Infrastructure ME January 2016 by Infrastructure ME

ISSUE 022 | JANUARY 2016

THE INSIGHTS ISSUE

ANSWERS ABOUT

INFRASTRUCTURE

PLUS TOP 10 UAE INFR A S T RUC T URE PROJEC T S

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INTRODUCTION

Sustainable urban transport 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 4 375 6842 Director of Advertising & Sales James Thorburn Direct: +971 4 440 9111 Email: james.thorburn@cpimediagroup.com Commercial Manager Tom Dennison tom.dennison@cpimediagroup.com +971 4 440 9104 DESIGN DESIGNER ULYSSES GALGO CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH NAIR rajeesh.nair@cpimediagroup.com +971 4 375 5682 Production Manager JAMES THARIAN

his year’s edition of World Future Energy Summit (WFES) will feature, for the first time, a zone dedicated to Sustainable Transport. With the global urban population set to reach 6.4bn by 2050, radical new transportation solutions are needed to avoid ever greater fossil fuel consumption, congestion and pollution. The transport sector accounts for about 60% of global oil consumption, 27% of all energy use, and 23% of world energy-related CO2 emissions. The COP 21 agreement reached last month aims to keep global temperature rise this century well below 2°C, and limit the temperature increase to below 1.5°C from preindustrial levels. However, steps in this direction will surely fall short if countries fail to include the transport sector. With cities accounting for three-quarters of the greenhouse gas (GHG) emissions, improving urban transport and mobility through innovative public transportation systems, and efficient traffic management systems can yield tremendous environmental, social and economic benefits. The Joint Statement by the Multilateral Development Banks on Sustainable Transport and Climate Change emphasises ‘the need to integrate climate change considerations into transport planning, design and investment, and support action that embraces climate mitigation and adaptation with both public and private sector across all transport modes.’ Bus and metro systems in cities, pedestrian and cycle pathways, and long distance railways can help reduce emissions and congestion. In other words, public transport needs to be at the “heart of the fight against climate change.” Countries at COP 21 have recognised the International Association of Public Transport’s (UITP) Declaration on Climate Leadership, viewing it as an essential part in the rapid implementation of the Paris Agreement. The Declaration supports UITP’s goal of doubling the modal share of public transport by 2025. To quote Philip Turner, Sustainable Development Manager at UITP: “Given that cities are fundamental in meeting sustainable development goals, public transport’s role in driving low-carbon, resilient growth it must be at the forefront of any sustainable urban mobility policy.”

james.tharian@cpimediagroup.com +971 4 375 5673

Published by

Anoop K Menon Editor Infrastructure Middle East anoop.menon@cpimediagroup.com

While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

January 2016

INFRASTRUCTURE MIDDLE EAST 01

CONTENTS

022 January 2016 32 26

cover story

REGULARS

The Insights Issue

05 Regional update

50 answers about infrastructure

10 Sector update 12 Global update 23 Infrastructure tenders

top 10 feature

56 Event Report

UAE Infrastructure Projects

Despite the ongoing decline in oil prices, the UAE government remains committed to infrastructure development and economic diversification

The 2015 ‘Be Inspired’ awards

58 Infra People

59 Events 60 Infrastructure Milestones

This month: The Middle

East’s largest wind farm

INdustry sectors

CONSTRUCTION

THE ENERGY REPORT

THE ENERGY REPORT (cONTD..)

30 Early on board

14 Spotlight on renewables

18 ‘Well-positioned for

The FM industry can help governments gain maximum value from their assets By Alan Millin

Renewable energy and energy efficiency offer a realistic path to keep global temperature rise below 2°C

sustained growth’ Luc Grare, Senior Vice President, Sales and Marketing, REC shares his solar market perspectives

utilities

52 ‘District Cooling is a

16 A steady road to paris

challenging market’

The UAE is smoothly managing the transition to a greener future By Frank Duggan

Kamal Pharran, CEO of Saudi Tabreed on the future of district cooling in the Kingdom OIL AnD gas

17 UAE’s leadership in

Africa’s soaring energy demand creates oil storage opportunities for ME investors By Thangapanidan Srinivasalu

INFRASTRUCTURE MIDDLE EAST

The challenges involved in rolling out energy pricing reforms in the GCC

executive insight

54 Storage prospects

20 The long road

future energy

12 examples of how UAE is at the forefront of bringing clean energy to the region

January 2016

55 Low-carbon transition Patrice Caine, Thales Chairman and CEO shares his company’s strategy on fighting climate change

Presents

THE ANNUAL

MIDDLE EAST PPP CONFERENCE Spotlighting vital aspects of public-private partnerships

22 MARCH 2016 | DUBAI, UAE

MEDIA PARTNERS

For Sponsorship Opportunities Contact: Jude Slann Commercial Director +971 50 456 3924 jude.slann@cpimediagroup.com

For Speaking Opportunities Contact: Anoop Menon Editor +971 50 281 6075 anoop.menon@cpimediagroup.com

ONLINE JANUARY 2016

L A U N C H PA R T N E R

CONSTRUCTION MACHINERY ME’S HOME ON THE WEB MOST POPULAR

EDITOR'S CHOICE

READERS' COMMENTS

Saudi Binladin Group

Damac removes Trump

“It was interesting to read about yet more allegations of labour exploitation in Qatar (“Qatar labour abuses still ‘rampant’ – Amnesty”, December 2). Amnesty International says there are still “appalling conditions faced by most migrant construction workers” in the country. Whatever the truth, what is clear is that Qatar needs to step up its reforms to the kafala sponsorship system if it is to avoid future allegations like this in 2016”

name from Dubai golf site

Comment to story “Qatar labour

to lay off 15,000

workers – Reuters Possible layoffs come amid uncertainty caused by oil price slump

ME Consultant Awards: Winners announced

More than 200 guests attended event at Jumeirah

PHOTO GALLERIES

IN PICTURES: BIG PROJECT ME AWARDS WINNERS ALEC’s Kez Taylor and Brookfield Multiplex were among the big winners. See photo galleries at: meconstructionnews.com/photos

Emirates Towers Hotel

Move apparently prompted

abuses still ‘rampant’ – Amnesty”

by presidential candidate’s anti-Muslim remarks

READER POLL

What was the mood like at The Big 5 construction show in Dubai?

Gulf construction in 2016: Experts give their outlook

29% 13%

Industry looks to year ahead after “interesting and challenging” 2015

”Dramatic” decline in GCC construction optimism

VIDEO

18-TONNE VOLVO TRUCK... DRIVEN BY A FOUR-YEAR-OLD

more disputes than expected

Four-year-old Sophie drives an 18t Volvo FMX – with the help of a remote control.

this year, survey finds

See videos at: meconstructionnews.com/videos

Longer payment periods and

Upbeat: Lots of deals on the table

No change: About the same as last year

16%

42%

Good: Business was brisk

Slow: There’s a gloomy outlook for 2016

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

Regional UPDATE

UAE Dubai has approved a zerodeficit budget of $12.6bn for 2016 with a major chunk of expenditure on social development and infrastructure. Spending will include 36% for wages, while general administrative expenses, capital expenditures and grants and subsidies account for 45%. As much as 14% is allocated for infrastructure projects. On the income side, fees for government services are projected to make up 74%, taxes 19%, oil six per cent and enterprise profits one per cent. The budget has allocated five percent of expenditures towards servicing government debt, signalling government commitment to meet obligations.

Top rank According to the WTO, the UAE ranks 16th among global exporters

Expo 2020 Dubai has awarded 72 new tenders through its dedicated online eSourcing portal to local, regional and international companies as work steps up on the global mega-event, reported Khaleej Times. â&#x20AC;&#x153;As we move into 2016, the scale and pace of the project will increase We are committed

to transparent procurement and a totally even playing field. Tenders are published online via our eSourcing portal. We want to select the best suppliers to work with - of any scale. Individuals and firms of all sizes, local or international, can register and bid for opportunities,â&#x20AC;? said Manal AlBayat, vice president for engagement at Expo.

The Ministry of Economy has announced that the UAE managed to achieve top ranks in international trade statistics 2015, reported WAM. Quoting a World Trade Organisation (WTO) study, the ministry said the UAE maintained its top ranks on the world trade map and came 16th globally in commodity exports, and 20th globally in commodity imports. The exports were valued at $360bn while the imports were valued at $262bn. In the area of service trade, the UAE ranked 19th globally as service importer, and 42nd globally in service exports. Dubaiâ&#x20AC;&#x2122;s service exports touched $20bn in 2014. The ministry said that the value of the UAE nonoil foreign trade is expected to reach $476.4bn in 2015, a growth of up to 10%.

regional UPDATE

Oman Oman’s State’s Council approved an Income Tax Law, Insurance Companies Law and Foreign Capital Investment Law, reported Gulf News. The Economic Committee at the State’s Council has decided to levy a 15% tax on all the corporates annual income without any exception or discrimination. Previously, Oman’s corporate tax rate stood at 12% but only applied to businesses earning over 30,000 Omani Rials. The proposal will be forwarded to the Cabinet for approval. The Omani government makes only $31.21m on taxes annually, and critics have said that figure is a pittance and not reflective of the large profits made by companies.

Spot on Oman is inching towards setting up a spot market for electricity trading

The Sultanate’s 9th Five Year Plan (FYP), covering the 2016-2020 timeframe, is based on an average oil price that ranges from $45 per barrel in 2016 to $60 in 2020, reported Oman Daily Observer. The report, quoting KPMG analysis, said starting from $45/ barrel in 2016, the 9th Plan envisions an increase in the

average oil price per barrel to $55/barrel for the years 2017 and 2018, spiking to $60 for the year 2019 and 2020. This compares with a corresponding price band ranging from $58 to $60 during the previous plan. The 9th Plan also sets aside proceeds from the sale of 15,000 bpd to be transferred to the Oil Reserve Fund from the second year.

Saudi Arabia Saudi Arabia’s civil aviation authority will privatise Jeddah and Dammam airports in 2017. The General Authority for Civil Aviation (GACA) said the privatisation initiative will be launched in the first quarter of 2016 with the privatisation of Riyadh’s main international airport. King Abdulaziz International Airport in Jeddah will be privatised in the second quarter of 2017 as the Kingdom seeks ways to support state finances following the sustained slump in oil prices. Dammam’s King Fahd International Airport will follow in the third quarter. All privatised airports and services would be supervised and managed by the Saudi Civil Aviation Company Holding.

INFRASTRUCTURE MIDDLE EAST

IPO of the century? Saudi Arabia has proposed selling shares in Saudi Aramco

Saudi Arabia is considering an Initial Public Offering (IPO) of Saudi Aramco, The Economist has reported. Muhammad bin Salman, the kingdom’s deputy crown prince and power behind the throne of his father, King Salman, told The Economist that a decision will be taken in the next few months. Saudi Aramco produces more than 10% of the world’s oil supply January 2016

every day, and owns a huge chain of downstream refining and petrochemical assets. According to the Wall Street Journal, taken together, the business could be valued at more than $10tn by some estimates. Saudi Aramco has already held an IPO for one of its domestic downstream facilities - the Rabigh Refining and Petrochemical Company.

Engineering consultancy Poyry and law firm Dentons have been appointed to provide advisory services to the Oman Power and Water Procurement Company (OPWP) for the proposed spot market system for electricity trading, reported Times of Oman. When operational over the 2019-2020 timeframe, Oman is set to become the first country in the region to have a fully functional spot market for electricity, heralding a new era that opens the electricity sector to competition, as well as cross-border energy trading. According to OPWP, the spot market will provide an alternative route for producers to sell power to the state-owned company outside of a standard Power Purchase Agreement (PPA).

Investors wanting to take out insurance on Saudi Arabia’s debt have to pay as much as they would for Portugal, a nation still saddled with a junk credit-rating five years after an international bailout, reported Bloomberg. The cost of insuring the kingdom’s debt more than doubled in the past 12 months to 190 basis points, the highest since April 2009, according to CMA prices compiled by Bloomberg. That’s six basis points more than contracts linked to debt from Portugal, whose rating is seven levels below Saudi Arabia’s Aa3 investment grade at Moody’s Investors Service. The Kingdom, which counts on energy exports for 70% of government revenue, sold bonds for the first time since 2007 last year to help fund a budget deficit that may have been the widest since 1991.

Regional UPDATE

Kuwait The interim public finance figures for the first eight months of FY 2015/16 point to a decline in government spending, as the price of oil fell to a seven-year low, said a report by National Bank of Kuwait (NBK). However, despite the decline in overall spending, salaries and capital spending still rose. The latter continued to reflect an accelerated pace of project execution. NBK estimates that FY2015/16 will close with a deficit of $12.8bn or 9.8% of GDP. As of November 2015, reported government spending stood at KD6.6 billion fiscal-year-to-date. At 35% of the FY15/16 budget, the spending rate is slightly lower than the fiveyear November average of 37%.

Asset shedding KIA is looking to sell assets in order to cover state budget deficits

Kuwait is set to follow the UAE, Oman, Saudi Arabia and Bahrain in hiking the price of petrol and some other services, reported Kuwait Times. The ministry of finance has started posting messages on its Twitter account to explain that the goal of any financial measure is to ensure the durability and

KDI 3404

UNIQUE, BUT NOT FOR A UNIQUE REASON

www.LOMBARDINI.IT

sustainability of “honourable living” standards for the people. The government plans to re-direct subsidies to ensure that they reach people who need it,” the ministry said in a tweet. Kuwaiti lawmakers have however warned the government against steps that will overburden citizens.

