate energy savings to the tune of 380,368 kWh/year. The authority is also considering a project to replace street lights at Al Rashidiya and Nad Shama with LED lights and relevant control systems in collaboration with Etihad ESCO. RTA is already replacing the lights of existing traffic signals with LED. About 20% of the project work under Phase I has been completed and the entire project is set for full completion by 2018, enabling energy savings of about 1m kWh/year.

Integrated Alternative Finance (IAF), a subsidiary of Abu Dhabi Financial Group (ADFG), has structured and financed a mezzanine debt facility for Downtown Investments Ltd (DIL), the owner of the Taj Dubai. The 296 key (including 31 luxury suites) hotel is located in Downtown Dubai. It is the Taj Group’s second hotel in the region, with plans for further regional projects in the pipeline. The facility for DIL was structured alongside senior debt provided by five regional lenders and equity provided by DIL’s parent with a total project cost of $190.58m. Jassim Alseddiqi, Chief Executive Officer of ADFG noted that in the last 12 months, IAF has completed over $820m of transactions. incorporating a mix of traditional and alternative lenders.

global UPDATE

Round Up Chinese railway giants CSR Corp. and China CNR Corp have merged to create a $117.3bn industrial giant. The merged entity, called CRRC will dwarf competitors like Germany’s Siemens and France’s Alstom as it targets emerging markets in Africa, Latin America and Southeast Asia. According to the Australian Financial Review Magazine, in May, rail was named as one of 10 focus industries in a blueprint to make China into one of the world’s most advanced industrialised economies. China will provide $29.7bn of the Asian Infrastructure Investment Bank (AIIB) capital base of $100bn, the largest contribution among the 57 founding members. The second biggest contributor is India at $8.3bn, followed by Russia at $6.5bn, Germany’s $4.4bn and South Korea’s $3.7bn. According to The Japan News, representatives of the 57 founding member countries will sign the Articles of Agreement in the Diaoyutai State Guesthouse in Beijing on June 29 with the aim of having the bank commence operations by the end of this year. Although the articles do not specify the percentage of voting rights for each country, China is calculated to have more than 25% of voting rights. OPEC must live with the reality of oil prices remaining well below $100/barrel, a level the market no longer recognises, said a report by Platts quoting OPEC secretary general Abdalla el-Badri. In a communique, OPEC said the sharp decline in oil prices caused

Estaiada Bridge, Sao Paulo Brazil has outlined a $64bn infrastructure package

by oversupply and speculation had now abated, with prices moving higher in recent months.. According to Platts, Brent crude appears to have found a trading range - for the time being, at least - of $60-$65/barrel, although this falls considerably short of the $75-$80/barrel suggestions from ministers polled in Vienna at OPEC’s 167th meeting. . Brazil has unveiled $64bn plan to attract private investment to build, upgrade and operate Brazilian roads, railways, airports and harbor terminals. Quoting Brazil’s president Dilma Rousseff, The Rio Times said new stage of infrastructure programs marks a ‘turning point’ for the government in its quest for the recovery of the country’s economy. An important part of weaning

projects from the public sector will be a reduction in funding from the National Social And Economic Development Bank, or BNDES. The bank will no longer use subsidised rates on the entirety of its financing for any project. The World Economic Forum ranks Brazil’s infrastructure 120th out of 144 countries. During his recent visit to Brazil, Chinese Prime Minister Li Keqiang had signaled that companies from China may bid for upcoming infrastructure projects in Brazil. Emerging economy infrastructure investments with private participation hit $107.5bn in 2014 in energy, transport and water, said a new World bank report. “Our update reveals that the top five countries with the highest investment

Turkey’s Ataturk Airport Airports are attracting investments in emerging economies

June 2015

commitments in 2014 are Brazil, Turkey, Peru, Colombia and India,” said Clive Harris, Practice Manager, PublicPrivate Partnerships, World Bank Group. The energy sector had the largest number of new projects, but the sector with the greatest total of investment commitments was the transport sector, receiving 51% of total global investment commitments. Roads attracted the most investment commitments with $28.5bn in 33 projects, the same as in 2013. Four out of the top five road projects were in Brazil, with the fifthlargest project in Turkey. Airports captured the second-highest investment commitments total with $13.2bn devoted to five projects. South African enterprises are moving toward multi-faceted power plans as the power crisis shows no sign of coming to an end, said power sector experts on the POWER-GEN Africa Advisory Board. Bertha Dlamini, MD, EON Consulting and a member of the POWER-GEN Africa Advisory Board, said: “Our clients are looking at a combination of energy efficiency technologies and alternative energy solutions to help reduce their dependence on Eskom. Most enterprises cannot move completely off the grid, but they are installing backup power solutions such as generators for load shedding, and renewable energy solutions to supplement their power supplies.” Noting that the first step to reducing the impact of the power crisis is to improve the energy efficiency of the users, she said: “Effective change management programmes could bring about an immediate reduction in pressure on the grid.” (See Page 43).

INFRASTRUCTURE MIDDLE EAST 15

Quote Board

GLOBAL AIRPORT LEADERS FORUM MAY 12-13, 2015, DUBAI

“In recent years, you (middle east region) have been the only ICAO world region experiencing a double digit passenger and freight traffic growth rates, and the 13.4% growth you enjoyed in 2014 was more than double witnessed anywhere in the globe”

MEED CONSTRUCTION LEADERSHIP SUMMIT MAY 27, 2014, DUBAI

Raymond Benjamin, Secretary General, International Civil Aviation Organisation (ICAO)

“The aviation industry in the Gulf region faces two major hurdles. There has to be better coordination among the civil aviation authorities and regulators. The other is the need for the creation of a Gulfwide body equal to EUROCONTROL with the involvement of all stakeholders and regulators” Georges Hannouche, CEO, Bayanat Airports and Engineering Supplies (BAES)

“Social projects for the people which in certain areas fall behind, must continue irrespective of the situation. The issue is prioritisation by the authorities” Mohammed al-Rais, President- Middle East, Hill International

“Airport industry as a whole is profitable, with airports posting net profit margins in the realm of 16% in 2013; (but) 69% of airports operate at a net loss and 93% of them have fewer than a million passengers. Industry profitability is driven by the 20% airports that carry the bulk of passenger and cargo traffic” Angela Gittens, Director General, Airports Council International (ACI)

“The aircraft movements in the UAE airspace will increase to 1.62m in 2030 with aircraft movements numbering 4,400 per day compared with the present 2,200 aircraft movements” Omar Bin Ghaleb, Deputy Director General, UAE General Civil Aviation Authority

INFRASTRUCTURE MIDDLE EAST

June 2015

“Petrochemicals will slow down but upstream will improve. Aramco will expand outside of the core business but other countries will only focus on oil and gas upstream” Samer Khoury, President of engineering & construction, Consolidated Contractors International Company (CCC)

IN Focus

URBAN PLANNING

Growth plan for Al Reem Island Abu Dhabi Urban Planning Council grants approval for the Al Reem Island Integrated Concept Master Plan he approval of an overarching concept master plan, which brings together the individual existing approved master plans and sets out the developments and community facilities Al Reem Island will see over the coming years has been announced by the Abu Dhabi Urban Planning Council (UPC). The UPC announced its approval of the Integrated Concept Master Plan (ICMP) for Al Reem Island at a special briefing attended by representatives of all major developers on the Island. Among the major facilities detailed in the ICMP are plans for 11 new private schools accommodating a minimum of approximately 22,000 students, six dedicated nursery/ kindergarten centres, one university (Paris Sorbonne), three new private hospitals and a number of clinics, nine mosques, Civil Defence and Police facilities, a major transit hub, and 500,000 m2 of parks and open space, including pedestrian promenades for much of the Island’s coastline. The ICMP will enable the Island’s developers to complete their own master plans, which will help the UPC and other agencies better manage existing development on Al Reem Island and ensure that future development is of the highest quality and meets current regulations and standards. The ICMP is in line with Abu Dhabi 2030 Vision, providing for managed growth of market housing, commercial offices and retail space in close proximity to the existing central business district on Al Maryah Island. It was submitted by Bunya LLC in December

“The integrated master plan for Al Reem Island forms an integral part of Abu Dhabi’s path toward sustainable urban growth in line with Abu Dhabi Vision 2030 and is a core component of Plan Capital 2030” HE Falah Al Ahbabi, Director General, Abu dhabi urban planning council 2014, after working closely with the UPC and Al Reem Island’s key developers over the past seven years to create a plan that incorporates the objectives of the developers with the requirements of the UPC. The UPC issued their final approval on 8th April 2015. Bunya LLC, responsible for planning, executing and managing infrastructure and operations on Al Reem Island, was incorporated by the Island’s three key master developers – Tamouh, Aldar Properties and Reem Developers – to ensure delivery is well-phased and comprehensively delivered. Tamouh’s developments account for approximately 57% of the Al Reem Island area, Aldar Properties 20%, and Reem Developers 20%. Al Reem Island will eventually be home to some 210,000 residents, up from the almost 20,000 that reside there now. The ICMP covers the total land area of Al Reem Island of 8.869, million m², with a total gross floor area (GFA) of almost 20 million m². Of that, 1.442 million m² GFA will be office

space, 873,576 m² will be allocated to retail (which includes the upcoming Reem Mall), and up to 10,000 hotel and serviced apartment rooms will be available, along with schools, hospitals and other community facilities. In addition to providing for the managed and orderly growth of such a large area, the ICMP provides for the protection and enhancement of the North Bay mangroves, it facilitates a number of new transport links connecting Abu Dhabi island to other areas via Al Reem Island, and ensures middle income (‘affordable’) rental housing obligations will be secured for all new areas of Al Reem Island. HE Falah Al Ahbabi, the UPC’s Director General, said: “The integrated master plan for Al Reem Island forms an integral part of Abu Dhabi’s path toward sustainable urban growth in line with Abu Dhabi Vision 2030 and is a core component of Plan Capital 2030. The approval of the Integrated Concept Master Plan for Al Reem Island is a tremendous achievement and a major milestone for Abu Dhabi City.” Mohamed Al Khadar, Executive Director, Urban Development & Estidama Sector, UPC, said: “We worked very closely with Bunya to get this over the line, and we’re very excited about what this means for the future of Abu Dhabi. “Not only will the growth of Al Reem Island, one of the key areas of expansion for Abu Dhabi, be carefully managed, we are also ensuring that all future developments meet our Complete Sustainable Communities directives, to support the creation of more comfortable, liveable and sustainable communities on the Island; this is central to our mandate.” Since 2008, the UPC’s Urban Development team has delivered 454 project and master plan approvals. June 2015

INFRASTRUCTURE MIDDLE EAST

Analysis

AVIATION

Airline profitability strengthens

Consumers benefit from lower oil prices with lower fares, more routes, and spend 1% of world GDP on air transport, says IATA

he International Air Transport Association (IATA) recently announced an upward revision of its 2015 industry outlook to a $29.3bn net profit. On expected revenues of $727bn, the industry would achieve a 4.0% net profit margin. The significant strengthening from the $16.4bn net profit in 2014 (re-stated from $19.9bn) reflects the net impact of several global factors, including stronger global economic prospects, record load factors, lower fuel prices, and a major appreciation of the US dollar. All regions are expected to see an improvement in profitability in 2015 compared with 2014.There are, however, stark differences in regional economies, which are also reflected in airline performance. “The industry’s fortunes are far from uniform. Many airlines still face huge challenges,” said Tony Tyler, IATA’s Director General and CEO. Over half the global profit is expected to be generated by airlines based in North America ($15.7bn). For North American airlines, the margin on earnings before interest and taxation (EBIT) is expected to exceed 12%, more than double that of the next best performing regions of Asia-Pacific and Europe. “For the airline business, 2015 is turning out to be a positive year. Since the tragic events of September 2001, the global airline industry has transformed itself with major gains in efficiency. This is clearly evident in the expected record high passenger load factor of 80.2% for this year. The result is a hard-earned 4% average net profit margin.