Kuwait’s sovereign wealth fund is delaying the sale of its holding in Kuwait Investment company (KIC) through an initial public offering due to market conditions, reported Reuters. The Kuwait Investment Authority (KIA), the region’s oldest state fund with an estimated $500bn in assets, owns 76% of KIC. In October 2015, Kuwait’s al-Anba newspaper had reported that KIA was studying whether to liquidate assets to cover a state budget deficit caused by low oil prices. More recently, Kuwait Times reported that KIA has decided to sell its share in Kuwait Public Transportation Company (KPTC), the Touristic Enterprises Company (TEC), Kuwait Clearing Company and Kuwait Livestock Trading and Transport Company (KLTT).

obituary

Infectious energy Dominic De Sousa (1959 - 2015)

n December 2015, with the passing away of Dominic De Sousa, the GCC region’s media landscape lost one of its leading lights. Dom, as he was affectionately known in media circles, was the Founder and Chairman of CPI Media Group. the publishers of Infrastructure Middle East magazine, and a partner in CPI Industry, the publishers of Climate Control Middle East. He died doing what he loved most – singing on stage, with the spotlights of Zabeel Saray at the Palm Jumeirah, in Dubai, UAE, solely focused on him. It was typical Dom – he loved the lights and thrived in situations that called for a star performer to hold the attention of a hard-nosed audience. The image of the man as a performer is compelling. Many of you, who have attended the Climate Control Awards in the past few years, will also remember him as an artiste with a penchant for vintage music, be it the nuanced, sonorous notes of Frank Sinatra or the cool baritone of Neil Diamond. But Dom was much more than that. Many, many years ago, weary and wary of the straightjacketed approach to publishing, he carved a model out of the established norms of print journalism in his inimitable style and spent almost a professional lifetime burnishing it. His was a unique touch to a free market enterprise that allowed all the parts of the sum – the team leaders he fostered

INFRASTRUCTURE MIDDLE EAST

January 2016

and empowered -- to be nimble and responsive to changing circumstances. He had neither the time nor the patience for dispiriting bureaucratic shackles and hoary traditions, if they did not serve the purpose of progress. He scythed his way through pussyfooting corporate codswallop, always eager to get to the point, and perpetually persuading, cajoling and goading his team to be decisive and to act with clarity of thought. At CPI Industry, this approach and outlook helped us through the worst of the economic crisis years, post-Lehmann. It was not easy, as many of you in your respective fields would probably agree, but we were able to rise to the challenge on the back of his unfaltering optimism, for the man who crooned on stage and almost always sported a becalming smile, was made of steel. There is no doubt we will miss Dom’s benevolent presence but are determined to hold on to his memory by perpetuating his approach “from here to eternity”. He built an empire of goodwill and enterprise with his infectious energy and, for that, his story needs to be told for long. Goodbye, Destiny’s Child! Rest in peace and everlasting happiness! By B Surendar, Editorial Director & Associate Publisher, CPI Industry

obituary

Multifaceted artiste John Magno (1989 - 2015)

ust a short time after the death on stage of Dominic De Sousa, Founder and Chairman of the Dubai-based publishing company, CPI Media Group, and just a few days before Christmas, one of the younger members of the firm’s Graphic Design team was killed in a tragic accident. John ‘Joms’ Magno died whilst long-boarding, an activity he had taken up after being a passionate skateboarder. Hailing from Nueva Ecija in the Philippines, Joms was a talented musician, playing bass in a band called 'Up the Ante', in Dubai. In the Philippines, Joms was the drummer of Amerie and guitarist of Avian Limit. His love of music came from his father, who was a keen non-professional player.

His favourite style of music was djent, a version of heavy metal music, which developed as a spinoff of traditional progressive metal. A music colleague recalled that he could play anything and was a master arranger of songs – “a real musician”. In addition to extreme sports, Joms showed talent and enthusiasm for photography and gaming. By Dave Reeder, Editor, Pro Chef Middle East (a CPI Media Group publication)

January 2016

INFRASTRUCTURE MIDDLE EAST 9

Sector UPDATE

Utilities KUBOTA Membrane Europe (KME), a subsidiary of KUBOTA Corporation, has been awarded an order for supplying Membrane Bioreactor (MBR) treatment system for the Al Ansab Sewage Treatment Plant in Oman. The contract was awarded by Doosan Heavy Industries, which is undertaking Phase II expansion of Al Ansab STP at a cost of around $81m. KUBOTA will be once again be supplying its Submerged Membrane Units for Phase II based on their successful track record in Phase 1, which started operations in 2010. The MBR system will process 125,000 m3/day of raw sewage per day.

Solar JV QEWC and QP will set up a JV to invest in solar power projects in Qatar

Qatar Electricity and Water Company (QEWC) and Qatar Petroleum (QP) have signed a MoU to set up a joint venture for investing in solar power generation in Qatar. QEWC will own 60% stake in the JV with QP owning the rest. The MoU was signed by QP President and CEO Saad Sherida Al Kaabi and QEWC

General Manager and Managing Director Fahad Hamad Al Mohanadi in the presence of HE Prime Minister and Interior Minister Sheikh Abdullah bin Nasser bin Khalifa Al-Thani. A subsequent report in Gulf Times, quoting Al Mohanadi, said the joint venture will involve an investment of $500m and will be set up by mid-2016.

Oil and Gas Honghua Group (HH), a leading global land drilling rig manufacturer, has announced that it has entered into a ultra-deep drilling rig sales agreement with Kuwait Drilling Company (KDC), with a total value of approximately $25m. Under the agreement, HH will deliver one set of ultra-deep drilling rigs to KDC in 2016. “This sales agreement marks the first domestic-made ultradeep drilling rig to enter into the Kuwait market and breaks the long-term monopoly of the Kuwaiti ultra-deep drilling rigs market by western drilling rigs manufacturers,” said Zhang Mi, Chairman, HH. “Since HH’s entrance into the Kuwait market in 2008, we have maintained a very good relationship with KDC.”

INFRASTRUCTURE MIDDLE EAST

GE Oil & Gas-PDO deal The contracts will support PDO’s enhanced oil recovery plans

Emerson Process Management has introduced Smart Commissioning, a technologyenabled process that drastically reduces automation commissioning time and effort. Smart Automation Commissioning builds on advances made possible by the combination of the DeltaV distributed control system (DCS) Electronic Marshalling January 2016

with CHARMs and AMS Device Manager software to remove automation from the critical path of projects. Upon arrival at a project site, pre-tagged smart devices can be connected immediately to any channel in a nearby junction box. Testing is safely done from the control room by using digital communication, requiring no field personnel.

China Sunergy and Z-One Holding have agreed to form a joint venture to market and sell the full range of CSUN’s solar products and value-added PV solutions in the Middle Eastern and African markets. Under the terms of the agreement, the joint venture, CSUN Solar MEA FZC, will be owned 60% by China Sunergy, and 40% by Z-One Holding. Tingxiu Lu, chief executive officer of CSUN, said: “Middle East and Africa are both fast-growing markets for photovoltaic, or PV applications. This JV venture will be a useful opportunity to offer our PV products and solutions in the two markets.” UAE-based Z-One Holding is a stakeholder in eight companies representing the photovoltaic value chain.

GE Oil & Gas has signed two contracts with Petroleum Development Oman (PDO) for supply and maintenance of advanced centrifugal compressors. The centrifugal compressors to be deployed across PDO’s Saih Nihayda Depletion Compression Phase II, Kawther Depletion Compression Phase II, Yibal Khuff Depletion, Burhaan West and Fahud Gaslift Compression projects. The contract also covers the aftermarket services for these new compressors as well as the existing GE compressor fleet. In addition, GE Oil & Gas also signed an agreement with PDO to extend training and development support for Omani nationals over the next 10 years, underlining its commitment to localisation and the development of human capital in Oman.

Sector UPDATE

Transport Abu Dhabi Ports, the master developer, operator and manager of ports and Khalifa Industrial Zone in the Emirate, set a new annual cargo-volume record in 2015. Khalifa Port Container Terminal, which is operated by Abu Dhabi Terminals, handled 32% more containers while Rollon-roll-off (RORO) traffic had 27% upturn. General and bulk cargo saw 20% upswing while the rapidly expanding cruise industry witnessed 16% growth. The Al Mirfa Port in the Western Region of Abu Dhabi was inaugurated after extensive redevelopment work. Three other ports in the region – Mugharrag Port, Delma Port and Sir Bani Yas – are also being redeveloped.

Khalifa Port Container Terminal Container traffic increased by 32% in 2015

The Department of Transport (DoT) in Abu Dhabi has launched a Surface Transport Master Plan (STMP) for the Western Region (Al Gharbia). The updated STMP plan aims to increase the capacity of the main roads of Al Gharbia through a series of expansion projects and new roads and intersections that will serve major cities in the

Western Region such as Madinat Zayed, Ruwais, Ghayathi, Sila and Baynunah. The plan is also designed to enhance public transport through projects aimed at improving transportation by buses and taxis. The STMP will be implemented in cooperation with the Abu Dhabi General Services Company.

Construction Dubai World Trade Centre (DWTC) has broken ground on the $196m second phase of Dubai Trade Centre District (DTCD) development. Al Futtaim Carillion, the main contractor who successfully completed phase one is also constructing phase two which comprises of two Grade A office properties of 8 and 12 storeys designed by the firms of Hopkins Architects and WSP. Phase one included an eight storey office building and a 588-room Ibis hotel. DTCD aims to be a prime central business district destination, underpinned by a strong conventions and exhibitions business endowed with a Free Zone and freehold status.

Leisure milestone Construction has started on the $1bn, 6.1m sq ft Reem Mall project

Aldar has awarded a contract worth approximately $540m to Arabtec Construction for the construction of 1,017 villas at West Yas, Aldar’s residential development at Yas Island. This contract represents the final package to be awarded for the West Yas development following the infrastructure and public realm, school, clubhouse

and retail, and mosque packages. Private developers, who have built new suburbs around Cairo, are meeting the needs of middle and higher income Egyptians who can buy homes outright or obtain mortgages. West Yas is located along Yas Island’s natural mangroves and features 1,017 four and five-bedroom luxury villas. January 2016

Etihad Rail, the developer and operator of the UAE’s national railway network, has signed a MoU with CEVA Logistics, one of the world’s leading supply chain management companies. The MoU was signed by Faris Saif Al Mazrouei, CEO of Etihad Rail, and Jerome Lorrain, Executive Vice President – Balkans, Africa, Middle East and Africa, CEVA Logistics. “This agreement is the first step towards the establishment of a long and strategic partnership between our two companies,” said Al Mazrouei. Noting that Etihad Rail offers a much more reliable and environment friendly alternative to traditional modes of transport, Lorrain said when the GCC rail is operational, it will significantly enhance the scope of CEVA’s business.

Construction has officially started on Abu Dhabi’s $1bn Reem Mall project. Located on Reem Island, the significant mall development is strategically positioned within the new masterdeveloped residential and commercial zone, which – according to Abu Dhabi’s Urban Planning Council – will eventually be home to more than 210,000 people. Home to the world’s biggest indoor snow play, the development is set to include some 450 stores including 85 food and beverage outlets. mSquared, RTKL, Dewan and Mace have been appointed to provide consultancy on key areas including retail advisory services, design, architecture, engineering and project management. With construction now underway, the mall is expected to open in 2018.

INFRASTRUCTURE MIDDLE EAST 11

GLOBAL UPDATE

Round Up China will invest about $11.7bn in 2016 in the construction of civil aviation infrastructure, reported ChannelNews Asia. The Civil Aviation Administration of China will step up construction of important new airports, including those in Beijing, Chengdu, Qingdao, Xiamen and Dalian. In addition, 11 key infrastructure projects and 52 upgrades or expansion work on civil aviation facilities will be started this year. The agency also said that work on Beijing’s second international airport, the largest construction project in Chinese civil aviation history, is progressing well, and is scheduled to be completed in Jun 2019. Kapsch TrafficCom has reached an agreement with Schneider Electric to acquire its global Transportation Business. Schneider’s Transportation Business, formerly operating as the Telvent Tráfico y Transporte, offers an industry portfolio of integrated Advanced Traffic Management Software (ATMS) solutions – for urban, highway and tunnel applications as well as tolling and transit solutions. The acquisition will enable Kapsch to offer its current and future customers around the globe an integrated portfolio of intelligent transportation systems (ITS) extending from the highway to the city. It also expands Kapsch’s global footprint in the important growth markets in Spain, Latin America, the US as well as the Middle East. Under Schneider Electric, the business generated revenues of $145m in FY2014.

INFRASTRUCTURE MIDDLE EAST

Airports push China plans to build 66 new civil airports in the next five years

Trimble has announced that Tekla Corporation has transitioned to the Trimble brand from January 1, 2016. “Trimble’s expertise, technologies and investment in research and development enables us to bring solutions to market that transform the construction workflow. The brand name is an important indicator of who we are and what we stand for,” said Risto Räty, general manager for Trimble’s Structures Division. “Together, we can better serve the construction industry as we more tightly connect Tekla software to Trimble’s broad portfolio of design-build-operate (DBO) solutions solutions.” With an open approach to Building Information Modeling (BIM), the name change reflects the combined companies’ strong commitment to customers.

Qatar’s RasGas Company and India’s Petronet LNG have entered into a binding sale and purchase agreement (SPA) for supply of an additional 1 MTA of LNG to India. Further, RasGas and Petronet LNG have entered into a binding agreement to adjust some aspects of their existing long term LNG SPA of 7.5 MTA, signed by the parties in 1999. Such adjustments will protect and preserve the overall value of the contract. As per such agreement, LNG volumes not taken by Petronet from RasGas during 2015 will be taken and paid for by Petronet during the remaining term of the SPA and will maintain its current level of oil indexation with the oil index more closely reflecting the prevailing oil prices. Petronet is the largest importer of LNG into India.