INFRASTRUCTURE MIDDLE EAST

June 2015

“It is important for our stakeholders, particularly governments, to understand that the business of providing global connectivity is still a very tough one” TONY TYLER, DIRECTOR GENERAL AND CEO, IATA On average, airlines will retain $8.27 for every passenger carried,” said Tyler. “Let’s keep things in perspective. Apple, a single company, earned $13.6bn in in the second quarter of this year. That’s just under half the expected full-year profit of the entire airline industry. We don’t begrudge anyone their business success. But it is important for our stakeholders, particularly governments, to understand that the business of providing global connectivity is still a very tough one.” At the industry level, a significant milestone has been achieved with an expected return on invested capital (ROIC) of 7.5%. For the first time, the industry-level average ROIC will be in excess of its cost of capital, which has fallen to 6.8% largely due to lower bond yields. This industry average is, however, dominated by airlines in the United States, which have benefitted the most from the fall in US dollar-denominated fuel prices, a strong local economy, and industry restructuring. The average non-US airline is still struggling with returns below the cost of capital and a significant debt burden.

Main forecast drivers

Fuel prices: The recent decline in fuel prices is a welcome development. The 2015 industry outlook is based on an average Brent crude oil price of $65/barrel, which is 36% below the 2014 price of $101.4. Jet fuel prices are expected to decline at a slower rate for a full year price of $78/barrel (33% below the $116.6 level of 2014). Fuel still represents approximately 28% of the industry’s operating cost structure. And the full impact of the fall in fuel prices is being moderated by a 20% rise in the value of the US dollar over the past 12 months as well as by airline hedging policies, which have locked about half of the 2015 fuel supply at higher levels. The impact of the stronger US dollar can be seen in a 0.7% decline in the industry’s overall revenues, which are expected to be $727bn ($733bn in 2014). Passenger: The passenger business is expected to grow some 6.7% in 2015, an acceleration on the 6.0% growth recorded in 2014. Passenger numbers are still expected to top 3.5bn for the first time in 2015. A focus on efficiency is seeing supply matched more closely than ever with demand and is expected to produce a record high load factor of 80.2%. A yield decline of 7.5% reflects the stiff competition in the business but is exaggerated by the impact of the US dollar appreciation. Cargo: The cargo business is expected to grow 5.5% this year, which is a slightly slower pace than the 5.8% realised in 2014. There was a strengthening of the cargo business in 2014 that continued into this year. Expected revenues— estimated at $62bn—would have exceeded

Analysis

the $67bn peak in 2011 were it not for the appreciation of the US dollar. The improvement is delivered through a volume increase with a record 54.2m tonnes of air cargo expected in 2015. Yields are expected to fall around 7% this year (a decline that is again exaggerated by the strength of the US dollar). The longer-term prospects for air cargo remain challenging with a continuing post-financial crisis trend of slower trade growth relative to GDP. The regions

All regions will see improved profitability in 2015 compared with 2014. They will also see capacity expansions but these are expected to broadly match the expansion in demand. This aligns with the global expectation for capacity to expand 6.2%, slightly behind the projected 6.7% increase in demand. North America: Carriers in North America are expected to generate a profit of $15.7bn (up from $11.2bn in 2014) for a net margin of 7.5%. On a per passenger basis this translates to an average profit of $18.12. Airlines in the US have been able to use this profitability to invest in new fleet, pay down high levels of debt and deliver a normal return to investors through dividends and share buy-backs. This has been driven by the relatively strong economy, a restructured industry, and the lower oil price. The region is expected to see a 3% growth in demand, although capacity is starting to pick up with an anticipated 3.1% expansion. Asia-Pacific: Carriers in the Asia-Pacific region are expected to generate a $5.1bn profit for a 2.5% net margin ($4.24/passenger). Asia-Pacific airlines have about a 40% share of the global air cargo market. Consequently, they have been disproportionately impacted by the doldrums in the air cargo industry. The slowdown in the Chinese economy has also had a dampening impact on profitability. Demand is expected to grow a healthy 8.1%, slightly ahead of the 7.7% forecast growth in capacity. Lower fuel costs will help but the stronger dollar reduces the benefit in this region. Europe: European airlines are expected to post a collective profit of $5.8bn in 2015 for net margin of 2.8% ($6.30/per passenger). The prospects for airlines based in the region have improved slowly over the last two years. This is particularly true for network airlines serving the North Atlantic, which looks set to

Middle Eastern airlines are expected to post a collective $1.8bn net return for 2015 for an average net margin of 3.1% ($9.61/passenger). The region’s carriers are expected to see a 12.9% growth in passenger numbers this year, the only region with a double-digit expansion continue generating decent returns. Long-haul markets have been stronger than home markets, which have been depressed by the ongoing debt problems of Southern Europe. Economic growth is starting to pick up even in Southern Europe and has been adjusted upward in 2015. Airlines in the region are expected to add 6.5% to capacity to meet a 6.8% expansion in demand. European airlines have benefited from lower fuel prices but again this has been limited by the strength of the US dollar. And the region’s operating environment continues to be hindered by onerous regulation, high taxes, and both infrastructure deficiencies and inefficiencies. Latin America: Latin American airlines are expected to return a net profit of $600m for a net margin of 1.8% ($2.27/passenger). This follows breakeven performance in 2014. The region has delivered weak returns on average for the past few years, largely because of the very poor performance of key economies like Brazil and Argentina. Significant exchange rate weakness against the dollar will substantially limit any benefits from lower fuel prices. This year, demand for the region’s airlines is expected to grow 5.1%, slightly outpacing a 5% expansion of capacity. Middle East: Middle Eastern airlines are expected to post a collective $1.8bn net return for 2015 for an average net margin of 3.1% ($9.61/passenger). The region’s carriers are expected to see a 12.9% growth in passenger numbers this year, the only region with a double-digit expansion. Airlines in the region have mixed fortunes, some loss-making, others

profitable. An improvement in profitability is also expected to be driven by lower fuel costs. Africa: African airlines are expected to post a collective profit of $100m for a net margin of 0.8% ($1.59/passenger), the thinnest of all regions. Although in the black, this continues the relatively poor performance of the past few years. Last year, traffic growth for African airlines was weak because of various problems that disrupted tourism, but market share also continues to be lost. Currencies have been weak, particularly for oil exporters, so the benefits of lower fuel prices will be limited in this region. African airlines are also expected to see the slowest growth among developing markets with capacity and demand expansion of 3.3% and 3.2% respectively this year. Connectivity, Jobs, Taxes

Aviation’s global connectivity now spans 16,485 city-pairs (2014), which is nearly double the number in 1994. This connectivity is a catalyst for economic benefits for users and the wider economy. Over that same period, average airfares have fallen around 64% (after inflation), which has been a major stimulus for trade, tourism, and foreign direct investment associated with global supply chains. The number of aviation jobs is rising although the pace of hiring is expected to taper slightly in 2015. Total direct employment in the sector is expected to reach 2.5m (up 3.1% on 2014). The total airline payroll in 2015 is expected to reach $150bn (up from $142bn in 2014). Compared with 2014, average unit labour costs are expected to fall 0.5% in 2015 as productivity per employee improves 3.2%. Airline employees are also extremely productive for the economies in which they work, generating gross value added (GVA—the company level equivalent to GDP) of $96,753 per employee in 2015 (up 2.7% on 2014). The industry tax bill is expected to grow to $116bn in 2015. That is a 3.9% increase on 2014. Airlines’ environmental performance continues to improve. Airlines are expected to use 288bn litres of fuel in 2015. In doing so, the industry is expected to emit 757m tonnes of carbon. Investments in new aircraft are a major driver of fuel efficiency improvements. In 2015, airlines are expected to take delivery of more than 1,700 new aircraft worth $180bn. About half are expected to replace less fuel-efficient older aircraft. June 2015

INFRASTRUCTURE MIDDLE EAST

MIDDLE EAST INFRASTRUCTURE TENDERS

Infrastructure Tenders Our monthly analysis of new tenders and key projects across the region

OMAN NATIONAL Railway Project

Biodiesel Refinery Project

Maryah Plaza Mixed-Use Project

Integrated Solar & Combined Cycle Power Plant Project

Budget: $15,000,000,000

Budget: $13,000,000,000

Budget: 1,000,000,000

Budget: 960,000,000

Territory: Oman Client Name: Ministry of Transport Description: Engineering, Procurement & Construction (EPC) contract for 2,135km-long national railway network. Period: 2018 Status: New Tender

Territory: UAE Client Name: Petrixo Group Description: EPC contract to build a bio-fuels refinery with a final capacity to produce 1 mtpa year of fuel, including jet fuel, naphtha and LPG. Period: 2018 Status: New Tender

Territory: UAE Client Name: Mubadala Description: Construction of 3 commercial and residential towers offering 435 luxury apartments and one hotel tower offering 180 rooms. Period: 2017 Status: New Tender

Territory: Saudi Arabia Client Name: SEC Description: EPC contract to build a 1,050MW integrated solar and combined-cycle (ISCC) power plant at the Waad Al-Shamal City. Period: 2017 Status: New Tender

June 2015

INFRASTRUCTURE MIDDLE EAST

MIDDLE EAST INFRASTRUCTURE TENDERS

Top Tenders UAE Runway Expansion Project - Fujairah International Airport Project Number: MPP2978-U Client Name: Department of Civil Aviation, Fujairah Address: Fujairah International Airport, Fujairah Phone: (+971-9) 222 4747 Fax: (+971-9) 222 3149 Website: www.fujairah-airport.com Description: This project involves expansion of the runway at Fujairah International Airport. The existing runway is 45 metres wide and 3.75km long with three turning loops and taxiway. It will be extended 900 metres to the east. The ability of this airport to increase traffic volumes had been constrained by safety concerns due to its proximity to the Hajar mountains. Abu Dhabi Airports Company (ADAC) has agreed to supervise the runway expansion work. Status: New Tender Tender Categories: Airport Development & Management

workers. This project will be located at Mohammed Bin Zayed City in Abu Dhabi and cover an area of 100,000 sqm. It is understood that the project is currently under design stage. Construction work is expected to commence in the final quarter of 2016. Period: 2016 Status: New Tender Tender Categories: Medical & Healthcare, Construction & Contracting

Dubai Trade CentrE Jebel Ali Project Project Number: MPP906-U Client Name: Dubai World Trade Centre Address: Shaikh Zayed Road, Dubai Phone: (+971-4) 332 1000 Fax: (+971-4) 331 8299 Description: Development of a 4.4 sq km site comprising a 1.68 sq km ticketed area, 700,000 sqm of pavilions, large arenas for cultural events and 500,000 sqm of permanent structures, including apartments, malls, hotels and warehousing. The client has issued requests for

Medical City Project - Mohammed Bin Zayed City

INFRASTRUCTURE MIDDLE EAST

OMAN Bulk Liquid Berths Project – Port of Duqm Project Number: ZPR1363-O Client Name: SEZAD Oman Address: Bareeq Al Shatti, Muscat PC 103 Phone: (+968) 2450 7500 Fax: (+968) 2458 7400 Website: www.duqm.gov.om Description: EPC contract to build bulk liquid berths at a port. The facility will be suitably equipped to handle liquid volumes, mainly refined petroleum products, chemicals and petrochemicals that will be generated when the refinery and other petrochemical plants come on-stream at the adjoining economic zone. International companies have submitted prequalification

documents for the EPC contract on this scheme. A contract award is slated before the end of 2015. Package 1 works are planned for completion in third quarter of 2018, ahead of the scheduled start-up of Duqm Refinery in 2019. Status: New Tender Period: 2018 Tender Categories: Gas Processing & Distribution; Marine Engg. Works & Seaports

LPG Extraction Plant Project – Salalah Project Number: MPP2840-O Client Name: Oman Oil Company Address: Al Khuwair, Muscat PC 133 Phone: (+968) 2468 1666 Fax: (+968) 2468 1656 Website: www.oman-gas.om Description: EPC contract to build a state-of-the-art liquefied petroleum gas (LPG) extraction plant. The project is currently in FEED stage. Client has revealed that 2016-2018 would be stage for detailed design, procurement and construction, while 2019 onwards would be the commissioning part of this scheme. US-based CB&I and UK’s Petrofac are vying for the EPC contract on this project. Period: 2019 Status: New Tender Tender Categories: Gas Processing & Distribution

KUWAIT Kabd Waste-to -Energy Plant Project

Project Number: WPR486-U Client Name: Manazel Real Estate Address: Salam St, Opp. Abu Dhabi Municipality, Floor 7, 8 & 9, Abu Dhabi Phone: (+971-2) 644 4466 Fax: (+971-2) 644 4465 Website: www.manazel-re.com Description: Construction of a new Medical City comprising a hospital of 40 beds, as well as housing for doctors and hospital

proposals for three consultancy contracts on this scheme. The three roles cover infrastructure design and supervision, urban planning and the design public spaces, as well as design of the development’s souq/market area. Status: New Tender Tender Categories: Leisure & Entertainment; Construction & Contracting; Hotels

Project Number: MPP2620-K Client Name: Kuwait Authority for Partnership Projects (KAPP) Address: Touristic Enterprises Co. Bldg., Shuwaikh Phone: (+965) 2496 5900 E-mail: (+965) 2496 5901 Website: www.ptb.gov.kw Description: Build-Operate-Transfer

June 2015

MIDDLE EAST INFRASTRUCTURE TENDERS

(BOT) contract for the development of a waste-to-energy plant with initial capacity of 3,275 tonnes/ day. Client will enter into a 30year contract with the winning investor. This will include 2 years for construction and equipment installation. Client has invited all foreign and local companies, consortia and listed companies in the Kuwait Stock Exchange to submit Request for Qualification (RFQ) no later than July 16, 2015. Period: 2015 Status: New Tender Tender Categories: Power & Alternative Energy; Sewerage & Drainage

Terminal 2 Project - Kuwait International Airport Project Number: SPA/214-K Client Name: Ministry of Public Works (Kuwait) Address: MPW Bldg, 3rd Floor, 6th Ring Road, Safat 13001 Phone: (+965) 2538 5520 Fax: (+965) 2538 5219 Website: www.mpa.gov.kw Description: This project involves construction of Terminal 2 at Kuwait International Airport. The new terminal will increase capacity of the airport from 6 million passengers a year to 13 million. The new terminal will be located

south of the existing terminal between the two existing runways. A consortium of local Kharafi National and Turkey’s Limak is understood to be the lowest bidder with a price of $4.8bn, followed by China State Construction Engineering Corporation at $5.6bn. Other bidders include UAE’s Arabtec Construction and a joint venture of Italy’s Astaldi with Turkey’s Ictas. Client has invited the same five contractors to submit revised bids for the main construction contract on this project. Period: 2015 Status: New Tender Tender categories: Airport; Construction & Contracting

construction of a Hydro-treater and hydrogen plant, gas sweetening facilities, a pipeline network, storage facilities, natural gas liquids recovery, gas de-hydration facilities, as well as offsite and utilities. The packages for the scheme are: - Package 1: Main processing facilities - Package 2: Sulphur recovery unit (SRU) - Package 3: Off-sites and utilities. Bidders for all three packages include: - South Korea’s Daelim Industrial; Daewoo Engineering & Construction / Samsung Engineering GS Engineering & Construction / Spain’s Tecnicas Reunidas - Hyundai Engineering & Construction - Japan’s JGC Corporation / Italy’s Saipem - UK’s Petrofac. The deadline to submit bids has been extended from the previous deadline of June 15, 2015. Period: 2018 Status: New Tender Tender Categories: Gas Processing & Distribution

QATAR Airport City Development Project Project Number: SPR2595-Q Client Name: New Doha International Airport Steering Committee Address: Hamad International Airport, Doha Phone: (+974) 4467 9888 Fax: (+974) 4467 9816 Description: Development of an Airport City spanning an area of 10sq km. Period: 2019 Status: New Tender Tender Categories: Construction & Contracting

Produced in association with Middle East Tenders

KSA Fadhili Gas Processing Plant Project Project Number: ZPR1186-SA Client Name: Saudi Aramco Address: Dhahran 31311 Phone: (+966-13) 872 0115 Fax: (+966-13) 873 8190 Website: www.aramco.com Description: EPC contract to build a sour gas processing plant with capacity of 2.5bn cubic feet a day in Fadhili. field in the Eastern Province of Saudi Arabia. Plant will process gas coming from Khusaniyah and Hasbah Fields. This will include

June 2015

INFRASTRUCTURE MIDDLE EAST

ten QATAR INFRASTRUCTURE PROJECTS

QATAR PROJECTS Qatar continues to be the fastestgrowing economy in the GCC as the country presses ahead with one of the worldâ&#x20AC;&#x2122;s most comprehensive infrastructure programmes

INFRASTRUCTURE MIDDLE EAST

June 2015

Doha Metro Project â&#x20AC;&#x201C; Phase 1

Owner: Qatar Railways Company (QRC) Budget: $36bn Progress: Work underway The Doha metro is being built in two phases, with Phase 1 scheduled for completion by October 2019. The metro comprises of Red, Gold, Green and Blue lines. There will be approximately 100 stations built for the entire network, including two major stations at Msheireb and Education City. Last month, Qatar Rail launched the pre-qualification process for the facilities management contract and operator contract for phase 1. In February 2015, QRC awarded the turnkey contract for rolling stock and railway system to a consortium led by Mitsubishi Heavy Industries (MHI). The Doha Metro project is utilising 21 Tunnel Boring Machines (TBM) for the Phase 1 excavation works, which include 113km of tunnels.

ten QATAR INFRASTRUCTURE PROJECTS

Water Security Mega Reservoirs Project

Facility D IWPP

Owner: Kahramaa Owner: Kahramaa Budget: $4.7bn Budget: $3bn Progress: Contracts awarded Progress: Contract awarded The foundation stone of the Mega Reservoirs Project was laid last month, a little more than a year after the commencement of excavation works for the scheme. Five reservoirs will be constructed at five locations, namely Um Baraka, Um Salal, Rawdat Rashid, Abu Nakhla and Al Thumama. The project consists of 24 reservoirs with a total storage capacity of 2,273 MIG. It also includes the installation of 650km of large diameter pipelines that will connect all the key desalination plants in the country to the reservoirs. The Mega Reservoirs Project includes four bulk earthwork contracts, seven pipeline contracts, three reservoir site contracts, and a SCADA contract. In April, the UAEâ&#x20AC;&#x2122;s HLG was awarded a $608m contract to construct the reservoirs. The project is scheduled for completion in 2018.

Facility D is a new Independent Water & Power Plant (IWPP) which will produce 2,400 MW of power and 590,000 m3/day of water. Earlier Global Water Intelligence (GWI) had reported that it will be the first privately financed power and water project in Qatar to involve outside developers since the Ras Laffan C plant, which reached financial close in 2009. The project was awarded to a consortium led by Mitsubishi Corporation with Acciona Agua responsible for design, construction, operation and maintenance of the desalination component incorporating both membrane and thermal technologies. Eversheds advised Kahramaa on the 25-year power and water purchase agreement with the consortium. The plant is expected to be commissioned in 2017.

Inner Doha Re-sewerage Implementation StrategY

Owner: Ashgal Budget: $2.5bn Progress: Work underway The Inner Doha Re-sewerage Implementation Strategy or IDRIS will provide a long-term wastewater treatment solution to serve the needs of Doha, Al Wakra and Messaieed. This scheme includes a major deep tunnel sewer network and advanced sewage treatment works. Last month, Ashgal awarded three contracts under IDRIS for the design and construction of the Main Trunk Sewer project at a value of approximately $296m. The main trunk sewer will be approximately 45km long, with internal diameters ranging from 3 to 4.5 meters, and depths ranging from 20 to 55 meters. For constructing the tunnel, two TBMs will be used. After installation of the tunnelâ&#x20AC;&#x2122;s outer shell, an inner lining of HDPE membrane will be added to protect the concrete from the aggressive gases. June 2015

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ten QATAR INFRASTRUCTURE PROJECTS

Lusail Tram Project – Phase 1

Owner: QRC Budget: $1.7bn Progress: Work underway In June 2014, Qatar Rail awarded a consortium of Alstom and QDVC a €2bn contract to develop a four-line tram network in Lusail. Alstom is supplying a fully integrated tramway system including design, manufacturing, commissioning and servicing of 35 Citadis tramways, power supply equipment, signalling and trackworks. The Lusail Tram network extends 33 km (with 7 km underground) with 37 stations. The rail network will connect to Doha’s metro network once the latter is completed. In March 2015, Thales was awarded a contract to supply integrated supervision, telecommunications, security and automatic fare collection system for the tramway. Last month, QRC launched the prequalification process for tram operations, and management of related facilities.

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Place Vendome Mixeduse Development Project

Owner: United Development Company Budget: Approx. $1.2bn Progress: On schedule Place Vendôme is an upcoming mixed-use development underway in Lusail City. It is a project of United Developers, a group of four Qatari investors who partnered to align their expertise in retail, real estate, construction and contracting. The project broke ground on March 17, 2014 and is slated for opening in the third quarter of 2017. The 800,000m² development will host two five-star luxury hotels, serviced apartments, a mall featuring up to 400 different retail outlets. The development will also feature a canal running through it directly from the sea. As Lusail City is set to host the stadium for the opening and closing of the 2022 World Cup, the project will cater to the needs of visitors by providing access to wide number of services, from accommodation to entertainment.