Better deal Under a new contract, Petronet will get LNG from RasGas at half the cost

January 2016

A new report released by CG/LA Infrastructure has identified one hundred strategic projects and the industry trends needed to propel them to drive global economic growth in 2016. CG/LA Infrastructure’s 2016 Strategic 100 Global Infrastructure Report highlights the need for a new development paradigm for global infrastructure, citing the current budget, decision-making, and project pipeline “gaps” as clear symptoms of a broken model. The report lays out a plan that highlights three critical areas of focus: new technology innovation as a driver of smart infrastructure, the recalibration of risk by bringing users into all areas of decision-making, and the revitalisation of the public sector’s role as a non-partisan driver of longterm economic growth. The top six countries, ranked in order of total project value, include: UK ($57.7bn); US ($40.6bn); China ($39.5bn); Vietnam ($38bn); Japan ($37.5bn); and Indonesia ($31.2bn). According to US drillers, OPEC’s market share battle with Shale producers isn’t working. The Saudi objective to tap down US shale has already had its impact, and from here, there’s not much more affect they can have the Saudis should accept the fact that is not going to change,” said Chris Faulkner, CEO of Dallasbased shale driller Breitling Energy Corp. “Shale has been more than validated, and once oil prices go back up to around $70, output in the US will pick up briskly,” said Faulkner, who will give The 2016 International Outlook Lecture at the UAE Energy Forum this month.

T H E

ISSUE 01 | JANUARY 2016

INSIDE SPOTLIGHT ON RENEWABLES p14 A STEADY ROAD TO PARIS

p16

UAE’s LEADERSHIP IN FUTURE ENERGY INTERVIEW: REC’s LUC GRARE

p18

THE LONG ROAD TO ENERGY REFORM p20

p17

THE ENERGY REPORT

Fast transition

Spotlight on renewables Renewable energy and energy efficiency offer a realistic path to keep global temperature rise below 2°C elying expectations, investments in renewable energy haven’t suffered from the steep decline in oil prices. Rather, they have held up pretty well against the economics of cheap fossil fuel. According to McKinsey’s Scott Nyquist, the economics of renewables are improving. In an article published in McKinsey Insights, Nyquist, who is a director in McKinsey’s Houston office, points out that in 2011, when annual global investment in renewables peaked at $279bn, 70GW were installed. In 2014, almost 40% more (95 GW) was installed, though investment was slightly lower, at $270bn. In other words, renewables are getting cheaper all the time The biggest competitor to renewables is not clean coal or oil, but natural gas. Nyquist believes that the best technologies in use are already highly efficient whereas for solar, for example, substantive improvements in cost and efficiency are not only possible but likely. In fact, the decline in oil prices has actually impacted the flow of investments into the hydrocarbons sector, especially in unconventional oil and gas. The agreement reached at the recent United Nations’ 21st Conference of the Parties (COP21), where 195 countries agreed to limit the increase in global average temperatures to below 1.5°C from preindustrial levels, the outlook for renewable energy has only become brighter. And half of all emission reductions needed to maintain a two degree pathway can be achieved by raising the share of renewable energy to 36% by 2030 with energy efficiency measures could supplying the rest. This finding has come from the International Renewable Energy Agency (IRENA) via its new report ‘REthinking Energy 2015 – Renewable Energy and Climate.’ “Transitioning rapidly to a future fuelled by renewable energy, accompanied by

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January 2016

increasing energy efficiency, is the most effective way to limit global temperature rise. This transition is underway but it must be accelerated if we are to limit global temperature rise to two degrees Celsius,” says Adnan Z Amin, IRENA Director-General. According to the IRENA report, to achieve a 36% share of total energy, the uptake of renewable energy would need to increase sixfold from current levels. This would require that global annual investment nearly double, to exceed $500bn in the period up to 2020, and more than triple to exceed $900bn from 2021 to 2030. To help achieve this, the report outlines five actions for a sustainable energy future including: strengthening policy commitments, mobilising investments, building institutional capacity, linking renewables to Sustainable Development Goals and enhancing regional engagement. According to the International Energy Agency (IEA), renewables accounted for nearly half of the growth in global electricity generation capacity in 2014, as supportive policies and rapidly declining costs, such as for solar photovoltaics, helped to deliver a record-high 130GW of new capacity around the world. Moreover, energy efficiency regulations now cover 27% of the world’s energy consumption (up from 12% in 2005). IEA’s World Energy Outlook 2015 Special Report on Energy and Climate Change recommends five measures using proven technologies to reduce GHG emissions from the energy sector, while maintaining the economic and sustainable development

prospects of all regions. IEA’s Bridge Strategy to a low carbon world comprises of five steps: 1. Increasing energy efficiency in the industry, buildings and transport sectors. 2. Phasing-out the use of the least-efficient coal-fired power plants. 3. Increasing investment in renewable energy technologies (including hydropower) over time, reaching at least $400bn in 2030. 4. Gradual phasing out of inefficient fossilfuel subsidies to end-users. 5. Reducing methane emissions from oil and gas production Thus, renewable energy and energy efficiency are expected to shoulder the lion’s share of the burden in limiting global temperature rise to two degrees Celsius. The question is will their deployment grow fast enough to make the critical difference with regard to climate change? Another question is whether the delinking of economic growth from emissions, as an IEA study seems to suggest, is practical? Ankit Mathur, GlobalData’s Practice Head for Power, notes that the success of COP21 will rely upon how effectively parties implement measures to fulfil their particular Intended Nationally Determined Contributions (INDCs), and how they deal with the impact these measures have on major industries, such as transportation and energy. If fully implemented, the INDCs would lead to a significant fall in per capita emissions of about 9% in the next 15 years, and would limit the forecast rise in temperature to 2.7°C. He continues: “Developed nations can be expected to focus on energy efficiency in terms of efficient usage and energy conservation practices from the commercial and residential sectors. “Meanwhile, emerging economies will need to implement more diverse strategies, including renewable energy, land use change, afforestation, transport, waste management, and most importantly energy efficiency in the industrial sector.”

THE ENERGY REPORT

COP 21

A steady road to Paris The UAE is smoothly managing the transition to a greener future By Frank Duggan he world today is facing an uncertain future. Climate change has been long identified as one of the most important drivers behind this uncertainty. The UN Secretary General Ban-Ki-Moon said: “Ours is the first generation that can end poverty, and the last that can take steps to avoid the worst impacts of climate change.” This means that the time to act is now. It’s a huge boost to the United Nations Conference on climate change known as COP21 that the United States and China announced their plans well ahead.

UAE’s energy transition Also, it’s equally heartening to see young countries like the United Arab Emirates take concrete steps towards pledging to a greener future. It’s obviously harder for an oil-rich economy to diversify their energy landscape and also speak about a post-oil era. We must remember that the UAE sits on 5.9% of the world’s oil reserves and 3.1% of the natural gas wealth. But the UAE seems to have managed this transition beautifully. The country has pledged to generate 24% of its electricity from clean energy sources by 2021 reinforcing its contribution to climate action. This is a very strong and clear direction of the economy and the industries. The country could well have the distinction of being one of the few oil-rich nations that not only exports oil, but also renewable technology through their investments in wind and solar power globally. Zayed Future Energy Prize ABB is proud to support this transition. We have been endowed with the Zayed Future Energy Prize by the country in recognition for our commitment to drive innovation, renewable energy and energy efficiency. We are partaking an active role in the Mohammed bin Rashid Solar Park, one of the biggest renewable energy projects in the

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January 2016

FRANK DUGGAN

Middle East and North Africa. It is expected to cover an area of more than 40 sq km and produce 5,000MW of clean energy when completed in 2030. ABB will integrate power from the solar park with its gas insulated switchgear substation. Dubai is further planning to invest billions of dollars in clean energy as part of a strategy that could see solar panels on the roofs of all buildings in the city by 2030. To that end, ABB will soon have a low voltage photovoltaic solar system at our Al Quoz factory in Dubai, where a 300 KW system on the roof will power our factory floor. The UAE is ABB’s regional headquarters for the wider Middle East region and we’re equally proud of our contribution to the growing renewable ambitions. From Jordan to Qatar, we are gratified of enabling a more responsible energy landscape that is sustainable and innovative. The region is home to pioneering organisations like Masdar, who have a clear vision for a greener future.

What will the future look like? The UAE is building a carbon-neutral city called Masdar City, which will include electric vehicles and energy efficient buildings. Going forward, city planners may have to include solar panels on every roof and electric vehicle chargers at every street. High-speed electric rail and buses would provide transport in urban areas where superfast chargers will become a regular fixture. At ABB, we have all of this technology ready and running in different parts of the world. We know the UAE is quick to adopt world-class technology and we are here to support the vision. (Frank Duggan is President, Asia, Middle East and Africa (AMEA) region and a member of the Group Executive Committee of ABB. He is the Managing Director of ABB’s UAE & Oversight Countries’ operations. He also serves as Chairman for ABB India. Additionally, as head of account management for ABB, Frank is passionate about helping its customers succeed! He is based in Dubai, UAE)

THE ENERGY REPORT

CLEAR AGENDA

UAE’s LEADERSHIP IN FUTURE ENERGY The UAE is smoothly managing the transition to a greener future

espite having one of the largest oil reserves in the world, the UAE has been at the forefront of bringing clean energy to the region. Here’s how:

• The UAE was one of the first nations to endorse the extension of the Kyoto protocol in 2005 to limit greenhouse gases in industrial countries. It was also the first nation from the region to sign the Copenhagen Accord at COP15 to limit emissions • UAE formally submitted its Intended Nationally-Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change (UNFCCC) ahead of COP 21. The country’s national target to generate 24 percent of its electricity from clean energy sources by 2021 • The UAE has been leading the region in adopting mandatory standards for buildings and appliances as well as labeling schemes in order to improve resource efficiency • UAE’s Capital Abu Dhabi is the first outside Europe and New York to house the headquarters of a United Nations agency, the International Renewable Energy Agency (IRENA) • Masdar, Abu Dhabi’s renewable energy company, is contributing to the UAE’s clean energy leadership by establishing an integrated ‘new-energy’ industry in Abu Dhabi and around the world. Masdar is the region’s largest supplier of clean energy, and takes an integrated approach to sustainability by combining academia, R&D, investment and technology deployment, to spur innovation and investment in clean energy. Masdar is behind 100 MW Shams 1, a first-of-its-kind concentrated solar plant in Abu Dhabi. • Recently, the Abu Dhabi Water and Electricity Authority (ADWEA) announced a tender for a 350 MW solar

• •

•

Abu Dhabi hosts the headquarters of the International Renewable Energy Agency (IRENA)

photovoltaic project to be built in Sweihan, about 120km east of the capital. • The Dubai Clean Energy Strategy 2050 has set the ambitious target of solar power generating 5,000MW by 2030 or 25% of Dubai’s total power output. This will save approximately up to four million tonnes per annum in emissions, the equivalent of planting about 100m trees per annum. • Dubai aims to have solar panels on the rooftops of all buildings in the Emirate by 2030, and has launched Shams Dubai

The 100MW Shams 1 Concentrated Solar Power Plant was a major milestone in the development of solar power in the region

•

initiative to encourage building owners to install photovoltaic panels to generate electricity and connect it to the grid. Dubai aims to convert 80% of its waste to energy by 2030. The Dubai Carbon Centre of Excellence, formed in partnership with the United Nations Development Programme (UNDP) aims to develop Clean Development Mechanisms to reduce greenhouse gas emissions to pre-industrial levels to support this goal. Dubai has committed $136m fund that will be invested directly in research and development for next-generation clean energy sources. The Dubai Green Fund proposed by Dubai Clean Energy Strategy 2050 will contribute over $27bn towards clean energy projects in the Emirate and will establish a Free Trade Zone specifically for green investments. Dubai achieved the world’s lowest tariff for utility scale solar power (at 5.84 US cents per kilowatt/hour, below the cost of even natural gas) with the 200MW Phase 2 of the Mohammed bin Rashid Al Maktoum Solar Park, the largest generator of solar energy in the world from a single location. The third phase of the park will have a capacity of 800MW. The solar park will generate 1000 MW by 2020 and 5,000 MW by 2030.

The Mohammed bin Rashid Al Maktoum Solar Park is the world’s largest generator of solar energy from a single location

January 2016

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THE ENERGY REPORT

BREAK-THROUGH

‘We are well-positioned for sustained growth in the region’ REC is a leading global provider of solar energy solutions with a strong presence in the Middle East. Luc Grare, Senior Vice President Sales and Marketing, REC spoke to Infrastructure Middle East about the prospects for solar power in the Middle East and Africa region and REC’s future plans. an the low Levelised Cost of Energy (LCOE) figures achieved by Dubai, and Saudi Arabia for specific projects be replicated? In general, the key to achieving competitive LCOE is the cost of capital. Looking at the turnkey solar projects in Dubai, costs have proved to be higher than in Europe due to several reasons: As an emerging region for solar, the local installation expertise is lower than in countries, like Germany; hence, more labour resources are required to complete the installation. To minimise this, German engineering expertise is very valuable. Secondly, Balance of System (BoS) components including cables and clamps are not available locally and need to be imported. Therefore, costs for components are 3-4 times higher in Dubai, reflecting transportation costs and customs duty of 5%; and the lead time is increasing respectively. However, these higher costs can be compensated by the right level of cost of capital and higher radiation. Therefore, the LCOE for utility-scale solar PV installations is in the range of 5-10 USD cents per kWh, which is lower than in Germany, for example.

Dubai has gone in for a solar park model with a mix of technologies. Are there other models that the region can look at for utility-scale power generation? You should not only mix the technologies, like PV and CSP but also, mix types of products in each category. Currently, the PV segment is represented mainly by one technology that increases the risk of serial defects. Speaking about incentive models, Dubai

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January 2016

4.5 MW, Commercial ground-mount & carport at Veterans Hospital, USA

focuses on a PPA approach (Power Purchase Agreement) for utility-scale projects and net metering scheme for rooftop PV installations. Looking at Europe’s experience, the largest boost for solar (both utility-scale and residential) was given by Feed-in-Tariffs schemes, which can be an alternative in the Middle East region. Net metering scheme is a good solution, with credit transfers from month to month, resulting in an attractive payback time on CAPEX of six years for large industrial and commercial installations based on current tariffs. In general, loan financing by local or international banks is well available. Are we anywhere close to cost-effective solutions for the GCC’s dusty and harsh environment? The key for an affordable solution, even in

Dubai’s harsh climate, is to reduce soiling losses by using high-quality materials. REC panels proved their outstanding performance in Dubai’s climatic conditions because of their high-quality glass with anti-reflective coating at an affordable price. Due to decreased soiling losses, service costs can be significantly reduced too. Will solar panels be twice as cheap by 2020? During the last six years, PV system costs decreased by half. By 2020, a further decrease of 40% is expected and will reach a global average of 5-8 USD cents per kWh. Whereas we do not expect tremendous drops in material costs (Si, aluminium, glass), technology and efficiency can be further improved resulting in a lower LCOE.

THE ENERGY REPORT

How would you compare on-grid and offgrid solar opportunities in the region? Off-grid PV solutions can help to reduce energy costs for remote applications, telecom, oil and gas. On-grid solutions are significantly cheaper because they do not require additional battery storage and charger. Furthermore, these are easily scalable, and capacities can be quicker set up. How has REC fared in the Middle East? With our high-quality solar panels and German engineering expertise, REC is well positioned in the Middle East region. Especially with our new, awardwinning TwinPeak solar panels, we are demonstrating a higher performance even in desert areas due to an innovative design and a better temperature coefficient. This results in a higher yield per sqm as shown in our Dubai installations. In Dubai, we are looking into commercial rooftop installations. Most recently, we strengthened our position with a new rooftop solar installation for BMA International’s Redtag Group. The installation is our first project framed by Dubai’s new renewableenergy net metering initiative. In Egypt, we recently signed a strong cooperation agreement with Orascom and bagged our first 50MW project as part of the FiT. Could you share your expert perspective on the development of solar markets worldwide and REC’s expectation on that front? REC expects global total module installations to reach 59GW in 2015 – an increase of 33% compared to 2014 – and to reach 65GW in 2016. We believe, the global solar industry has a bright long-term future, with solar energy becoming increasingly competitive worldwide. Furthermore, REC expects the agreement at the UN Climate Change Conference (COP21) to give solar probably an even stronger push. Ambitious targets to reduce carbon emissions, submitted by countries in the Middle East, are a clear sign for this. How is that perspective reflecting in your strategy and plans for 2016? With an office in Dubai and a track record of various local installations, REC is well positioned for sustained growth in the Middle East and Africa. We are focusing on

24MW Phenix Power Plant in Italy

Luc Grare

UAE, Egypt, Oman and Jordan, where we are expanding our resources to serve better the market needs. This demonstrates our commitment to the region. Furthermore, with 620m people without access to electricity, we see a good potential in the Sub-Sahara region. To keep on growing with the markets worldwide, REC is continuously expanding its production capacities: In 2015, our module capacity will increase to 1.2GW from nearly 1GW and will be further expanded to around 1.7GW by the end of 2016.

REC installs rooftop solar plant in Dubai

EC executed a turnkey 572 kilowatt (kW) rooftop solar project in Dubai. The installation is located on the roof of the logistics and warehouse centre of the Redtag Group, part of UAE-based retailer BMA International FZE. REC supplied photovoltaic (PV) panels and also full Engineering Procurement Construction (EPC) expertise for the installation, one of the first under Dubai’s new net metering scheme for renewable energy. The company has installed 2,161 solar panels of its new TwinPeak series over 7,000 m² of unused roof space. These panels are expected to generate 904,000 kWh of electricity annually while reducing the CO2 footprint by 550 metric tonnes per year. In its bid to encourage investment in solar projects – and kick-start the private rooftop solar market – Dubai has introduced ‘Shams Dubai’ scheme to encourage building owners to install solar panels and use the electricity generated for their consumption. Any surplus electricity generated is fed into the Dubai Electricity and Water Authority grid and credited against future consumption. “The REC solar panels offer high efficiency and reliability in the extreme temperature conditions we have year-round in Dubai,” said Ernest Hosking, CEO, Redtag. “But we also chose REC because they were able to offer a complete solution. Redtag Group benefited from REC’s ability to manage the project end-to-end, and make certain the installation was completed quickly. The project has been completed within no more than two months and is ready for operation.”

January 2016

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THE ENERGY REPORT

ENERGY SUBSIDIES

The long road to energy reform Together with energy pricing reforms, GCC countries also need to develop mechanisms that address resulting economic and social risks, says APICORP research

iscal pressures due to the decline in oil revenues are forcing GCC governments to rationalise their spending and implement long overdue fiscal and economic reforms, including to energy prices. Saudi Arabia and the UAE are leading the GCC in raising energy prices and cutting subsidies. While the provision of low energy prices in the past few decades has helped the GCC to achieve key developmental and social

F 20

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January 2016

objectives, this policy has come at a huge cost and has resulted in a wide range of distortions. The inefficient allocation of resources prevents the GCC from maximising the value of its natural resources. The negative consequences of low energy prices are well known. They result in rapid growth in energy consumption beyond what can be explained by factors such as the rising income levels and population growth. They increase a countryâ&#x20AC;&#x2122;s energy intensity of GDP because low prices distort investment decisions towards energyintensive projects, hindering economic diversification.

They also result in low efficiency as consumers and industries have little incentive to conserve energy. They distort a countryâ&#x20AC;&#x2122;s energy mix by encouraging reliance on oil and gas, limiting the penetration of alternative fuels such as renewables and nuclear power, which struggle to compete with hydrocarbons. Differences in energy prices also increase cross-border smuggling. Nor are low energy prices neutral in terms of their distributional effects. Low transport fuel and electricity prices reward higher-income households, which tend to consume more.

THE ENERGY REPORT

Similarly, the provision of cheap gas to industry increases profits for the owners of industrial establishments and shareholders in these companies who mostly fall within the high-income groups. Negative shocks and mitigation Despite all these known distortions, a move to increase energy prices can induce negative shocks affecting households, industries, and the wider economy. Higher energy prices can spur inflation, especially if they result in a shift in expectations and wage-price spirals. Energy-pricing reform reduces the welfare of households both directly by raising the price of electricity, water and petroleum products, and indirectly, by increasing the price of other goods and services that use energy as intermediate inputs. Higher energy prices also increase input costs for industries, reducing profits. This is especially true for energy-intensive industries that are not able to pass on the cost increase to end-buyers, either due to the competitive structure of the industry (such as petrochemicals) or the imposition of price controls (cement). SABIC for instance said that as a result of the fuel and electricity price hikes its annual cost would increase by more than 5%; Saudi Arabia Fertilisers Company’s (SAFCO) production costs would increase by 8%; Yanbu National Petrochemical Company’s (YANSAB) costs would increase by 6.5%; while Saudi Cement Company announced that its production costs would rise by SAR68m ($18.1m). These companies added that they would increase the efficiency of their plants and cut other costs to offset the input price shock. Thus, in any energy-pricing reform strategy, it is essential that governments put in place measures to mitigate these negative impacts. For instance, the government should design schemes to compensate households, especially those with low incomes. It should establish specialised funds that provide technical assistance and soft loans to help industries most affected adjust to the higher cost by increasing efficiency through the introduction of new technologies and equipment upgrading. It is the ability of the GCC governments to put in place such schemes and communicate their policies effectively and transparently that will determine the success of their energy-pricing reform programmes in the longer term.

Step in the right direction While it is still early on to evaluate the recent announcements of increases in energy prices and their impacts on the wider economy, it is possible to discern some trends, which will shape the reform agenda for years to come. First, more price increases are very likely in the coming years. Countries such as Saudi Arabia have specified a clear time framework (in its case, five years) while others have shied away from committing to a specific time frame. Second, it is important not to underestimate the spill-over effect within the GCC. The UAE and Saudi announcements have encouraged other countries in the GCC to follow suit. But this can also work in the opposite direction. Any reversal or slowdown in policy in these two countries will have an impact on the reform agenda elsewhere in the GCC. Third, the need to generate revenues in these difficult times has been the main driver of the recent increases in energy prices. This is not ideal. Experience suggests that reforms are better implemented in good times, when the economy is in a better shape. However, a period of weaker oil prices makes it easier for countries to adjust their domestic prices to international levels, hence presenting a unique opportunity to align the two. It remains to be seen whether governments will continue with their reform agenda when fiscal pressures ease. Fourth, none of the GCC governments has yet put in place mitigating measures to protect the household incomes from the price increases, perhaps because the increases for now remain modest and are starting from a low base. But designing compensation schemes for households would be essential to avoid backlash from consumers if GCC governments decide to further increase gasoline water and electricity rates, as these have a direct impact on household welfare. Lessons from neighbouring countries can be useful in this context. For instance, increases in energy prices in Jordan were accompanied with direct cash handouts to households with low income whilst Egypt and Morocco ensured that reforms to LPG prices were minimal to ensure the vulnerable still had access to energy for cooking. The effectiveness of GCC governments to design and execute such compensatory schemes will be closely monitored.

Fifth, the increase in energy prices will affect the cost base of some key industries and companies reducing their profitability. Governments could establish specialized funds to help industries adjust to higher costs by introducing new technologies and upgrading equipment, though any assistance should be on a case by case basis as some of the companies already benefit from different forms of government support and remain highly profitable even after the current increase in energy prices. Finally, designing an effective communication strategy that transmits information in a timely and transparent manner and that reaches all segments of society impacted by the price increases is key to the success of any reform programme. Part of Morocco’s success was a result of a well-orchestrated communication strategy that included public TV and radio discussions, advertisements and debates explaining the reform steps, the reasoning behind the reform and the benefits to society. The recent experience in most GCC countries is not encouraging in this respect: most countries announced the price increases in an ad hoc manner and without an effective communication strategy to explain the reasons behind them, who the main beneficiaries would be, and whether compensation schemes would be put in place. While some of the GCC countries have taken a step in the right direction, the road for reform is still long and fraught with risks. The GCC governments can breathe a sigh of relief that the initial announcements did not generate much public opposition. But it is too early to celebrate as experience shows that price reversals are possible. For reforms to succeed, a clear vision, political resolve, the involvement of different segments of the society, effective and transparent communication strategy, and well-designed compensatory schemes to mitigate the negative impacts on households and industry are all essential. In the GCC countries, the jury is still out as to whether the preconditions for a successful pricing reform programme have been appropriately put in place. (Excerpted from Arab Petroleum Investments Corporation’s (APICORP) Energy Research, titled ‘Energy price reform in the GCC: Long road ahead’) January 2016

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MIDDLE EAST INFRASTRUCTURE TENDERS

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

OMAN NATIONAL Railway Project

Umm Al Haul Independent water and power plant

Integrated Solar & Combined-Cycle Power Plant Project - Taiba

Al Abdaliyah Integrated Solar Combined Cycle Project

Budget: $15,000,000,000

Budget: $2,750,000,000

Budget: $3,000,000,000

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: Qatar Client Name: QEWC Description: Power and desalination plant with an installed capacity of 2,520MW of power and 136MIGD of water. Period: 2015 Status: New Tender

Territory: KSA Client Name: Saudi Electricity Company (SEC) Description: EPC contract to build a 3,600MW ISCC power plant including a 180MW solar component. Period: 2015 Status: New Tender

Territory: Kuwait Client Name: KAPP Description: Build-operate-transfer (BOT) contract for the construction of a 280MW thermal solar power and natural gas hybrid plant. Period: 2017 Status: New Tender

January 2016

INFRASTRUCTURE MIDDLE EAST

MIDDLE EAST INFRASTRUCTURE TENDERS

Top Tenders UAE Solar Energy IPP - Sweihan Project Number: MPP2999-U Client Name: Abu Dhabi Water & Electricity Authority (ADWEA) Address: ADWEA Building, Al-Falah Street, Abu Dhabi Phone: (+971-2) 694 3333 Fax: (+971-2) 626 7725 Website: www.adwea.gov.ae Description: ADWEA has invited Expression of Interest (EoI) for a 350MW Solar Photovoltaic Independent Power Project (IPP) located at Sweihan, Abu Dhabi. The developer or developer consortium will own up to 40% of the special purpose vehicle which will implement the project including development, financing, construction, operation, maintenance and ownership. The remaining equity will be held, directly or indirectly, by ADWEA. Status: New Tender Tender Categories: Power and Alternative Energy

Mohammed Bin Rashid Al Maktoum Solar Park - Phase 3 Project Number: MPP2963-U Client Name: Dubai Electricity & Water Authority (DEWA) Address: Head Office, Near Wafi Shopping Mall, Zabeel East, Dubai Phone: (+971-2) 601 9999 Fax: (+971-2) 601 9995 Website: www.dewa.gov.ae Description: The project involves an Engineering, Procurement and Construction (EPC) contract to build a Solar PV IPP with capacity of 800MW at the Mohammed bin Rashid Al Maktoum Solar Park, which is the largest single-site solar project in the world. The park will produce 1,000MW by 2020 and 5,000MW by 2030. DEWA has received 21 Requests for Qualification (RFQs) for the project. The project tender is expected to be released in January 2016. KPMG has been awarded the lead advisory services contract for the project. Status: New Tender Tender Categories: Power and Alternative Energy