Mall of Qatar Project

Owner: Mall of Qatar WLL Budget: $1.51 bn Progress: Work underway Mall of Qatar, which is being built in the Al Rayyan area of Qatar – the heart of the new Doha - will cover over 195,000 sqm of leasable space and is being developed by the Mall of Qatar WLL with UrbaCon Trading & Contracting (UCC), as the turnkey general contractor and operator. Last month, UrbaCon announced that construction of the mall is 70% complete. Slated to open in the first quarter of 2016, the Mall of Qatar is set to serve an estimated 20m customers a year. It is positioned as a ‘A Super Regional Mall’ offering over 400 shops, three major anchors, a luxury five star hotel, a Family Entertainment Centre and an array of 81 international restaurants, cafes and specialty food shops. According to Arabian Business, over 75% of its retail space has already been signed for. The owners estimate that 10% of the mall visitors will come from the GCC.

ten QATAR INFRASTRUCTURE PROJECTS

Lusail Expressway Project - Package 2

Owner: Ashgal Budget: $700m Progress: Work underway As part of Ashgal’s Expressway Programme, this project will provide a vital connection into Doha’s fast growing Lusail City currently under construction. The Lusail Expressway project includes three major interchanges: Al Wahda Interchange, Onaiza Interchange and the Pearl Interchange. At 5.3 km, it will comprise four lanes of highway with additional lanes to provide for traffic movement between the interchanges. The expressway will also cater for future light rail transit (LRT) and Metro’s Red Line North. Currently, 60% of the construction work has been completed and the expected completion date is the second quarter of 2017. Hyundai Engineering was awarded the main construction contract for the expressway while AECOM Middle East is the design consultant.

highway & interchanges construction - Doha Expressway Package 13

Owner: Ashgal Budget: $640m Progress: On schedule The Doha Expressway is part of a strategic plan to modernise transportation for Greater Doha. It will connect the south of Doha with the north, and the east with the west. Package 13 involves the construction of 10km of four lane highway and three interchanges. The UAE’s Al Jaber Group was awarded the main contract on this scheme. Scope of work involves construction of approximately 8km of new dual carriageway on Abu Hamour Road/Al Muntazah Street from East Industrial Road Interchange to Al Woqod Interchange and approximately 2km of dual carriageway on F-Ring Road. Nearly 40% of construction works have been completed.

Northgate Shopping Mall Project

Owner: Equinox Qatar Budget: $290m Progress: Work underway The UAE’s Habtoor Leighton Group was awarded contract for construction of the first phase of Doha’s North Gate mall. Phase 1 comprises a total built-up area of around 375,000 sqm, with a podium comprising two levels of carpark, a three-level mall and six, five-level office buildings. The project represents the first phase of the North Gate mixed-use development in a growing neighbourhood on one of Doha’s strategically important arterial roadways, Al Shamal Road (North Road), north of Doha’s West Bay central business district. The North Gate Mall is positioned as a mid-to premium-development with targeted luxury attracting leading fashion, home, dining, leisure and entertainment brands and outlets along with office accommodation. June 2015

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the EFFICIENCY IMPERATIVE

Dubai’s long-term sustainability roadmap In his keynote address at the 2015 Seminar on Energy Efficiency and Management, Eng. Abdulla Rafia, Assistant Director-General, Dubai Municipality highlighted the steps being taken to transform Dubai into a smart and sustainable city ubai Municipality’s (DM) roadmap towards building a sustainable built- environment in Dubai was the main theme of Assistant Director-General Eng. Abdulla Rafia’s keynote address at the 2015 Seminar on Energy Efficiency and Management. Organised by CPI Media Group and presented by Infrastructure Middle East, the event was held on May 24, 2015 at the Habtoor Grand Dubai Marina. In his opening remarks, Rafia pointed out that DM’s vision of ‘creating an excellent city that provides the essence of success and comfort of living’ is closely aligned to Dubai

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Plan 2021 and its ‘A Smart & Sustainable City’ theme. The framework of Dubai Plan 2021 includes six themes that define and describe Dubai in the year 2021. DM’s roadmap for smart and sustainable city consists of Institutional framework, Research and development, Incentives programme, and Education and awareness. Rafia’s observations on the roadmap have been reproduced below: “Our institutional framework starts with long term plans. For example, we started the study for green building regulations in 2008, made them optional in 2011 and in 2014, they became compulsory.” [The green building regulations were optional for private buildings from the beginning of 2011 but mandatory for

government buildings. Starting from 2014, they have become mandatory for all new buildings in government and private sectors – editor’s note] “If you don’t do Research and Development, then you lose track. We want to continuously research, study, analyse and improve.” “I don’t like incentive programmes myself; I always think economics must drive green buildings.” “Education and awareness are important in order to ensure that customers and stakeholders are part of the Dubai story, and not looking into it from outside.” Managing demand

DM, as a member of the Dubai Supreme Council of Energy, is helping drive the demand

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side management strategy outlined in the Dubai Integrated Energy Strategy 2030 (DIES 2030). It consists of eight programmes to manage energy demand including green building regulations, building retrofits, district cooling, energy efficiency standards/labels for appliances and equipment; wastewater reuse, energy-efficient street lighting, power and water tariffs and demand response. After revealing that there are 24 projects on the demand management side, Rafia provided an update on the status of some programmes. He observed that green building regulations were driven by the fact that 75% of the energy consumed by the city of Dubai is used by buildings with most of it going into airconditioning. The green building regulations are now mandatory for all new buildings in Dubai. Rafia said: “This year, in the months of January and February, we were at a 50:50 ratio - 50% green building regulation buildings and 50% older regulation buildings. In March and April, that changed to 70:30.” The 30% share of non-green building regulation buildings was attributed to projects that were submitted to DM for permission ahead of the 2014 deadline. Some projects had been delayed due to the financial crisis while some were phased projects. “For example, if someone is designing 1000 villas and their first package is 100 villas, then the whole lot stays with the same design. We don’t want people to go through a lot of expenses in redesigning buildings if they submitted a design which was accepted according to the older regulations,” explained Rafia. In 2014, the green regulation compliant building projects cleared by DM added up to 100 million sq.ft. He continued: “Our mandate for the green building regulations is to give energy savings of 20% and water savings of 15% without increasing the cost more than 5%. But we are achieving much more than that. In one of our buildings, we achieved 43% savings in energy at zero increase in cost.” Future developments with regard to green buildings include building audits and an enhanced version of existing regulations, which will be announced in 2018. With regard to retrofits, Rafia noted that Etihad ESCO, as a super ESCO, is using approved ESCO companies to conduct its business.

“I have heard that retrofitting was there some time ago but couldn’t take off. With the regulations and the roadmap in place, I am confident it will take off. I am a board member of Etihad ESCO and know that they are overwhelmed with requests for retrofitting.” “In our case, by 2030, we are striving to retrofit 30,000 buildings or 25% of all existing buildings in 2010, which is our baseline. It is a steep challenge, but this is what we love here in Dubai – challenges.” DIES 2030 aims to increase district cooling’s share of total cooling capacity to 40% by 2030. Currently, district cooling’s penetration rate is 20%. Rafia blamed “inefficiency in the development of the area” around district cooling plants as the key inhibiting factor for the low penetration rate. He also assured that steps are being taken to tackle this issue so that 40% target can be achieved ahead of schedule. At the consumer end, DM is working closely with Emirates Authority for Standardisation & Metrology (ESMA) on energy labelling. “This is an area where we feel we can achieve more than 6% energy saving,” said Rafia. On the water reuse front, DM is targeting industrial users for its Treated Sewage Effluent (TSE) and has signed up paper mills and district cooling plants. Rafia continued: “When you are using TSE, you are reducing your dependence on desalinated water, which consumes a lot of energy. Moreover, the cost of TSE is 18% of the cost of desalinated water. By 2030, we want to ensure there is sufficient supply of TSE. Today, it doesn’t look like we are producing enough TSE although we are treating 100% of our sewage and all of Dubai city is connected to our sewerage network.” With regard to outdoor lighting, DM has managed to change 50% of the lights for its parks and outdoor areas to energy efficient lighting, pushing the programme ahead of schedule. “Future lighting systems are going to consume somewhere 10-20% of what we are consuming at the moment,” said Rafia. New programmes

After wrapping up the update on demand side management, Rafia drew the audience’s attention towards three new initiatives by the municipality – green concrete, zero energy parks and the Desert Rose project.

The newly launched mandate for green concrete aims to encourage the use of recyclable or left-over material from industries in concrete, reducing the price of concrete, and increasing its strength and workability on one hand while reducing the greenhouse gas emissions associated with Ordinary Portland Cement used in Dubai’s buildings on the other. “Currently, the refuse material needs to be imported. However, we are planning for the future because Dubai will be using clean coal four years from now, and there will be huge amounts of ash that will need to go somewhere. Green concrete will use all the ash that will be produced so that nothing that will go into the dump yards.” The green concrete mandate is in force since April 2015. DM is also pushing the concept of zero energy parks with its newly inaugurated Al Khazzan Park powered entirely by solar power. However, its most ambitious green endeavour is Desert Rose project. Rafia said: “We are talking about building from scratch a completely new and sustainable city with 160,000 inhabitants. We have already awarded the contract for infrastructure design for the project, which is going to be the biggest single development built on sustainability principles outside China.” “The initiatives are there, but they don’t just remain initiatives. They are always going into projects and the projects are always being realised.”

Key takeways In 2014, the green regulation compliant building projects cleared by DM added up to 100 million sq.ft By 2030, Dubai is aiming to retrofit 30,000 buildings or 25% of all existing buildings in 2010, which is the baseline The next update of green building regulations will be launched in 2018 The design contract for ‘Desert Rose’ sustainable city has been awarded

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PANEL 3

Rooftop solar revisited Opportunities and challenges involved in installing, operating and maintaining roof-top solar systems

MODERATOR

Panelists

Imtiaz Mahtab President Middle East Solar Industry Association (MESIA)

Waseem Qureshi Founder MiccGreenTec

Imtiaz Mahtab [MODERATOR]: Waseem, you have extensive experience with off-grid solar projects in the UAE. What is going to be the impact of Dubai’s roof-top solar programme? Waseem Qureshi: Since 2009, we have been doing off-grid solar power projects in the Northern Emirates. Our off-grid systems served to replace diesel-powered generators as the source of electricity. However, there is no policy on connecting these systems to the grid. Therefore, the launch of the rooftop solar programme with net metering by the Dubai Electricity and Water Authority (DEWA) is a significant development not just for Dubai but also for the UAE. Imtiaz: Let’s talk about the money. I am burning diesel today, and would like to go for solar power. What kind of payback periods are we looking at? Waseem: In 2009, solar power meant either large utility-scale solar power projects or small gadgets like torches or lights. The mediumscale sector like households, commercial establishments and factories was not in the market. When we set up MiccGreenTec in the UAE, our main goal was to develop a system which can cater to this sector as available

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Faizan Ahmed Manager HVAC Solutions NIA

systems couldn’t handle high loads like air-conditioners or microwave ovens. We, therefore, developed a system which can handle all types of loads and run 24/7; it also had a payback period of 3-4 years. Being off-grid systems, they also involve battery storage. We have supplied solar power systems to industrial consumers as well – for example, we have powered a fastener factory with heavy equipment like power presses, welding machines and metal treatment plants. We won Solar Project of the Year award at Middle East Electricity (MEE) 2015 for a labour camp project in Ajman which runs 24/7 on solar. The payback is mainly linked to not buying diesel for electricity generation and avoiding the maintenance costs for diesel generators. Imtiaz: Faizan, what are the maintenance issues encountered with rooftop solar power systems? Faizan Ahmed: When you are installing the panels, structural aspects of the building need to be looked into. Also, it is important to take into consideration how the client is going to maintain the panels while designing the rooftop system because, in this environment, cleaning of panels can be a monthly or even daily activity. Also, cleaning personnel need to be trained on how to clean the panels. The rooftop system