Aster Hospital Project - Mohammed Bin Zayed City Project Number: WPR561-U Client Name: Aster Hospital Address: Dubai, UAE Phone: (+971-4) 398 8799 Website: www.asterhospital.com Description: Construction of a new Hospital comprising a basement, ground floor and five floors consisting of 61 beds. The project is currently in the detailed design stage. Status: New Tender Tender Categories: Construction & Contracting; Medical & Healthcare

INFRASTRUCTURE MIDDLE EAST

January 2016

OMAN Salalah Independent water project (IWP) Project Number: 17/2015-O/11 Client Name: Oman Power & Water Procurement Company Address: Floor 5, Bldg. 5, Muscat Grand Mall, Tilal Complex, Al Khuwair Al Janubiyyah, : Ruwi PC 112 Phone: (+968) 2450 8400 Website: www.omanpwp.co.om Description: The project involves the construction of an IWP with capacity of 18-22 MIGD. The client has issued a Request for Qualifications (RFQ) from experienced international utilities. PricewaterhouseCoopers (PWC) will provide financial advisory services, while Spanish engineering consultant Ayesa will provide technical advisory services. US law firm Curtis, MalletPrevost, Colt & Mosle will provide legal services. The last date for submission of qualifications is January 17, 2016. The commercial operation date for this plant is being targeted in early 2019 Status: New Tender Tender Categories: Water Works

Duqm Oil Refinery Development Project - Phase 1 Project Number: MPP1632-O Client Name: Oman Oil Company Address: Al-Harthy Complex, Muscat PC 118 Phone: (+968-2457 3100 Fax: (+968) 2457 3101 Website: www.oman-oil.com Description: The project involves EPC contract for the development of a 230,000 bpd. grass-roots refinery in Duqm. A pair of multi-billion dollar contracts linked to the establishment of this refinery will be awarded towards the end of 2016. Period: 2019 Status: New Tender Tender Categories: Industrial & Special Projects

KUWAIT Kabd Waste-toEnergy Plant Project 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 (BOT) contract for the development of a waste-to-energy plant with initial capacity of 3,275 tonnes/day. Client will enter into a 30-year contract with the winning investor. The client has invited five prequalified companies to participate in the Request for Proposal tender round. Period: 2015 Status: New Tender Tender Categories: Power & Alternative Energy; Sewerage & Drainage

MIDDLE EAST INFRASTRUCTURE TENDERS

Jeddah Public Transport Development Project

Kuwait Schools Development Program Public-Private Partnership Project Project Number: MPP2895-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: The project involves the development of nine schools, including five kindergartens, three elementary and one middle school, a residential building for female teachers and an Olympicsize swimming pool. It is being developed by KAPP in association with the Ministry of Education. KAPP has prequalified four consortiums to purchase the request for proposals for the tender. The project is being procured as design, build, finance operate and maintain structure. The term of the contract is expected to be 25 years in addition to three years for the design and build of the infrastructure assets. The new schools will have a combined capacity of 4,350 students. Status: New Tender Tender categories: Construction & contracting; Education & Training

KSA Mecca Metro Project - Phase 1 Project Number: MPP2444-SA Client Name: Makkah Mass Rail Transit Company Address: Makkah 50449 Phone: (+966-12) 567 3987 Website: www.makkahtransit.org Description: Known as the Makkah Mass Rail Transit (MMRT) system, it will run around Makkah city centre. The network will be able to transport about 100,000 passengers an hour. Client has announced that it expects to award five contracts worth $8.8bn for Phase 1 of this scheme in the first quarter of 2016. Four of the packages will be for lines B and C and include 44km of track and 22 stations. The contracts will be civil 1 (tunnels), civil 2 (viaducts), systems and finishing, and rolling stock. The fifth contract is for a bus system. Once contracts have been awarded, the first phase will take four years to complete. Period: 2020 Status: New Tender Tender Categories: Public Transportation Projects

Project Number: ZPR088-SA Client Name: Jeddah Municipality Address: Jeddah 21146 Phone:(+966-12) 614 9999 Fax: (+966-12) 614 9292 Website: www.jeddah.gov.sa Description: The project involves the develoment of a public transport programme comprising a Metro network, Tramway and Light Rail Transit. Arab Center for Engineering Studies (ACES) has been awarded the geotechnical investigation contract for the preliminary engineering design phase. Metro Jeddah Company (MJC) has invited initial expressions of interest (EOI) for the civil works contract of the metro network. It has also invited EoI and prequalification to design, build, procure, supply, operate and maintain a light rail transit (LRT) and corniche tramway civil works and rolling stock. Period: 2022 Status: New Tender Tender Categories: Public Transportation Projects

January 2016

QATAR Qatar Long Distance Railway Network Project Project Number: MPP1592-Q Client Name: Qatar Railways Company (QRC) Address: Doha Fax: (+974) 4497 4333 Description: The project involves construction of a 400-km-long railway network. The client has prequalified 15 consortiums for the Phase 1. Period: 2018 Status: New Tender Tender Categories: Public Transportation Projects

Produced in association with Middle East Tenders

INFRASTRUCTURE MIDDLE EAST

ten UAE INFRASTRUCTURE PROJECTS

UAE infrastructure PROJECTS Despite the ongoing decline in oil prices, the UAE government remains committed to infrastructure development and economic diversification

INFRASTRUCTURE MIDDLE EAST

January 2016

Upper Zakum Crude Increment Project

Owner: Zakum Development Company (ZADCO) Budget: $10bn Progress: Contracts awarded It is part of the client’s programme to increase crude production capacity to 750,000 bpd from 500,000 bpd at present. The scheme is being implemented in JV with US’ ExxonMobil, which holds a 28% stake. The major civil engineering works on this project have been completed. Amec Foster Wheeler has been awarded an extension to its existing project management consultancy (PMC) contract on this scheme. Client will oversee the contractors’ delivery of reimbursable EPC scopes of work, commissioning and startup support. Work is scheduled for completion in December 2017.

ten UAE INFRASTRUCTURE PROJECTS

Tacamool Petrochemicals Complex

Owner: Abu Dhabi National Chemicals Company Budget: $10bn Progress: Bids under evaluation This project will be developed at Al Gharbia in the Western Region of Abu Dhabi, and is the first phase of a much larger planned development. Tacamool will produce more than 7m tonnes/year of products, including basic commodity polymers such as olyethylene and polypropylene, advanced plastics such as polycarbonate and acetone. Companies have submitted commercial EPC bids for the aromatics plant package and offsites and utilities (O&U) package. Aromatics package bidders include GS Engineering , Samsung Engineering and Technip; O&U bidders include GS Engineering , Hyundai Engineering , Samsung ngineering and Petrofac.

Maryah Plaza Mixed Use Project

Reem Mall Development Project- Reem Island

Owner: Mubadala Development Company Budget: $1bn Progress: Bid evaluation

Owner: National Real Estate Company (Kuwait) Budget: $1bn Progress: Design approved

The scheme, which is being developed in a JV with Taiwanâ&#x20AC;&#x2122;s Farglory Group, will come up on the Al Maryah Island in Abu Dhabi. It will be a mixed-use community with residential apartments, 5 star hotel, serviced apartments, commercial units and a waterfront retail promenade. The towers will spread over an area of 42,000 sqm offering 435 luxury apartments and a fivestar hotel tower offering 180 hotel rooms. At the ground level, there will be restaurants, cafes and shops. The project will also include construction of 65,000 sqm of car parking space. Evaluation of bids is still underway for the main contract. There are six bidders for the main contract and three for the MEP contract.

Spread across two million sq ft, Reem Mall, which will come up on Abu Dhabiâ&#x20AC;&#x2122;s Reem Island, will feature approximately 450 stores, including 85 restaurants and a range of family-focused entertainment offerings. The project has taken a significant step forward after Abu Dhabi Urban Planning Council (UPC) granted its approval for the initial design. The Concept Planning Report (CPR) agreement paves the way for Enabling Works Permit, also issued by UPC, which will allow for construction to commence this year. In July, the owner and partner company UPAC announced a new corporate structure for this project. UPAC, through its real estate subsidiary, Al Arfaj Real Estate Company, will invest up to $224m over the next three years. January 2016

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ten UAE INFRASTRUCTURE PROJECTS

Jebel Ali Refinery Upgrade Project

Etihad Rail Project Phase 2 (Package A Contract C0303

Owner: ENOC Budget: $1bn Progress: EPC prequalification This project involves upgrading of the existing Jebel Ali Refinery in Dubai. The refinery currently processes 120,000 bpd of crude and has two trains of condensate. Client is planning to add two new processing trains - jet and diesel hydrotreaters, and an isomerisation unit that will lead to the production of Euro 5 grade products such as highoctane gasoline, lowsulphur jet fuel and ultralow sulphur diesel. ENOC has invited companies to submit technical EPC proposals by November 16, 2015. Prequalifiers for the EPC contract include South Korea’s GS Engineering & Construction, UK- based Petrofac and Italy’s Saipem among other firms. US-based KBR carried out the FEED.

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January 2016

Umm Shaif Oil Field Expansion Project

Owner: Etihad Rail Budget: $800m Progress: Re-tendered

Owner: ADMA-OPCO Budget: $500m Progress: EPC contract award stage

The client has re-tendered the main contract on this project without the connection to Oman. In August, the bid submission deadline for main contract was extended from the previous deadline of July 30, 2015. Prior to the retendering, Etihad Rail was involved in extended negotiations with Italy’s Salini Impregilo / South Korea’s Samsung C&T / local Tristar and China Railway Construction Company / local Ghantoot Group. Submission of technical and commercial bids is currently underway for the main contract. An award is expected in November 2015, with construction anticipated to commence in December 2015. Client has invited consultants to resubmit PMC bids.

This project involves expansion of the offshore Umm Shaif oil field. Client aims to sustain the average annual output of this field at 275,000 barrels a day (b/d) by enhancing the existing infield oil gathering network to sustain the production target. The infield pipelines transfer crude from the field to offshore processing platform from where the oil is transported to Das Island for storage and export. Client plans to install a new manifold tower and riser platform along with installation and modification of several other facilities. Commercial bids have been submitted for the EPC contract;, Bidders include local National Petroleum Construction Company (NPCC), US-based McDermott and UK’s Petrofac.

ten UAE INFRASTRUCTURE PROJECTS

Deep-Tunnel Storm Water Network Project - Jebel Ali

Owner: Dubai Municipality Budget: $544m Progress: Request for Qualification stage The project involves the construction of a deeptunnel storm water network, which will collect rain and surface water in deep tunnels and then discharge it into the sea. The project is divided into three packages: Pumping station; Main tunnel, which will have a total length of 12km and a diameter of 10 metres; Lateral tunnel, which will have a total length of 11.15 km and a diameter of 9 meters. The storm water tunnel network has been identified as a key project to prevent any future flooding of AlMaktoum International Airport and the surrounding area, which will include the Expo 2020 site.

JEBEL ALI STP (Sewage Treatment Plant) PHASE 2

Silicon Park Project Dubai Silicon Oasis

Owner: Dubai Municipality Budget: $410m Progress: Bids submission for main contract

Owner: Dubai Silicon Oasis Authority Budget: $330m Progress: Bid evaluation underway

Jebel Ali STP will be one of the largest in the world, serving an ultimate population of 4.5m. The completion of phase 2 is expected to decrease the load gradually on existing Al Aweer sewage treatment plant. Phase 2 will use the existing infrastructure and roads that serve the first phase. The construction contract will include a provisional option for one-year operation and maintenance (O&M) of the entire STP. The client had set November 22, 2015 as the deadline for technical and financial bids. Belhasa Six Construct understood to be the lowest bidder. Other bidders include: AlGhandi/ CCC/ WTE / Wabag and CSEC; China Petroleum; Samsung Engineering and Kharafi National.