Sarfraz Dairkee Board Member Emirates Green Building Council (EGBC)

should be designed for serviceability as well in terms of daily visits or monthly visits. Imtiaz: Sarfraz, any comments you would like to share on what has been discussed so far? Sarfraz Dairkee: I think there are challenges and opportunities. The biggest opportunity with solar PV in this region is meeting peak demand, which coincides with the period when solar insolation is at its highest. Meeting peak load with gas or oil-fired power stations is expensive whereas with solar power, peak generation coincides with the peak demand. But dust accumulation is a major challenge. The atmospheric turbidity in this part of the world is much higher than in other parts. There is no natural cleaning effect which is available in the rest of the world. Another challenge is dew point temperature. Humidity levels in the early morning is much higher leading to moisture condensation on the panels, and since the turbidity is high, it accumulates on the panels. It is crucial that these challenges are addressed during design. It is also important to focus on proper commissioning of the system. I would also like to add that defining the need is very important. If you are putting up a roof top system, you will have to assess the impact of solar insolation and junction

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temperature, how the system will be serviced and how the electricity generated is going to be utilised in the most effective manner. Waseem: The challenges involved in cleaning of solar panels and designing the system to meet local environment are already being addressed. I have installed systems that are in operation for the past two to three years. In some cases, my customers have their own people to clean the panels. Imtiaz: Moreover, DEWA has put in place a scheme for approving consultants and contractors to advise customers on installing grid-connected rooftop solar systems. This also ensures that only qualified and professional people operate in the market. Waseem: I think the main challenge is to convince owners that the system works. Customers, whether they are industrial customers or home owners or farmers, worry whether the solar power system will work for 25 years as promised. The other major challenge is the high capital investment. If I ask you to pay three years of electricity bills to me in return for 25 years of electricity – it’s still a hard sell. Even the car industry was struggling till banks came up with financing models. Solar power is something banks here are still not comfortable with financing. Imtiaz: Today, a customer in this region has to put in his own money to install a rooftop

solar system. At the other end, in the US, there is a company called SolarCity which offers financing and leasing solutions for solar power systems including rooftops. Do you see this coming here as well?

the most optimum at this particular time. Fifty years ago, rooftop solar system was the not the optimum solution as gridsupplied electricity was far cheaper. However, things are starting to change.

Waseem: It will come, should come. If some entity steps in with financing, it is fair they get a share of the savings going to the customer, and once the obligations are met, the systems belong to the customer. Currently, the contract is between the consumer and DEWA, and there is no other party in the picture. A potential issue with DEWA regulations is that if a customer wants to increase the load from, say, 100 kVA to 200 kVA, he has no option to do that. Whatever is available is within the sanctioned load. But we hope that the regulations evolve.

Imtiaz: I read some time ago that the most efficient gas-fired power plant is in Saudi Arabia. But this plant - the most effective and efficient combined cycle power plant in the world - runs only for a few hours.

Imtiaz: Sarfraz, you rightly pointed out that the solar panel works best in the middle of the day. But what happens in late evening or night, when the customer wants to turn his TV on, for example. What is going to be the impact on the grid? Sarfraz: I think it comes down to what I said earlier about optimisation. This would be using solar power when it is relevant; rest of the time, you should be using the grid because it is producing electricity at a much cheaper rate in the night than during the middle of the day. We have to get out of the mind set of ‘Zero Energy Building,’ which I feel is not

Waseem: Like solar panels, batteries too have evolved. I think the most optimised way of using solar power system is using it with battery storage. We are seeing utility-scale battery storage systems, and Tesla recently unveiled a new battery range for homeowners and businesses. Our off-grid systems come with batteries. MiccGreenTec recently launched supercapacitor battery with technology with an unlimited number of charge/discharge cycles and 40 years of life. These batteries are also non-chemical in nature. So battery technology is also evolving like solar panels. At one time, we were using solar panels only for high tech applications like satellites. Now we are using them in homes and other applications. A lot of investments are going into battery technology R&D. Imtiaz: As battery solutions evolve, it will make the case for solar even more economical than it is today. June 2015

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PANEL 2

Energy efficiency in hospitality industry Adopting a strategic approach is the need of the hour Panelists

MODERATOR Omer Al JameL Regional Manager Business Development KONE

Muhammad Ihsanullah Qamar Director of EHS Rotana Hotel Management Corporation

Bill Jolly Regional Director of Sustainability Ramboll Middle East

Ali Al Suwaidi Board Member Middle East Facility Management Association

P R Jagannathan Sustainability Manager Trakhees - Environment, Health & Safety (EHS)

Sarfraz Dairkee Board Member EGBC

Sandrine Le Biavant Director - Consultancy FARNEK

Sandrine Le Biavant [MODERATOR]: We will start by focussing on existing buildings and what are the current practices being followed in terms of energy management. Muhammad, could you share with us your implementations, in terms of products and methodologies, over the past few years? Muhammad Ihsanullah Qamar: We started with existing buildings by monitoring their energy use. Now hotel buildings, whether they are resorts, hotel apartments or airport hotels, vary from each other. So as a first step, we carried out energy audits to pinpoint the problem areas, followed by a five-year

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long-term action plan because for buildings already operational, renovation may come up after 15-20 years. After action plan, came the accrual implementation where we prioritised. A key takeaway is that as long as you have done your homework properly, the owners will be receptive to your plans. Thatâ&#x20AC;&#x2122;s a key reason we managed to achieve 20% savings in terms of kWh over the past two-three years. Recently, we issued our second sustainability report, and I feel the results are impressive given that we started only in 2009. Sandrine: Most of the hotel chains are actually setting up targets from baseline

year for five to eight years. Has Rotana set up a target already for all the properties? Muhammad: The first target we set was from 2012 to 2017, a five-year plan. We asked each and every property to do Root Cause Analysis (RCA) and submit an action plan. The corporate target is one thing but the individual targets had to be developed by individual properties. For example, we had set a target of reducing energy use by 7% in the first few years. We achieved beyond that, and while some of our properties achieved 14% reduction, some couldnâ&#x20AC;&#x2122;t give more than 4-5% reduction.

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In the next two years, we have an even bigger goal of minimum 20% reduction. Sandrine: The solution behind these savings. Muhammad: The first part was finding out where the problem is and the second part was the equipment and the appliances. A major issue is the chillers, especially in the properties that opened in the early 1990s. We had to convince the owners of the need to invest and replace the chillers. There are things we are doing on a yearly basis like lights but a major chunk of investment was in chillers, refrigeration and lighting. Sandrine: Sarfraz, would you like to comment on this and how benchmarking fits into this? Sarfraz Dairkee: Benchmarking is kind of a guideline, and it would vary a lot. One has to differentiate between the best and the optimum. In fact, optimum is that point which is dynamic and varies from property to property, system to system. Benchmarking will give a broad outlook, but each and every property will have its own dynamics which has to be understood. It is like a GPS – you are getting a broad outline, but you have to travel the path yourself. Sandrine: Omer, when we talk about efficiency in hotels, you may actually have seen solutions and some of their practical aspects as well. Could you share some of your experiences? Omer Al Jamel: Most of the hotels have monitoring systems that operators use to monitor traffic patterns for security reasons and monitoring flow to ensure that right comfort levels are maintained. Having that in place, we can really monitor the energy efficiency of the equipment. Taking that into consideration, and being a supplier, we have noticed that there is an opportunity for improving energy efficiency in existing hotels and at the design stage of future hotels. It is also related to the life cycle of the project; earlier you start, the better as it can be part of the budget. If you start later, then it is a matter of finding the right budget; you need to plan ahead and get it approved, which will take some time. As a supplier, we can see this as a responsibility towards their customers and the environment, they can continue doing innovations and continue to invest.

Sandrine: We often hear about replacing and retrofitting equipment, but I am sure you also have some ways of optimising the use of current equipment Omer: Elevators and escalators can account between 2-10% of the energy consumption of an individual building. For a new building, we can save a lot in the design stage by proposing LED lights, for example; in fact, energy is consumed not only by the running of the elevator but also by lighting. Through standby solutions, you can power down the equipment when it is not in use, which saves a lot of energy. From a construction standpoint, we have a solution called JumpLift, which helps customers to finish construction work earlier and thus keep energy consumption low. For existing buildings, we can propose our gearless technology which reduces oil and energy consumption. We also have a destination control system, which assigns the right elevator at the right time to passengers, maximising the use of elevators while optimising energy consumption. Sandrine: Do you feel this is an area which is overlooked by contractors or operators? Omer: I don’t want to say it is overlooked. The challenge we face is that these innovations haven’t been taken into account when comparing new and cheap but obsolete technologies. Sandrine: Bill, could you share your experience about integrating new types of products and innovations into recommendations for implementation? Bill Jolly: I am strongly in favour of energy audits in order to understand the energy consumption patterns. They will tell you where and what the problems are so that you are able to redress the problems. A key aspect in the whole process is communication and education. By bringing in the facility management team in the design stage, you can control the results better. You have to work with facility management team to improve their understanding and focus on specific areas to reduce energy consumption. Sandrine: Ali, how is the facility management (FM) industry integrating energy management in their scope and in their skills, expertise? Ali Al Suwaidi: I think FM professionals

play a key role in energy efficiency. But in the hospitality industry, they face a big challenge. Why? Because top management looks for profitability and occupancy rate. If you have 100% occupancy, you are very successful. If we don’t keep energy efficiency policy or drivers at the same level and make it impact the bottom line from a total cost of ownership point of view, then you will have to shift in that direction. What we do in FM industry is educate all centres. In the hospitality industry, the red line is always the comfort of the people. If I am implementing energy efficiency initiative and people aren’t feeling comfortable, I wouldn’t want to do it. To do it the right way, it is important to go into design. If you don’t affect the design, and instead, you try to go and improve energy efficiency in operation without the retrofit, nobody is going to help you. Continuous commissioning is also very important; we need to look at the behaviour of the building, the behaviour of people in the building and try to tweak and make the strategy as per that time of commissioning. We need to commission the building continuously to ensure the best and ensure that people are comfortable. Sandrine: Muhammad, is there enough training about energy efficiency? Do you track what is happening elsewhere or are you still working in isolation in terms of maintaining the building, making sure you focus on guest comfort first? Muhammad: From a training standpoint, making engineering responsible and accountable for energy is not justified. It has to be made everyone’s responsibility. We are still working on integration. In many hotels, energy efficiency implementations are not getting implemented because from top to bottom, they have thousands of Standard Operating Procedures (SOP) but you will not find energy efficiency, sustainability properly integrated. Once you make them part of SOP, then it is very easy in the hotel business because we have a strong training mechanism. If you make it part of SOP, you need to have a departmental trainer who is responsible to train everyone for the SOP; then comes the monitoring, review and performance measurement. That why we realised that laying down a policy or getting a certification June 2015