The project involves the construction of a silicon park comprising 97,000 sqm of office space, 25,000 sqm of commercial space, 20,000 sqm of residential area and 115-room business hotel. Touted as the first â&#x20AC;&#x2DC;smart communityâ&#x20AC;&#x2122; to be built at DSO, Silicon Park will be built with green building materials and control mechanisms, solar panels and doubleglazed windows to reduce heat absorption. Al Fanar, ASGC and United Ebgineering have submitted bids for the main contract while Thermo has bid for the MEP contract. du has signed a MoU with the client to provide the necessary telecom infrastructure. January 2016

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Construction

SOFT LANDINGS

Early on board The FM industry can help governments gain maximum value from their assets By Alan Millin e start 2016 on a high note for facilities management (FM), particularly at the governmental level where property portfolios are large and geographically dispersed. Local and national governments are realising many of the benefits that FM can deliver. Individual ministries are reinforcing their own FM capabilities through the delivery of structured FM training to staff members. This development will contribute to the increasing sustainability maturity of those organisations that embrace it. Governments around the region are urgently looking to gain maximum value from their assets and the FM industry is perfectly placed to support them in doing just that. FM can make a solid contribution to the success of client organisations and the earlier FM professionals are brought on board the better it should be for all parties. As government departments work to achieve the very best management of their assets, and in doing so reap maximum value, FM practitioners and champions need to be seen and heard at the very highest level. The benefits and value that FM can deliver need to be clearly articulated, while all claims of value will need to be fully supported. Maximum returns will of course come to those who engage FM professionals early in the project lifecycle. The call to include FM at the earliest opportunity in projects is certainly not new. FM professionals have been calling for it for years and it continues to gain support. The FM industry also has external champions supporting it now. The Soft Landings framework does its best to hammer home the importance of early FM inclusion on projects. Any developer, government

“Given the sheer scale of existing government property portfolios, along with the potential benefits, the scope for the implementation of Soft Landings projects is considerable.” 30

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January 2016

or commercial, stands to reap benefits by applying the framework and the good news is that it does not only apply to new developments. The Soft Landings framework can be just as useful on refurbishment and alteration projects. This is important and effective support for the argument of early FM inclusion in projects. Given the sheer scale of existing government property portfolios, along with the potential benefits, the scope for the implementation of Soft Landings projects is considerable. In Europe the UK government has recognised this potential and implemented Government Soft Landings. This adaptation of the original framework may be an option for governments in this region to consider. Soft Landings project champions need to have good contract management skills; which facilities managers should already have. Similarly, we will need stakeholder, communication and project management skills on a Soft Landings project. It should by now be apparent that a facilities manager is ideally equipped to promote Soft Landings with confidence as these are all FM competences. Commissioning is another domain that should be considered as early as possible in a project and this is also reflected in Soft Landings. It is also another area where FM gets an external boost. The National Fire Protection Association (NFPA), in its Recommended practice for commissioning of fire protection and life safety systems (NFPA 3:2015) notes that facilities managers could be included in the commissioning team. One of the activities that NFPA 3 suggests the facilities manager should undertake is to review and comment on the owner’s project requirements. This provides, within the scope covered by NFPA 3, the opportunity for the facility manager to link the owner’s

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Construction

requirements and the project design with the operational phase of the facility. This linkage is also what Soft Landings sets out to achieve, a connection between the initial idea, through procurement and into the operational phase of a facility such that the facility works as intended and occupier satisfaction is optimised. Of course we need to interact with occupants if we are to gauge their satisfaction levels. Soft Landings achieves this through post-occupancy evaluation (POE) and, by great coincidence, facilities managers are well equipped to design and deliver robust POE surveys and interpret the data. It should be noted however that the use of an external specialist may be preferable to conduct a POE to ensure independence and objectivity. That specialist could still be a facilities management professional. To support the achievement of in-use performance targets of government and commercial facilities alike we will of course need robust asset management systems. ISO 55001:2014 provides the framework for such systems and the standard also identifies FM as a relevant asset management subject area. At this point we have only touched on Soft Landings, NFPA 3 and ISO 55001 references to FM. There are likely to be other standards and authoritative publications around the world that will add to the weight of the FM argument. FM practitioners just need to find them and use them to greatest advantage, for themselves and for their clients. FM providers cannot afford to wait for busy government portfolio managers to conduct extensive research to find the information they need. They should be preparing case studies that inform. For government portfolios FM is, quite simply, too important to overlook. While Soft Landings provides â&#x20AC;&#x153;the golden thread, running through the project from inception to post-handoverâ&#x20AC;?, FM may just provide the spool that such golden threads need to be wrapped around to ensure successful, smooth, value-enhancing operations.

Alan Millin is a Dubai-based Facilities Scientist and noted thinker.

January 2016

INFRASTRUCTURE MIDDLE EAST

WHY WHAT HOW

50 ANSWERS ABOUT

INFRASTRUCTURE

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January 2016

1 How should the GCC countries be addressing the economic challenges arising from low oil revenues? CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND (IMF)

he GCC countries face the challenge of lower oil prices from a position of strength. Prudent policies over the past decade have enabled them to build up financial buffers which avoid the need for a sudden or disruptive adjustment in fiscal policy. Nevertheless, with low oil prices expected to persist for a number of years, all GCC countries need to undertake some degree of fiscal adjustment, although the size and urgency of this adjustment varies across countries. Well-planned fiscal consolidation strategies need to be put in place as soon as possible and communicated so that people understand how the adjustment will take place. How best to carry out this fiscal adjustment will depend on each countryâ&#x20AC;&#x2122;s specific situation. But the main elements are common across countries: an expansion of non-oil tax revenues; raising energy prices which are still well below international norms; firm control of current spending, particularly on public sector wages; and a review of capital expenditures. Reforms to strengthen the fiscal frameworks would support these consolidation efforts.

50 answers about infrastructure

Will a lower oil price translate to fewer infrastructure projects?

Which infrastructure sectors are showing an uptick in recruitment?

KARIM NASSIF, PRIMARY CREDIT ANALYST, S&P RATING

SANJAY MODI, MANAGING DIRECTOR, MONSTER.COM (INDIA, MIDDLE EAST, SOUTH EAST ASIA AND HONG KONG)

he drop in oil and gas prices contributed to a 58% reduction in corporate and infrastructure bond and sukuk issuances over the 12 months ended Aug. 31, 2015, compared with the previous 12 months. This declining issuance was partly because of the tightening of budgets at key government-related entities (GREs) that carry out important roles in infrastructure projects on behalf of their respective government. In some cases, limited government budgets prompted the cancellation of infrastructure projects. With regard to entities exposed to the oil and gas industry, a sharp reduction in capital expenditures is also leading to lower issuance. The weakening of the global economy is also a contributor and has resulted in a more cautious approach to investment both at home and abroad for our issuers. We observe, however, that GCC governments continue to invest in large public sector infrastructure projects. Still, the longer the oil price remains near current low levels, the higher the likelihood of seeing more infrastructure projects postponed or dropped. We note, in particular, statements from the Saudi minister of finance in early September 2015 that the country is looking to cut unnecessary expenditures. [Excerpted from Industry Report Card: Some Gulf Corporates Could Feel the Heat on Low Oil Prices]

3 How will the introduction of VAT impact the infrastructure sector?

ounis Haji Al Khoori, undersecretary at the UAEâ&#x20AC;&#x2122;s Ministry of Finance told Reuters last month that GCC countries have agreed on the main aspects of introducing value-added tax (VAT) in the region. He said the GCC is planning to implement the tax in three years, but the countries have not worked out a final agreement yet. The introduction of VAT is expected to compensate for the decline in oil and gas revenues on the one hand while strengthening economic diversification drive on the other. So far, the GCC member states have agreed to exclude healthcare, education, social services and 94 food items from VAT. Till further updates, it is an open book as far as impact on infrastructure projects is concerned. What is certain is developers, manufacturers and service providers involved in infrastructure projects will have to look at the VAT costs of the project as well if VAT comes into play. On the flip side, the tax revenues flowing to the government will be surely be re-invested in infrastructure development.

CC economic growth has slowed down due to the low oil price environment, which has adversely affected growth in the non-oil sectors as well. The job market has not been spared either, as revealed by the Monster Employment Index. The year-on-year growth last month has eased considerably as compared to Q2 and Q3 2015, with the Oil and Gas sector continuing to exhibit the steepest decline in job demand. In spite of the general slowdown in the job market, the Middle East is witnessing a rising need in serving the GCC Healthcare sector. Looking at the November 2015 data for professionals working in this field, job opportunities continue to soar reaching 36% year-on-year growth, in addition to the industry itself recording a 20% year-on-year growth in terms of job posting. This trend is reflected particularly in the UAE, with the Healthcare sector leading the year-onyear top growth charts with a 60% increase. [The index indicates that recruitment in Engineering, Construction and Real Estate grew only by two per cent]

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50 answers about infrastructure

Which was the fastest growing infrastructure projects market in the GCC last year?

uwait awarded record projects worth $39.4bn in 2015 compared to $24bn on the whole of 2014. The GCC state also has more than $251bn worth of development schemes planned or underway despite the sharp fall in oil income. In February 2015, the Kuwaiti parliament had approved a five-year development plan that envisages spending $112bn between fiscal 2015-2016 and 20192020. Planned projects over the next five years include a metro system at $18.5bn, a railway project as part of the GCC railway link at $6.6bn and a power plant at $8bn. Kuwait’s non-oil private sector growth is poised to hit 4-5% in 2016 and 2017, supported by accelerating project implementation and a robust consumer sector.

Which country has the best infrastructure in the Middle East?

he United Arab Emirates (UAE) tops World Economic Forum (WEF) rankings for the best infrastructure in the Middle East and is ranked fourth globally. In WEF’s Global Competitiveness Index 2015–2016 Rankings, the UAE was ranked in 1st for the quality of roads, 2nd for the quality of air transport infrastructure, 3rd for the quality of port infrastructure and 10th for the quality of electricity. The country ranks 17th overall in the index for 2015-16, “building on the positive trend of the last five years. Its excellent macroeconomic environment, highly developed infrastructure, and strong institutions provide a solid base, and the Emirati economy is significantly more diversified than other GCC countries.” (Source: World Economic Forum)

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January 2016

7 How is Qatar’s investment in transport infrastructure progressing?

atar is investing heavily in transport projects including the expansion of Hamad International Airport (HIA) and Hamad Port, the Doha Metro, long-distance passenger and freight network, and the expressway programme. The $8bn expansion of Hamad International Airport (HIA) involves expansion of the main terminal building and concourse D and E. Qatar is also planning to construct two additional container terminals at Hamad Port that would increase the $7.3bn project’s handling capacity to 6m TEUs by 2020. The $10.8bn expressway programme, which involves 1,000km of new or upgraded roads, 240 major interchanges and 360 bridges, has already seen 43 major contracts awarded. A total of 15 contracts are either in the market or are being prepared, while a further 23 are in the planning stage. On the rail front, the tender for the first phase design and build of the long-distance freight and rail network will be issued to contractors this year.

50 answers about infrastructure

What are the top macroeconomic factors affecting the region’s oil and gas sector in 2016?

What will be the long term impact of the lifting of ban on US oil exports? DAVE ERNSBERGER, GLOBAL EDITORIAL DIRECTOR OIL, PLATTS

ower oil prices have taken a hefty toll on governments whose budgets are heavily supported by energy revenues, including OPEC members. Oil and gas companies are also slashing expenditure and increasing staff redundancies in the Gulf and beyond. Nearly 45% of respondents to the Gulf Intelligence Industry Survey said that the restrained budgets in the Gulf will be the top macroeconomic factor affecting the oil and gas sector in 2016, followed closely by China’s economic weakness (38%). The weakening economies in the majority of BRIC countries (Brazil, Russia, India and China) and the US’ decision to increase interest rates will not have as much of an impact, with only 10% and 8%, respectively. A strong majority (71%) said that oil producers and companies will revise down their reported recoverable reserves of fossil fuels following an agreement at the COP 21 climate change meeting in Paris last December to limit global warming to below 2 degrees C and strive to keep temperatures at 1.5 degrees C above pre-industrial levels.

9 How long will the oil prices remain depressed? Terry Marshall, Senior Vice President at Moody’s

PEC oil producers continue to produce without restraint as they compete for market share, exacerbating the currently saturated markets. Russia has also greatly increased production, and the possibility that sanctions will be lifted on Iran in 2016 could flood the market with even more supply. We do not expect oil prices to shift significantly in 2016 from their late 2015 levels, which have touched multi-year lows in December. We assume that Brent crude, the international benchmark, will average $43/barrel (bbl), and West Texas Intermediate (WTI) crude, the North American benchmark, $40/bbl. For Brent, this marks a $10/bbl reduction from our previous assumption, and for WTI, an $8/bbl reduction. We assume that both prices will rise by $5/bbl on average in 2017 and 2018. Increasing consumption will not match the increase in supply. It will take time for these large global inventories to unwind, and combined with the possibility of new supply coming online from Iran, we expect oil prices to remain lower for a longer period than previously anticipated. Taking into account our forecast for economic growth and trends in energy intensity in each of the G20 countries, we expect oil demand to increase by around 1.3m barrels per day in 2016.

he deal unveiled by US Congressional leaders to lift longstanding restrictions on US crude exports comes as a big surprise to world oil markets, where conventional wisdom has broadly been that the walls built 40 years ago around the US crude oil market were there to stay. This agreement, tagged on to a massive government spending bill, is historically important for producers, refiners, distributors and consumers of oil in the US... within the US, there will be big winners, most prominently the WTI benchmark, and some who experience real pain, like US refiners. In the main, and as is often the case, the world’s markets seem to have priced most of these developments in, already. Economically viable oil exports found their way to market -- either through deals with Canada or as refined products. It seems more likely that refiners in Europe and Asia will be weighing up offers to buy crude from Iran and Iraq long before they turn their attention to what it would cost to get their hands on big volumes of Eagle Ford Shale, or any other US crude or condensate. The lifting of crude export will long be remembered as an exclamation mark, powerfully punctuating the end of the US’ remarkable mental journey from oil importer to oil exporter, and serving as a call to the rest of the world to be ready for a new US mindset, when prices do eventually recover. (Source: Excerpted from Q&A with Gulf Intelligence)

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50 answers about infrastructure

How far ahead is the oil industry in using data analytics to solve its pressing challenges?

11 How can the oil industry take advantage of the region’s abundant sunshine?

olar Enhanced Oil Recovery (EOR) is wellsuited for any region that needs steam to produce heavy oil and enjoys abundant sunshine. Many oil-producing countries have limited gas supplies. Using solar energy for EOR, allows gas to be redirected to higher value applications. There are many regions of the world that would benefit from solar EOR. Miraah (meaning mirror in Arabic) is a 1,021 MW solar thermal facility in South Oman, harnessing the sun’s rays to produce steam. The steam will be used in thermal Enhanced Oil Recovery (EOR) to extract heavy and viscous oil at the Amal oilfield. It is being set by GlassPoint for Petroleum Development Oman (PDO). The scope of this landmark project underscores the massive market for deploying solar in the oil and gas industry Unlike solar panels that generate electricity, GlassPoint’s technology uses the sun’s energy to produce steam. Its enclosed trough technology uses large, curved mirrors to focus sunlight on a boiler tube containing water. The concentrated energy boils the water to produce high-quality steam, which is fed to the oilfield’s existing steam distribution network. The first steam is expected in 2017. Miraah will the largest solar project in the Middle East and the largest serving the oil and gas sector worldwide. The actual solar field comprises of 36 glasshouses that span less than 2 km2. The adoption of solar competes well with gas and enables PDO to conserve precious gas resources for deployment to other strategic and high value industry sectors, while generating significant In-Country Value in terms of technology development, manufacturing and employment. The gas savings is enough to provide residential electricity to more than 209,000 people in Oman. It will also save more than 300,000 tons of CO2 each year from entering the atmosphere.