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or distinction is a different thing from implementation, which is the reality, the goal. Sandrine: Do you feel that engineers have the knowledge to be able to design the SOPs, to have the whole understanding of what their role is in terms of energy efficiency and then to go down to the different levels? Muhammad: That’s why we restructured. We have a sustainability department which is working in close collaboration with all the departments including engineering. Nowhere have I found a wing within the corporate structure called Research & Development (R&D) like we have in Rotana. We are not dependent on a particular consultant who is selling us a technology or a product. We work closely with research institutions and organisations. We currently have 12 students who are working with us in the areas of sustainability, energy efficiency and water tackling real challenges. Sandrine: Typically, proposals for products or solutions get stuck at the general manager stage. Sarfraz, why does this happen? Sarfraz: the hospitality industry is one where the ingredients vary enormously but end product is the same. In hospitality, each and every site will have different ambient conditions, which needs to be taken into account. This, in turn, requires far more in-depth studies. That’s what we need and integration is the name of the game. Sandrine: Bill, do you feel an external company can fill the dots and provide a clear picture? Bill: From an engineering perspective, it is important to understand the building envelope design to control energy consumption, understand what the potential hotel operator’s requirements would be. It is also important to undertake energy modelling analysis during the design process, which will allow the design team to make informed decisions. In this region, there are certain times of the year, like summer, for example when the occupancy levels drop and the overall occupancy is lower. It is important to understand that when designing the building. Sandrine: I have to say when it comes to some of the properties under Trakhees, when we

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go for the Green Globe audit, it’s a pleasure to see that the property has everything in relation to the green buildings. They are sure of where they stand at present and what they need to do for the future. From a mandatory standpoint, how do you see the involvement of the owners and do you see continuity in what you have mandated? P R Jagannathan: For hotel projects, at the design stage, the role of owner or operator is very important but, unfortunately, that isn’t the case. We have projects with clear owner’s project requirement (OPR) which talks of being the largest project, the tallest, the biggest, but is difficult to find an OPR which states that ‘I would like the project with EUI of 380/kWh/sqm. It is left to the consultants, and in the absence of clear directives from owner’s project requirements, energy efficiency is less to be aggressively pushed. There should be owner’s representative driving the project all through. Especially for projects with an integrated design that includes facility management people, the ultimate end-user and operator of the facility has to be involved. In its absence, the project will go through the business-as-usual cycle; there will be pressure for handing over or soft opening and certain important things like commissioning would be compromised. You would find 14-16 weeks of commissioning in a Primavera cycle which might be reduced to a couple of weeks and people are happy if you are able to get the comfort conditions and if you are able to just make do with the facility. So the concept of proper commissioning and handover is crucial. Sometimes there are tricky elements on the theme of the project. In one of the projects, the lighting requirement was not

met. There is always a compromise because we didn’t want to sound anti-romance! So the romance of the project went on with a slight nudging towards compliance. As far as new constructions are concerned, there should be clear-cut commitment from the owners’ project team, there should be an independent commissioning authority, who will be appointed by the owner, reporting to the owner and doing a review of all the active and passive elements of the project up to the stage of handing over of the facility. Where existing hotels are concerned, again it is owner’s drive and commitment. Not all hotels have gone through an energy audit. As my fellow panellist from Rotana mentioned, there was a clear-cut commitment from them and because of that, they are able to establish policies and seek 7% energy efficiency target. In short, regulations may not be able to police all hotel projects, especially existing ones. We take care on new constructions to ensure that the designs are robust, are adding value to the project and are reasonably transferred to the site. Beyond that, operations are something that we don’t enjoy 100% control. We do keep getting feedback on measurement and verification of projects but it’s a very complicated aspect. Sandrine: Ali, Do you feel hospitality industry is ready for the ESCO model? Ali: I don’t think so. The driver is again RoI, and hospitality industry is growing and booming and there is massive pressure to cater to the upcoming forecast of tourism. You shouldn’t be enforcing it; rather, they should buy into it. I feel that we overdesign in energy, and afterwards, we do energy efficiency. Instead, why can’t we design efficiently?

OIL & GAS

fter the success of the first edition, MS Marmomacc + Samoter Africa & Middle East International Trade Fair - Stone Design and Technology & Construction Equipment (www.msafrica.net), the event organized in Egypt by Veronafiere, in cooperation with the Egyptian partners Art Line and ExpoLink, which drives Italian and international excellences in the construction

field to the African markets, is back. Born from the experience of Marmomacc, leading trade fair for the natural stone sector (materials, design, technologies), and Samoter, international exhibition dedicated to earthmoving and building machinery, MS Africa & Middle East will take place from 2nd to 5th November 2015 in Cairo. The exhibition will be co-located with Projex Africa - The Future Building and Construction Trade Fair (www. projexafrica.com), a new show dedicated

MS Marmomacc + Samoter Africa & Middle East 2014 - Facts and figures • 120 exhibitors from 7 countries (Italy, Egypt, China, India, Turkey, Russia, Poland) • more than 3.000 professional visitors • more than 300 B2B meetings between exhibitors and selected buyers of the International Buyers Program (from 16 countries) • 6.500 sq.m. exhibit area • conference and seminar program on architecture and design, restoration, country focus Tanzania and Kenya

MS Marmomacc Samoter Africa & Middle East is the show for you: • Marble, Natural Stone, Granite, Agglomerates • Machinery and Technologies for Marble, Natural Stone and Granite • Design • Services • Earthmoving Construction Equipment • Road Building Machinery/Asphalt Equipment

to building materials, technologies and solutions, with a focus on green building, sustainability, innovation, energy efficiency. Egypt, whose GDP will grow by 4.3% in 2015-2016, is one of the most active and dynamic African markets. Its privileged geographical position makes it an ideal candidate for the role of hub for Africa, an emerging continental market consisting of 54 countries and 1.1 billion people with GDP growth estimated at +5.2% per year in 2015 and 2016. Over the years, Egypt has signed several trade agreements that allow access, on preferential terms, to the world’s largest markets and various free trade agreements with over 20 African countries. There are attractive investment opportunities in different sectors: infrastructure, residential housing, tourism, transportation and logistics. The Egyptian Government has defined the medium term development strategy with the primary objective of improve the overall infrastructure and housing quality and encourage growth. More than 60 projects, public and private, will be completed in the next few years: from the announcement of the New Cairo, the new administrative and economic capital, sustainable and ‘smart’, which will cover an area of over 700 km2, will host 5 million residents and will cost 43 billion euros, to the 1.15 million new housing units that will be built in five years and the big luxury malls and new resorts on the Red Sea.

• Concrete Equipment • Quarrying Equipment • Vehicles

Projex Africa is the show for you: • Green & Smart Buildings • Building Structure • Building Materials and Components • Building Systems & Technologies • Indoor Fitting • Outdoor Fitting • IT- Professional and Consulting Services - Institutions - Press For more info on MS Marmomacc + Samoter Africa & Middle East and Projex Africa, please contact us: Veronafiere International Department vfi@veronafiere.it | +39 045 829 8800/8428/8807

June 2015

INFRASTRUCTURE MIDDLE EAST

COVER STORY

PANEL 1

Energy efficiency in retail industry Energy is a key cost driver in the retail sector Panelists

MODERATOR Pontus Grimberg International Sales Director FRICO AB

Raied Al Bitar Senior ManagerMechanical Meraas Holding

Francisco Silvero Marques Business Development & Marketing Director MAF Dalkia Middle East

Tharun Thomas Technical Director Clean Energy Business Council (CEBC)

Dr Pablo Izquierdo Associate - Sustainability & Energy WSP | Parsons Brinckerhoff

Tharun Thomas [MODERATOR]: Hassan, could you give us an overview of energy consumption patterns in the retail sector? Hassan Younes: When it comes to energy use intensity (EUI), measured in kWh/sqm/ year, malls in the UAE are in the top bracket. The biggest electricity consumers are the chillers, followed by lighting, fans (due to huge amounts of air being distributed to cool down the space) and refrigeration. Within malls, Food and Beverage (F&B) areas are among the biggest consumers because of the huge amount of fresh air required. The opportunity of having recovery is diminished because of

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June 2015

the exhaust. That’s where you need a lot of fresh air to be treated and sent to the units. Tharun: Raeid, from a design standpoint, is there a separate design in place for F&B or retail or is it a general shell and scheme structure? Raied Al Bitar: As Hassan pointed out, for F&B areas, you need massive amounts of fresh air and also exhaust for the kitchen area. The main concern we face, from a developer standpoint, is the need for a design which accommodates the requirements of all types of retail – normal retail, department stores, and light or full menu F&Bs. We need a

Hassan Younes Technical Director Griffin Consultants

flexible design to cater to all of the demand redundancies coming from the customers. We don’t have a fixed leasing plan – some customers will ask to amalgamate or de-amalgamate units or change the retail from designer retail to F&Bs. Therefore, to accommodate these requirements, it is important to have a strong and flexible design in terms of chilled water, fans, and even non-HVAC requirements like cooking gas for the F&B outlets. At the same time, it is important to avoid over-design. The main stakeholders when it comes to design would be the developer, the suppliers, the contractor, the consultant, and even

COVER STORY

the fit-out contractors and consultants because we hand over as shell and core. Tharun: Francisco, your point of engagement begins after the handover. How do you approach the challenge of energy efficiency? Francisco Silvero Marques: The major challenge in the retail industry revolves around the stakeholders. The major stakeholders in the life of the building are the owner, tenant, facility manager and end-user; everything that you will manage needs to take these four into account. If you are doing a mall retrofit, a very important thing in terms of responsibility and cost/benefit is: who will benefit from the retrofit, and who should pay for that? There are short-term benefits in terms of reducing the energy bill and long-term benefits in increasing the asset value, so how exactly do you share the costs and benefits? The answer to all of that is information, to not only understand the energy consumption of the building but also what it is related to in the common areas and private areas, what can be done to improve that, follow what’s been done and the results thereof. All that information and also transparency in the way you deliver the figures is the key rather than just technologies. You can replace the lighting or the chillers - there are lots of innovations for making chillers more efficient, distribution more efficient - but the first step is being able to measure and communicate those measurements. This provides the framework to do everything else. Tharun: We have seen scenarios where the owner knows he has a consumption issue but is unable to pinpoint the cause. Pablo, could you share your experiences in Spain implementing sub-metering systems and control systems? Pablo Izquierdo: A monitoring system is definitely needed because that’s the only way the users will be responsible for checking how much they are consuming and pay for it. In a mall we were monitoring in Spain, we managed to reduce the energy consumption by 5% purely by monitoring without changing anything. Furthermore, monitoring gives you a starting point with regard to reducing energy consumption because you know what is happening on a daily basis, for example, if someone is leaving lights on or setting

thermostats wrongly. There should be an overlap between design, construction and operation stakeholders to ensure actual sustainable operation of the asset. This overlap allows everyone to understand what is going to happen in the daily operation of the building. Tharun: A few years back implementing energy efficiency for existing or even new buildings wasn’t easy. Today, though, you have technologies like remote monitoring, upgrading Building Management System (BMS), LED lights…. Pablo: Yes, all these technologies and systems allow you to check what is actually going on and target the highest energy consumption. LED lighting, for example, is very important for retail, particularly for tenants as they want to maintain a uniform image throughout all their outlets. It is very difficult to change some of the standard lighting systems they have because they want very specific colour-index or colour-temperature. But nowadays, LED lighting gives you the same characteristics as traditional lighting systems and allows you to maintain the corporate image at half the energy costs. A BMS can only give you information about how you are running the building; it doesn’t allow you to overlap what was happening last week with this week after switching to LED lights, for example. It is very difficult to measure how much energy you are saving if you don’t have a decent monitoring tool, which gives you all that information and let stakeholders know about the payback. Tharun: Dubai’s Green Building regulations stipulate that, for all new air conditioned buildings, other than villas, regularly used air conditioned entrance lobbies must be protected by a door design, which acts as a barrier to the loss of conditioned air. Pontus, could you elaborate on energy saving opportunities utilising air curtains? Pontus Grimberg: Yes, Dubai’s green building regulations require the installation of a solution in new buildings that stops air-conditioned air leaving the building. Research and field tests have shown that usage of air curtains blocks the loss of air-conditioned air by up to 75-80%. Pablo was talking about moving away from control into monitoring – that’s

where we can show our benefit, to show a building before and after having air curtains. Tharun: Due to these regulations, energy saving solutions like air curtains can be incorporated at the early stage of design. Hassan, is there a requirement coming in from retailers for green certifications like LEED as part of their CSR activity? Hassan: I feel that without regulation nothing will move. The good news is that the Regulatory & Supervisory Bureau (RSB) in Dubai is planning to roll out a regulation, hopefully by the end of this year, wherein every building in Dubai has to undergo an energy audit. RSB will also accredit the auditors for the same. The first set of buildings they are targeting is any building above 2.4m kWh/year. When it comes to BMS, there are hardly five or more working BMS in Dubai. You go into the building with a very expensive BMS and you find that sensors aren’t working, their locations are wrong and the people running the BMS don’t understand the system or the processes. Relying too much on technology without all the stakeholders on board is a waste of time and money. One of the things we try to do is reduce the need for the load – using air curtains if there is a door, for example. This reduces the dependence on technology in terms of high-sensitive controls or expensive controls. Malls often have to meet the demands made by retailers to keep their business. So if a retailer asks for 1MW, the same has to be provided. As a result, malls end up with oversized systems. While district cooling has huge energy savings potential, everybody is paying too much due to the high capacity charge, mainly due to over design on the part of consultants. Though you are saving energy through district cooling, you end up paying lot of money, which has made everyone sceptical about the solution. RSB is coming up with new regulation for district cooling to regulate prices, regulate kW/tonne for the plant. I believe regulation will be the main contributor to energy efficiency in the coming five years. Francisco: I fully agree that regulation is needed; another leverage, especially in the private sector, is voluntary programmes. Regulations give the framework so that everybody is talking about the same thing. I believe that just the idea of having buildings June 2015

INFRASTRUCTURE MIDDLE EAST

COVER STORY

audited will launch voluntarily from the private sector even before the need for retrofits come from regulation. In the end, it is important is to have a common framework so that when we say the building is efficient, it actually is efficient. Tharun: When we talk to stakeholders who are paying huge bills to invest in energy efficiency, often they tell us that they don’t have enough people on ground to manage this additional initiative. But facility management (FM) cannot be separated from energy management. Francisco, have you come across such instances? Francisco: I fully agree that energy management cannot be separated from FM. In one of the energy performance contracts priced recently, we estimated the impact on energy savings from a maintenance standpoint at 12-15%. The payback in energy retrofit investments comes from energy savings. That’s why it is very important that savings are guaranteed; otherwise, you won’t have the payback for the investments no matter who invests – the end user, the customer, the ESCO, investment fund or government. It makes sense to correlate the two given that you need to guarantee savings and the fact that maintenance if poorly done, will have a significant impact on savings. But in practice, companies that are keen to implement energy savings programme often have an existing contract for FM or in-house FM teams. So not everyone is willing to go for a full contract where you have both facility management and energy management. The only solution is communication – if you have right sensors, meters and monitor the building every day in real time, analyse where the energy is coming from and going to; if the building is behaving as it should behave, then you are able to do something much tighter, and alert the building owner, operator or facility manager if things are moving out of track. When you commit to energy savings for the whole year, the challenge is how do we translate that dayafter-day? Monitoring tells you what you need to achieve today at this particular time to reach the energy savings goal at the end of the year. Tharun: Malls have strong engineering teams, finance teams, marketing teams but energy management is not a core competency for them. They don’t have a team or division specialising

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June 2015

in that. Perhaps, Raied can elaborate… Raied: All our customers are governed under tenant manuals we issued as a developer. The mall management ensures that these manuals are adhered to. We need to think out of the box, and not blindly oversize our equipment just based on the peak load. Retail design is different from residential or hotels; we have frequent opening of the doors (this panel has discussed air curtains a solution) which is becoming a big concern for us as it is not just infiltration and loss of energy; it is also like a heat exchanger between the outside and the inside. My message to all the stakeholders is that we need to optimise the design instead of blindly designing for the peak load. Tharun: Pontus, what is your involvement with consultants in terms of driving the technology from the design stage? Are you constantly involved in providing these inputs or are you roped in at later stages? Pontus: We believe in working closely with consultants and building owners. Air curtains differ but we need to have a common way of measuring it and that’s where we take help from the consultants to get it measured according to standards. We use Air Movement and Control Association International (AMCA) standards for all of our air curtains. Tharun: Pablo, Is there a separate set of standards and benchmarks when it comes to retail or mall design? Do you have that level of detail or do you go by commercial design? Pablo: It is very difficult to depart from existing standards like ASHRAE, LEED or even local standards. Even if you have energy audit data of one shopping centre, no two shopping

centres are alike. Variations in region and weather apart, you also have different typology – open mall versus closed mall, for example. Having said that, it is also true that standards definitely gives you information; it allows you to size and focus on your design. Here, the peak load is only 3-4 days in a year. When you are having additional capacity for those days, you can size it most for the average load rather than the peak. Tharun: Investing in energy efficiency is also a financial decision; you need stakeholders from finance to say yes, 20% savings will look good in our P&L statements. For stakeholders who don’t have energy management as a core competency but also don’t want to risk their capital, the ESCO model offers a way out. Hassan, how is the private sector looking at ESCO? Hassan: Currently, Etihad ESCO is looking mainly at government buildings. The contracts being signed are based guaranteed savings where the client invests and if the ESCO doesn’t hit the savings, the client can go and encash the bond. Only a few players - ESCOs and banks - are working with Etihad ESCO. We don’t have many ESCOs with the capability of getting those bonds and few banks understand these issues. I think shared savings contract is a good opportunity because the client doesn’t pay anything, the ESCO will come and invest and both will share the savings over a certain period. Etihad ESCO might want to look at this option so that more players can engage in that. There should be a third part overseeing the Measurement and Verification phase, and checking how much savings were done for each Energy Conservation Measures (ECM). Unfortunately, a lot of owners are uninformed about the ESCO model and its benefits, and it takes a lot of time to convince them.

Gallery

June 2015

INFRASTRUCTURE MIDDLE EAST

transportation

RAILWAYS

Dealing with uncertainty

Malcolm Dowden, Consultant, Charles Russell Speechlys spoke to Infrastructure ME on the risks that railway projects in the region should take care to avoid

alcolm Dowden is an environmental and regulatory lawyer with extensive experience of infrastructure projects and a particular focus on rail. He is individually accredited as a provider of legal training to the UK’s Network Rail and has advised and trained government PPP and infrastructure teams on land access and development rights in a range of jurisdictions. Dowden notes that a major risk, which is is true everywhere, including the Gulf is that passenger volumes cannot easily be predicted. Excerpts from the interview

really promising as the design, signalling and other traffic management technology allows the system to grow with demand or with the expansion of residential developments at greater distances from the commercial centre. Longer distance is where freight is the key to economic viability; with freight, it is possible to enter into long term contracts with volume commitments from the freight carriers. In the GCC, you are looking at significant potential benefits particularly when you are looking at cross-border freight.

Given that rail is a brand new infrastructure in the region, what are the risks we should be careful about? The major risk for any long distance rail project is demand risk. In the GCC, uncertainty over the level of demand for passenger rail prompted a move away from the initial idea that development might be carried out on a Public Private Partnership (PPP) basis to a much greater focus on direct government investment. That highlights the major risk, which is that passenger volumes cannot easily be predicted. And this is true everywhere. Because every decision to travel or not, and whether to travel by road or rail, is an individual decision. The market is extremely atomised and dispersed. For passenger rail, you either need to have a very strong economic case, which is difficult in the GCC because people are used to cars and fuel prices are low. Or you need some premium element to it - rail travel as a luxury. Do you think technology can mitigate some of the risks associated with demand uncertainty? I think we need to draw a major distinction between metro and urban transit at one end and longer distance – inter-city or inter-region passenger. The longer distance – inter-city

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June 2015

Malcolm Dowden, Consultant, Charles Russell Speechlys

Is there a cross subsidy element involved? It is very much cross subsidy; if you are looking at a decision whether to invest in a longer distance rail project the economic and business cases depend very strongly on there being a guaranteed volume of freight. That’s where you can secure the revenue streams over 15-20 years, required as a payback. Then of course, you have the challenge of coexistence between passenger and freight services on the same lines. Successful co-existence depends on efficient time-tables and signalling. A key decision is which, out of freight or passenger services, should get priority? If your objective is to attract premium segment passenger traffic, then the system needs to be set up so that passenger services have priority during the hours when they are most likely to be attractive. That’s quite a logistical challenge.

or inter-regional cross-border passenger volumes are extremely difficult to predict. But this is easier in an urban context because you can model quite closely, for example, to the number of commuter journeys; you can, as in London, make travel a more productive experience by having, for example, Wi-Fi coverage within carriages. For people who have to travel to work across the city, modular metro systems are

Is rail on a resurgence as a sustainable mode of transport? After the disappointment of Copenhagen in 2009, there is a fairly strong expectation that there will be some kind of legally binding agreement to manage and reduce GHG. In that context, rail is being looked at very closely as a way of helping any government to sign up and ratify that agreement to meet any targets that they sign up to for GHG reduction.