INFRASTRUCTURE MIDDLE EAST

ATIF KUREISHY, PRINCIPAL & DR MAHIR NAYFEH, SENIOR VICE PRESIDENT – TECHNOLOGY AND ANALYTICS, BOOZ ALLEN HAMILTON MENA

January 2016

he truth is that today less than one percent of the data currently available on a modern oil rig is being captured and analysed. This means three things. First, money is being left on the table in the form of suboptimal performance. Second, human resources are being underutilised because too much of their time is being taken up doing things that computers can do. Finally, if predictive analytics aren’t being employed to monitor critical equipment operators are not doing all they can to ensure that their people are working in the safest possible environment. Technological advancements in the industry have allowed for the execution of increasingly complex projects, allowing for the rapid and reliable recovery of hydrocarbons in even the most challenging environments. However, historically high-prices and large margins have meant that industry could get away with a great deal of inefficiency. Now, the rising cost of production due to increased complexity in oil recovery coupled with the volatility of oil prices are pressurizing companies to optimise their performance. Here again, data holds the answer. Successful vertical data integration can optimise virtually any individual process, and when done horizontally across the production value chain, and secured with robust cyber defence measures it can give a real boost to production. If you take the Gulf of Mexico for example, a full four per cent of production is lost due to downtime, and estimates are that in regionally that number could be much higher. Greater utilisation of automation techniques and interdepartmental data could drive these numbers down significantly.

How can the financially stretched hydrocarbons industry save on project costs and speed up delivery?

n current economic environment, lower prices mean lower revenues, which means oil companies have to do more with and avoid time and cost overruns that tend to plague the industry. The oil and gas industry take a leaf out of the experiences of the automobile and electronics industry by adopting modularisation and standardisation to deliver projects. According to McKinsey, by dividing a plant into modules that are standardised and then reused multiple times, direct project costs can be reduced by as much as 15% and project delivery can be speeded up by as much as 20%. (1) This approach can also be applied to oil field development. According to Tyler Farley, Senior Project Engineer, Halker Consulting, the key ideas behind the modular oilfield are threefold: repeatable, consistent and interchangeable. The goal is to minimise field construction by using prefabricated, predesigned pieces of equipment that are built on assembly lines with standard options in place. All the operator has to do is order up the pieces they need and effectively plug them into their system (2). 1. Saving time and money on major projects by Jeff Hart, Niels Phaf, and Koen Vermeltfoort; McKinsey Quarterly December 2013 2. Improving oil and gas well performance with modular facilities design - http://bit. ly/1TXz4vb

50 answers about infrastructure

What is the status of the UAE’s nuclear energy programme?

hen completed, the four reactors at Barakah will have a combined generating capacity of approximately 5,600 MW and will supply nearly one-quarter of electricity demand in the UAE. Barakah Unit 1 is more than 81% complete and Unit 2 is almost 60% complete. Each unit’s progression remains scheduled at approximately 12 months apart. Most recent construction milestones include the completion of the 2,000 tonne containment liner plate for the Reactor Containment Building (RCB) including placement of the upper dome, lifting the pressuriser into place and lifting the roof frame for the Unit 2 main control room. Emirates Nuclear Energy Corporation (ENEC) is currently working to obtain the approval of the Operating License from the Federal Authority for Nuclear Regulation (FANR) for Units 1 and 2 and is responding to Requests for Additional Information (RAI) from the regulator to proceed to operate the first two Units. The UAE peaceful nuclear energy program is scheduled to be complete by 2020, when Unit 4 is connected to the grid and provide the UAE with emissionsfree electricity to power the future growth of the nation.

What is the status of ‘Shams Dubai’ rooftop solar programme launched by Dubai?

o regulate electricity produced from photovoltaic panels to grid, the Dubai Executive Council issued resolution number 46 for 2014 to put in place a comprehensive legislation to connect electricity produced from solar power to the Dubai Electricity and Water Authority’s (DEWA) distribution system. DEWA’s Shams Dubai smart initiative encourages building owners to install photovoltaic solar panels to generate electricity from solar power. The surplus after on-site use is exported to DEWA’s grid. An offset between exported and imported electricity units is conducted and the customer account is settled based on this offset. So far, DEWA has received 27 applications to install PV systems in commercial and residential buildings, with a total capacity of 12MW. Investors have expressed willingness to invest in solar on other companies’ rooftops for an annual yield - a fact that changes the dynamics of the industry in Dubai. Businesses can install solar power systems with virtually no investment but with a leasing contract between the financier and the end-user for 15-20 year for a monthly tariff. To insure that PV systems are installed according to the highest international quality standards, DEWA trains consultants and contractors and then register them as enrolled consultants or contractors. Under the Dubai Clean Energy Strategy 2050, solar panels will have to be installed on the roofs of all buildings in the city by 2030.

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50 answers about infrastructure

What is the growth forecast for the Saudi Arabia’s electricity sector?

16 Is there a trend towards decoupling desalination from electricity generation?

opulation growth and rising consumption of electricity and water account means domestic energy consumption is on the increase at the cost of exports. The decline drop in oil prices has dented export revenues forcing governments to cut expenditure that also includes fuel subsidies. On the technical side, in the GCC countries, water demand is relatively consistent throughout the year but electricity demand tends to peak during the summer months as air conditioning load kicks in. The rest of the year, though electricity demand is low, full desalination output needs to be maintained. To produce the steam, one can operate the power plant inefficiently or installed a supplementary boiler. The costs involved and the energy wastage are clear in either case. The cost savings of co-generation are restricted only to the summer months when electricity demand is 100%. Decoupling electricity generation and desalination mean water output won’t depend so heavily upon the quantity of power produced. Flexibility apart, energy-intensity will be lower resulting in optimal utilisation of fuel. Once nuclear power plants go mainstream in the region, they will provide base-load power generation for electrically-driven desalination. This will strike a balance between thermal desalination and membrane-based desalination.

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January 2016

ccording to MEED Insight, Saudi Arabia will see the demand growth up to 2030 will average five per cent a year as a result of population and industrial expansion. Including under construction projects, it plans to add 47,711MW of generation capacity to the grid by 2024. A recent report by Frost & Sullivan stated the Kingdom’s energy demand is expected to grow by 45% from 69GW in 2014 to 100 GW in 2040, an amount that is nearly as much as all of the rest of the GCC. In anticipation the Kingdom plans to spend $109 billion to install 54GW of renewable energy by 2040. Recently, Saudi Arabia’s Royal Commission has signed an agreement with Al-Afandi Solar to build a solar cell and silicon panel manufacturing facility.

18 What are the opportunities in Egypt’s renewable energy sector? BAKR ABDEL-WAHAB, MANAGING DIRECTOR OF INFRASTRUCTURE PRIVATE EQUITY, EFG HERMES

e are bullish in the short- to mediumterm on Egypt’s renewable energy projects. But it’s a matter of properly executing the first feed-in-tariff wave. The Government’s implementation of the regulatory framework is one of the biggest challenges. Once the right implementation plan is in place, then it will be easy for international lenders to be fully comfortable with Egypt’s renewables sector There is a lot of focus on investors and developers, but we have to remember that 60-75% of the funding will be via debt from international and multi-lateral institutions. All the necessary structural changes need to be in place to assist aggressive debt financing. [EFG Hermes has predicted a debt and equity investment opportunity of approximately $6-7bn for Egypt’s feed-intariff renewable energy program to 2018] The country aims to generate 20% of its power from renewables by 2020. Many of Egypt’s renewable energy projects under the feed-in-tariff regime are split into 50 MW contracts, which has created a fragmented renewable sector that lends itself to further aggregation and consolidation.

50 answers about infrastructure

Why is district cooling making slow progress in the region given its benefits? GEORGE BERBARI, CEO, DC PRO ENGINEERING

n my view, the major players have lagged behind in technology, as if reluctant to emerge from a decade ago, and are focused on competing on increasing capacity, revenues and size. They seem content in using the motto that they are saving 40% energy compared to air-cooled systems and have not addressed customers’ complaints about expensive District Cooling services. I am not suggesting there is anything wrong in aiming to be among the largest District Cooling service providers in the world and in trying to increase profits and size. However, District Cooling needs to evolve into an industry that embraces the future and offers serious solutions to global warming at competitive rates that customers can afford. The road to evolution and improvement comes through a willingness to introspect and to ask questions of one self. Here are a few pertinent ones, in my humble opinion… If the customer’s actual peak cooling load is 1,000 tonnes of refrigeration (TR) and the customer’s consultant has designed the building with a design peak of 1,600 TR, then why is the District Cooling industry happy in overcharging 600 TR x AED 750 (or AED 900) per TR per year, which equals to AED 450,000 (or AED 540,000) a year? Yes, it is true that District Cooling providers have to put in the investment in plant and piping and also in customer connection, based on 1,600 TR, but what are the corrective and preventive measures being considered? Are the providers publishing actual building peak? And what are they doing, so that their future customers do not find themselves in a similar situation, caused by not adhering to the recommended square metre per tonne? Are they trying to reduce the connected capacity up to 20% after three years of operation and after confirming the actual peak load? Shouldn’t this be the least we ought to expect from them? When the District Cooling providers switch from the expensive fresh water to the more affordable treated sewage effluent (TSE) in Dubai and, through doing so, achieve eight fils

per tonne-hour reduction in cost, shouldn’t they pass on a major part of the savings to the customers and reduce the current 64-65 fils per tonne-hour to 56-58 fils per tonne-hour? DEWA charges 44 fils per KWh for central air conditioning and District Cooling while selling power to ducted splits and VRFs at 29 fils per kWh. Similarly, in my opinion, the slab rate in Saudi Arabia is not favourable to the District Cooling industry. Residences are charged five halalas per kWh as the first slab rate to residences, whereas central air conditioning schemes and District Cooling schemes are charged 26 fils per kWh. In Dubai, DEWA has promised to revise the rates. The question is, what are the District Cooling providers doing to persuade DEWA and the other utilities to hasten the change in rates? The GCC countries are putting aggressive targets in place to incorporate at least seven per cent Renewable Energy in electricity generation. Why are renewables not even on the agenda of the District Cooling industry? Be it around the District Cooling plant or away in the desert, the District Cooling industry ought to work towards having at least 10% of their energy produced through renewables.

The Government of Dubai has announced the renovation of 4,000 government buildings under the Etihad Energy Service Company. The DEWA HQ has been awarded to a leading ESCO on the basis of using 3 x 200 TR variable speed centrifugal chillers with magnetic bearing, which makes the entire plant designed for less than 0.9 kW/tonne, as compared to 0.85 – 1.05 kW/tonne in the case of the District cooling industry. The question that comes to the mind is how can the District Cooling industry benefit from the new technology? Tri-generation can save 70% of DC primary energy as compared to electric chillers. What is the District Cooling industry doing to promote tri-generation and to put a case where it can have a priority use of the Natural Gas in the UAE and diesel in Saudi Arabia? In the UAE, where we have 100,000 TR operating on Natural Gas, the District Cooling industry is entirely dormant. In Saudi Arabia and Oman, we are seeing greater momentum for tri-generation, but it is still not sufficient to create a massive change. (Excerpted from ‘What ails our industry,’ published in Climate Control Middle East, April 2013 edition)

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50 answers about infrastructure

What are the future prospects for the desalination market in the GCC?

ED JAMES, DIRECTOR OF CONTENT & ANALYSIS AT MEED PROJECTS

s oil revenues decrease and the issue of water has risen up the political agenda, governments have acted to try and dampen demand and reduce capital and operational expenditure. For example, earlier this year Abu Dhabi imposed water tariffs for the first time for UAE nationals while increasing existing prices for expatriate users as a means of decreasing subsidies and lowering demand. The move emulated Dubai’s decision in 2010 to raise water tariffs with the result that annual demand growth slowed from 10% to just four per cent in the emirate. Our data shows that over the last 10 years, the region has invested $76bn in standalone water projects. If we add the power component investment of these desalination facilities, that figure exceeds well over $100bn. Going forward, we expect the largest investments to be made in Saudi Arabia, Abu Dhabi, Oman and Kuwait, which have the steepest short-term demand projections. The addition of more than 1,500MIGD of new capacity will likely require a similarly large amount of investment. [According to the data produced by MEED Projects, the GCC’s current seawater desalination capacity of approximately 4,000 MIGD is set to increase to more than 5,500MIGD – nearly 40%– over the next five years as the GCC states invest heavily in increasing potable water supply].

INFRASTRUCTURE MIDDLE EAST

January 2016

Are GCC countries investing in water recycling and reuse as well?