“In the GCC, uncertainty over the level of demand for passenger rail prompted a move away from the initial idea that development might be carried out on a Public Private Partnership (PPP) basis to a much greater focus on direct government investment”

EXECUTIVE INSIGHT

Mohamed Alammawi

“The limiting factor for thin-film solar technology had been efficiency grade”

Shifting economics of solar Mohamed Alammawi, Vice-President of Sales, MENA, Manz AG, outlines the technological developments driving the competitiveness of solar power nsuring the cost competitiveness of solar energy entails selecting the right technology, or in this case, the composition. In contrast to traditional crystalline solar technology, in thin-film solar technology, the semiconductor is deposited on a glass substrate. This technology is named for the fact that the conductive layer is about 90 times thinner than in crystalline technology. Simply put, thin-film photovoltaic cells can convert sunlight into electricity with much less material than conventional crystalline silicon solar cells, resulting in a potential for lower material cost. Additional advantages of thin-film PV modules include possible improvements in production yields and field performance. Conventionally, the limiting factor for thinfilm solar technology has been efficiency grade when compared to crystalline solar technology, but advancements in manufacturing processes are now nudging this gap shut. Specifically, the efficiency of thin-film modules when mass-produced is at a level comparable to that of multicrystalline solar cells; the Centre for Solar Energy and Hydrogen Research

Baden-Wuerttemberg (ZSW), secured the world record in efficiency grade for thin-film solar technology – an unprecedented 21.7% – and the goal with thin-film technology is to transfer lab efficiencies to mass production. Integrating PV into buildings Building-integrated photovoltaics (BIPV) incorporate photovoltaics as an integral building component, such as part of the roof or the façade of the building. Today, a BIPV project can be a synergy of architectural design and functional properties. And although solar modules are preferably installed on roof surfaces due to good irradiation values, façade surfaces have enormous potential. The big advancements in the BIPV industry have been powered by thinner cells, lighter modules and the ability to incorporate hard surfaces into standard-sized external building components such as roof tiles, cladding, curtain walls, windows, skylights, breezeways and so on. Another contributing factor is the ability to incorporate individual designs into the module by the printing preferred patterns such as arabesque. A recent study in the Middle East found that governments and builders might consider

the expense of BIPV because in hot, sunny regions like the UAE, this technology can slash energy costs by as much as 33%. Meanwhile, the development of technologies to store electricity – in particular, batteries – has also furthered solar power’s development. Without storage, solar power can be harnessed only when the sun is shining; with storage, it can be used at any given time. The costs of battery storage have declined by about 70% over the last five years, and are projected to decline another 70% in the coming decade. So there you have it - while coal, natural gas and nuclear power, which today supply approximately two-thirds of global power, are not about to fade away overnight, technological jumps, widespread adoption and robust projected growth rates in the solar sector have, in spite of modest rates of market penetration, brought about a marked shift in the economics of electricity. It wouldn’t be surprising if future housing developments, office buildings and public spaces such as shopping complexes, especially in the sunshine belt of the Middle East, were built incorporated with solar modules – the onset of the solar power age is definitely gathering momentum. June 2015

INFRASTRUCTURE MIDDLE EAST

EVENTS

2015 IDA World Congress San Diego to host the biggest gathering of global desalination industry he highly anticipated 2015 IDA World Congress will take place August 30-September 4 in San Diego, California, USA. The theme for this year’s World Congress is Renewable Water Resources to Meet Global Needs, reflecting the discussions already taking place around the world surrounding the growing demand for a sustainable source of fresh water in response to population growth, economic expansion, degradation of existing resources and the effects of climate change. Held every two years, the IDA World Congress features a comprehensive four-day Technical Programme, industryleading Exhibition, exclusive plant tours and extensive networking opportunities throughout World Congress week. Organisers expect that this year’s World Congress – widely considered the preeminent event for the global desalination and water reuse industry – will attract approximately 1,500 delegates from around the world and from both the public and private sectors.

Technical Programme The Technical Programme brings together leading experts from government, academia, and industry to share valuable knowledge, experiences and views; and provide unparalleled opportunities for cross-collaboration between these sectors to resolve the challenges of desalination and advance its adoption around the world. With 404 extended abstracts accepted for paper or poster presentation, this year’s Technical Programme will be the largest and most comprehensive ever. The Technical

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June 2015

Programme includes four days of technical sessions, lectures, roundtable and panel discussions. The sessions cover: • Brackish Water Desalination • Seawater Desalination • Pre- and Post-treatment • Water Reuse and Disinfection • Thermal Desalination • Industrial Water and Wastewater Treatment • Plant Operations and Optimisation • Environment and Sustainability • Emerging Technologies • Governance: Finance and Project Delivery New for this year is a series of 10 open forum panel discussions, designed to generate engagement not only among the moderators and panellists but also with the audience members. Topics include A Regulator’s View of the Water Energy Food Linkage moderated by Nick Carter, Managing Partner of Hydrocity LLP, formerly Director General of the Abu Dhabi Regulation Bureau; Energy: Desal’s Critical Partner: Is Net Carbon Neutrality a Reasonable Goal? moderated by Paddy

Padmanathan, President & CEO, ACWA Power International; Current Challenges and Future Needs for Desalination and Water Reuse in Industrial Applications moderated by Christopher Gasson, Publisher, Global Water Intelligence; and Innovation and Collaboration and How it Works moderated by Dr. In S. Kim, Professor & Director, Gwanqui Institute of Science and Technology (GIST) Exhibition The World Congress Exhibition spans more than 10,000 sqm and will feature more than 90 exhibitors from around the world. A new initiative for 2015 is the Innovation Theatre. Located within the Exhibition, the Theatre features presentations highlighting innovative products and services and offers an opportunity to meet with many pioneers in the field of desalination and reuse. This year, IDA will offer a special Exhibitiononly day pass for individuals for individuals who want only to meet with the exhibitors. Networking Events The IDA World Congress is known for its unparalleled opportunities to exchange ideas, establish new relationships, and reinforce business-building connections. Delegates are invited to attend a special sponsored event, ‘A Celebration of California’ at the world-famous Birch Aquarium at the Scripps Institution of Oceanography. Plant Tours Delegates are invited to exclusive plant tours of the Carlsbad Desalination Plant, the largest in North America, and the Orange County Groundwater Replenishment System, the world’s largest water purification system for direct potable reuse.

What: 2015 IDA World Congress When: August 30-September 4 Where: San Diego Convention Centre, San Diego, California, USA How to Register: Visit http://wc.idadesal.org/registration/ to register. The early registration discount applies through July 1, and discounted registration fees are available to IDA members. Details about the IDA World Congress are available in the Second Announcement, which can be downloaded from the World Congress website at http://wc.idadesal.org/

events

COMING SOON

POWER-GEN Middle East 4-6 OCTOBER 2015, Abu Dhabi he 13th annual POWER-GEN Middle East Conference and Exhibition is set to take place at the Abu Dhabi National Exhibition Centre (ADNEC) alongside WaterWorld Middle East. HE Suhail Mohamed Al Mazrouei, Minister of Energy of the UAE will formally launch the conference and exhibition with an official ribbon cutting ceremony and keynote address on the opening day. Other participating exhibitors include METKA, AE Power International, Turbomach, AAF International, Masaood John Brown, Siemens, GEA Middle East, Wartsila, AMEC Foster Wheeler, Mitsubishi Hitachi, Ansaldo Energia, Durag Group, Quartzelec and PW Power Systems. The strategic conference tracks include market structure & regulation; strategic planning; market trends; project issues and renewable energy while the technical tracks include tackling fossil

Mark your diary... power-gen africa & distributech africa

fired technology; renewable energy technology; nuclear power and operation & maintenance. Event Director Nigel Blackaby said: “The sessions will be headlined by powerful list of speakers, each a thought-leader in his own right. Such conversation is the need of the hour as electricity demand is expected to surge, resulting in a 45-50% increase in power generation capacity over the period 2015 – 2020, requiring investments in the Middle East & North Africa (MENA) region to the tune of over $200bn.”

15 – 17 july, 2015 cape town The 3rd annual POWERGEN Africa and 2nd annual DistribuTECH Africa conference & exhibition returns to Cape Town. Contact: Sue McDermott Tel: +44 992 656 632 Email: suemc@pennwell.com www.powergenafrica.com 2015 IDA World Congress August 30-Sept 4, 2015 SAN DIEGO Held every two years, the IDA World Congress features a

Contact: Sue McDermott Tel: +44 992 656 632 Email: suemc@pennwell.com www.power-gen-middleeast.com

comprehensive four-day Technical Programme, industry-leading Exhibition, exclusive plant tours and extensive networking opportunities throughout

PROPERTY TIMES Real Estate Awards 2015, Dubai he first edition of Property Times People’s Choice Real Estate Awards 2015 was held on May 12, 2015 at The Address Dubai Marina. The first edition featured 32 leading real estate brokerage companies in eight categories The winners were chosen by buyers, investors, sellers and renters through an online voting platform on www. propertyonline.ae over a period of 40 days. The entire process was monitored by highlevel Advisory Panel comprising Ali Al Suwaidi, MEFMA Board Member; Jeevan D’Mello, Senior Director, Emaar Community Management;

Dr. Georges Maurice, trainer at Dubai Real Estate Institute; Ahmet Kayhan, CEO, REIDIN. com and Ben Churchill, CEO, Urbanise. The award ceremony was attended by more than 375 people including top officials from Dubai Land Department, Ajman Real Estate Regulatory Agency, diplomats, developers and real estate agency owners. Binesh Panicker, Editor in Chief and Co Founder of Property Times and Propertyonline. ae said the purpose of the awards is to give a chance to end users to voice their opinion. Jatin Deepchandani, Business Head, Property Times and Propertyonline.ae, said that next on the agenda is ‘Property Times People’s Choice Real Estate Developers Awards.’

June 2015

World Congress week. Contact: Michele Pszenny Tel: +1-978-887-0410 Email: info@idadesal.org wc.idadesal.org MENA Rail and Metro Summit 2015 5 – 7 october, 2015 DUBAI The 11th edition of the summit will have a focused agenda exploring key themes and issues regarding projected rail plans in the region. Contact: MEED events Tel: +971 4 818 0217 Email: meedevents@meed.com www.meedrailprojects.com

INFRASTRUCTURE MIDDLE EAST

Infrastructure Milestones

#016 Largest engine power plant Internal combustion engines have staked their claim in the region’s utility power generation market, with tri-fuel capability to boot power generation technology that had been pushed to the corners by the onslaught of gas turbines has made a smart comeback. On 29th April, IPP3, the world’s largest internal combustion engine (ICE) power plant was inaugurated in Jordan. Owned by AAEPC (Amman Asia Electric Power Company), the plant is powered by 38 Wärtsilä 50DF multi-fuel engines with a combined capacity of 573 MW. In recognition of its world record size, the plant has been accepted into the Guinness book of records. The project’s engineering, procurement and construction (EPC) consortium was led by Wärtsilä. IPP3 will be used for covering the sharp daily peaks of electricity demand in Jordan. The plant can

INFRASTRUCTURE MIDDLE EAST

follow the demand very precisely, kickstarting one engine at a time. IPP3 and its sister plant, the 250 MW IPP4, have been in commercial operation since late 2014. According to data provided by the Jordanian grid operator NEPCO, their impact on the Jordanian power grid has been positive. Since the two engine plants have covered most of the peak demand, large gas turbine power plants in the grid have been released from this task. As a result, turbines now produce steady baseload, operating much more efficiently. This leads to significant savings in fuel, energy costs and CO2 emissions. With Jordan expected to install 600 MW of solar and 1,200 MW of wind energy by 2020, IPP3’s fast-reacting back-up capacity is expected to play an important role in balancing variable renewable power. Apart from operational flexibility, IPP3 also provides fuel flexibility. The

June 2015

Fast facts Inauguration of the plant: April 29, 2015 Generation capacity: 573 MW Fuel flexibility: HFO, LFO and Natural Gas Owner: Amman Asia Electric Power Company EPC contractor: Wärtsilä

tri-fuel plant can run on heavy fuel oil (HFO), light fuel oil (LFO) and natural gas. Currently HFO is used due to shortage of natural gas. The plant will start to use LNG-based natural gas later this year, as soon as it becomes available. According to Taylor Embury of Navigant Research, the plant is important because ‘before IPP3, Jordan’s utility professionals had never contemplated the installation of a reciprocating engine plant, preferring to generate baseload power through combined-cycle gas turbine (CCGT) facilities, which have peak efficiencies of 55% to 60%. It’s also important because many utility professionals around the world, not just in Jordan, are looking for a solution that is reliable, offers fuel and operational flexibility, is quickstarting and efficient across a wide range of loads, and consumes less water and produces fewer emissions.’

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June 2015

INFRASTRUCTURE MIDDLE EAST