Is solar energy being used for desalination in the region on a commercial scale? DR ABDULLAH AL ALSHAIKH, CEO, ADVANCED WATER TECHNOLOGY & FORMER PRESIDENT, INTERNATIONAL DESALINATION ASSOCIATION (IDA)

he key obstacle in the way of our progress towards sustainability is our ability to act. We have spent enough time talking about solutions, and not enough on implementing them. Advanced Water Technology (AWT), which I head as CEO, selected Abengoa to develop jointly, the world’s first large-scale desalination plant powered by solar energy. The plant will produce 60,000 m3/day to supply Al Khafji City in the North Eastern part of Saudi Arabia. This is a pioneering project globally, where a solar photovoltaic plant will provide the power required by the desalination process. It will also have a system to optimise power consumption and a pre-treatment phase to reduce the high level of salinity and oil present in the seawater. [The project is valued at $130m and slated for 2017 completion] I think using renewable energy for desalination is a game changer in itself because it slashes the operational costs of running a desalination plant. (Source: Infrastructure Middle East JulyAugust 2015)

opulation and economic growth, paralleled by industrial diversification, is placing immense pressure on water demand in the GCC. Realising that desalination alone cannot meet water demand, GCC countries are putting a lot of emphasis on wastewater recycling and reuse to increase available water resources. At one-third the cost of desalinated water, treated wastewater is seen a viable substitute for potable water in municipal, industrial and agricultural sectors for applications including landscaping, irrigating non-food crops and district cooling. Meeting growing demand for water purely through desalination isn’t sustainable because desalination is energy intensive. Its high cost is masked by government subsidies, which is a burden on the government. Water reuse is an economical option compared to desalination. Government regulations are also getting stricter concerning treatment and discharge. Abu Dhabi is committed to the goal of 100% use of TSE within five years. Abu Dhabi Sewerage Services Company (ADSSC) has started working on creating the necessary infrastructure to achieve the goal including the Strategic Tunnel Engineering Project (STEP). Saudi Arabia has set long-term goals of increasing water reuse to more than 65% by 2020 and more than 90% by 2040, all by transforming more of its existing and planned wastewater treatment assets into source water suppliers across all sectors.

50 answers about infrastructure

What are the key issues facing the aviation industry in the region? TONY TYLER, DIRECTOR GENERAL AND CEO, IATA

23 How is the region’s aviation sector faring in the face economic headwinds?

ccording to IATA, the Middle East will continue to be one of the fastest growing regions in terms of passenger traffic, expanding 4.6% per year on average to 2034. The region’s carriers are expected to see a 12.9% growth in passenger numbers in 2015, the only region with a double-digit expansion. In fact, the Middle East countries are pumping in billions of dollars toward expanding existing airports and building new ones. With Saudi Arabia planning to invest $12.3bn in its airports until 2020 and $32.7bn worth of airport investments underway or planned in the UAE alone, and Qatar planning to expand Hamad International Airport (HIA), the Middle East airport developments would be among the top two factors that will push regional and global investments considerably. Aviation remains a vital strategic player in the growing regional economies, especially in the UAE, where it almost contributes to 25% of the GDP.

ir Traffic Management (ATM) is an issue of pressing concern. Capacity has not kept pace with the growth in demand, which is leading to significant delays. I understand that Emirates alone has suffered 1,740,000 minutes of ATM-related departure delay for the year-to-date. There are 525,600 minutes in a year. So that is equal to having three of their aircraft completely unproductive for an entire year. Moreover, this leads to significant inefficiency to hub operations which we all know need high levels of on-time performance. Other major carriers in the region are similarly suffering. The region grew by 13% last year and that trend is set to continue. Without action, this situation will get much worse. Cooperation between States to achieve change is paramount. First, we need full commitment of States to the Middle East Enhancement Program (MEAP), This will facilitate regional cooperation in order to overcome fragmented airspace structures end ensure efficient infrastructure. Nobody is challenging sovereignty. We just need States to work together so that aircraft can get from A to B as efficiently as possible. That’s in everybody’s interest! The second element is more flexible use of airspace between military and civilian operations. Again, nobody is challenging sovereignty or the right of the military to airspace. But prioritising the current route network to take into account real traffic flows and looking at what is working in other regions on flexible use of airspace and dynamic route management could pay big dividends—particularly in the Gulf. Continued progress in all these areas is required in the short- and long-term. But If I consider what concrete achievements would be most useful by the middle of 2018, it would be for the airspace over the Saudi Empty Quarter to be opened up, and for traffic flow in the Muscat FIR to improve. I would also like to see air navigation service providers establish a mechanism to measure ATM system performance against user expectations.

25 What is the status of Saudi Arabia’s plan to privatise its major airports?

audi Arabia’s General Authority for Civil Aviation (GACA) plans to privatise the country’s airports by 2020. The King Khaled International Airport in Riyadh will be privatised in the first quarter of 2017. King Abdul Aziz International Airport in Jeddah will follow in the second quarter and King Fahd International Airport in Dammam in the third quarter of 2017. Foreign companies will be allowed to participate in the privatisation contracts without the need for local partners. The Kingdom has enjoyed success with the expansion of Prince Mohammad Bin Abdulaziz Int’l Airport in Al Madinah Al Munawara, which was executed a Build-Operate-Transfer (BOT) contract. The first phase of the Madinah Airport expansion project was inaugurated in July last year.

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50 answers about infrastructure

The region is building up and also adding new modes like rail to its transportation infrastructure. What should they be doing today to ensure that assets continue to perform well into the future? MARTIN BASSETT, DIRECTOR OF TRANSPORT AND INFRASTRUCTURE, WSP I PARSONS BRINCKERHOFF

e need to develop locally-based skills and experience in terms of operating, maintaining, renewing, rehabilitating, extending, modifying, enhancing these various assets. Another area is asset management or stewardship. Rather than looking at assets only in terms of design management or transport planning or project management or construction management, which is a relatively small period over the assetâ&#x20AC;&#x2122;s lifecycle, we need to stand back and ask: what is the overall lifecycle of the asset. We also need to ensure that we are mindful of the wider considerations in the design, construction and transport planning period â&#x20AC;&#x201C; ensuring, for instance, that the cost to keep that asset in service and operating at a high standard is optimised. Delivering sustainable transport and smart transport solutions that are an integral part the city and the society as a whole is of paramount importance. In fact, I see that as a duty and obligation of professional engineers such as WSP I Parsons Brinckerhoff. I see it as a duty to ensure efficient use of resources by society, not just in the design construction process that we are heavily involved in but also in the decisions that are made during the small window of opportunity and the impact that it has over the longer term lifecycle of the asset. In other words, ensuring that we are using renewable energy, minimising the use of water which is a precious commodity in this region, ensuring that we are using technology to provide the safest level of operable performance, that the assets are reliable, available and maintainable throughout their lifecycle so that they are continuously providing efficient and safe service to society.

INFRASTRUCTURE MIDDLE EAST

January 2016

What are the some of the key trends in GCC rail sector? SRINATH MANDA, PROGRAMME MANAGER, TRANSPORTATION & LOGISTICS PRACTICE, FROST & SULLIVAN

ailway projects are complex and need higher investments and longer time for development. Further, for almost all the GCC states, the railway projects being developed, especially long distance (national, regional) are the first set of projects in this sector. Hence, there are relatively higher challenges in realising the projects. Urban rail systems like Metro projects and LRT are being given priority over long distance projects in almost all the GCC states. One major reason for this is lack of integrated urban local transport system in most cities within the region (except for Dubai), and relative ease in realising the urban projects. Further, the Governments are focused on enhancing living conditions and transportation facilities within their prominent cities. We believe that the government agencies and the developers in the GCC states are aware of the need for integration of rail with other modes of transport, and appropriate links would be established with other modes once the rail networks are realised. We also believe that a significant share of traffic (both people and freight) is likely to be shifted to rail to make it economically selfsustaining. Success of rail in people transportation is already visible in case of Dubai Metro, and success in freight transport is also expected to be first visible from projects such as Etihad Rail linking transport hubs and industrial hubs. Revenues could be maximised through such freight trains.

50 answers about infrastructure

Could you share a unique example of how 3D printing can be used in the development of Infrastructure?

How are Unmanned Aerial Vehicles (UAV) or Drones advancing processes in the infrastructure sector?

DOMINIC THASARATHAR, SENIOR INDUSTRY PROGRAMME MANAGER FOR CONSTRUCTION, AUTODESK

ith their robots that 3D “draw” in steel, MX3D will print a bridge over the water in the center of Amsterdam. The Dutch company researches and develops groundbreaking, cost-effective robotic 3D printing technology. MX3D can 3D print beautiful, functional objects in almost any form. Much larger and more efficiently than possible until now, using sustainable materials. Printing an intricate, ornate metal bridge for a special location is the ultimate test for robots and software, engineers, craftsmen and designers. The bridge by designer Joris Laarman will be ready in 2017. The design process using new Autodesk software is a research itself, synchronized with the technical development and taking into account the location. The project is a collaboration between MX3D, software giant Autodesk, construction company Heijmans and many others. MX3D equips multi-axis industrial robots with 3D printing tools and develops software so that the robots print metals, plastics and combinations of materials in virtually any format. From large construction to small part – with this technique MX3D can 3D print strong, complex structures of durable material. The new technique is cost-effective and scalable, more than current 3D printing methods, and offers creative robot production solutions for art, construction and more.

29 How is reality modelling transforming construction of infrastructure? APURBA TRIBEDI, DIRECTOR, REGIONAL PRODUCT DEVELOPMENT, BENTLEY SYSTEMS

eality modelling adds the ‘as-built’ flavour on top of analytical modelling and design modelling, supplying real world context to these modelling environments. Bentley Systems started this journey a few years ago with our point cloud technology. However, point clouds are expensive because we have to use drones or LIDAR to get the point data that can be quite voluminous, and from there, you are trying to process and make sense of how the model will look. With our new ContextCapture tool, users can produce high resolution 3D models of existing conditions using photos taken with any digital camera. The software generates a 3D mesh incorporating the referenced photography. Instead of connecting the dots, if you will, you have a detailed reality mesh that is easy to render. The models can be any size or resolution, up to city scale.

hough Unmanned Aerial Vehicles (UAV) are a recent phenomenon on construction, common applications include aerial surveying, construction site inspection and monitoring, aerial photography and 3D mapping. UAVs can be used to collect realtime environmental data like air quality and temperature to ensure safe operation of projects, survey difficult or inaccessible terrain to capture data that can be used to design facilities efficient, and track realtime construction progress. Aerial imagery captured by UAVs can be used to create project site maps to communicate scheduled work and coordinate site logistics. By using UAVs to track daily changes on a construction site, project managers can inspect a large section of their sites using their desktop computer instead of walk-through, which very time consuming. Construction companies are also looking into incorporating data gathered from UAV into their 3D and BIM models.

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50 answers about infrastructure

What are the undercurrents in the region’s construction sector going into 2016? SACHIN KERUR, HEAD OF MIDDLE EAST REGION AT PINSENT MASONS

31 How do construction costs in the Middle East compare with the rest of the world? IAN WILLIAMSON, BUILDINGS GLOBAL BUSINESS LEADER AT ARCADIS IN THE MIDDLE EAST

hroughout 2015, the global construction market saw the overall level of cost inflation restricted due to the drops in commodity prices. Particularly when it comes to oil, growing uncertainty over prices will inevitably have a short to medium term impact on the GCC construction industry. The region’s major commercial centres of Doha and Dubai remain – for the time being, at least – relatively stable locations for developers, benefitting from access to inexpensive labour and energy. [Dubai, Doha and Jeddah are among the least expensive cities in the world in which to build in thanks to access to low-cost labour and energy, according to an International Construction Costs Index, published by Arcadis. Within the region, Doha is the most expensive city for construction followed by Jeddah and Dubai.] With the steep fall in the price of oil, the timing of investment programmes across the Middle East has become uncertain. Declining commodity prices, low labour rates and a highly competitive Middle East construction market have given rise to more potential opportunities across newly-affordable markets. It is a good time for government, funders and developers to capitalise on their investment ambitions.

INFRASTRUCTURE MIDDLE EAST

January 2016

snapshot of opinion from the GCC’s construction sector – the majority of which are companies involved in larger projects with a value of over AED 100 million – has shown a dramatic drop in optimism over the last year. Nowhere in the region is falling optimism as pronounced as it is in Saudi Arabia. This is to be expected given the challenges the country is facing and the central role oil maintains in its economy. Despite this, there is a general sense amongst the industry that if the current financial squeeze can deliver greater diversification of the economy, Saudi Arabia will remain a highly attractive market. Indeed there have been some positive diversification measures discussed in the Kingdom, which if implemented should enable greater private participation in the economic development of the country. Meanwhile, in Qatar, they are benefiting from a natural bounce as the World Cup edges closer. The lack of anticipation of more PPPs was a surprise, on account of the fiscal challenges facing many countries in the region. These arrangements could offer a favourable solution for numerous major infrastructure and construction developments, and there have been legislative changes made to make them more accessible and attractive. It may well be that the private sector still believes more reform is needed before PPPs become mainstream. [Pinsent Masons’ Annual GCC Construction Survey was presented to representatives from the industry at the international law firm’s recent Annual Construction and Engineering Law Conference]

33 Should we be worried about a repeat of 2009? ENG ANWAAR AL SHIMMARI, DIRECTOR OF PROJECTS PLANNING DEPARTMENT, UAE MINISTRY OF PUBLIC WORKS

’m stating my own opinion here - I’m not going to say that another fiscal deficit will not have any impact on project planning, because it would. There will definitely be an impact, but the government will make sure that it will be minor. Even during the 2009 crisis, the support from the government was really strong. And it also worked hard to ensure that the private sector would not be jeopardised. Today, the government is determined that there will be no repeat of 2009. (Source: Infrastructure Middle East October 2015]

50 answers about infrastructure

What is off-site construction?

Why precast is gaining more prominence with regard to the built-environment?

FAIZAL E KOTTIKOLLON, FOUNDERCHAIRMAN, KEF HOLDINGS

ENG. ABDULLAH RAFIA, ASSISTANT DIRECTOR GENERAL ENGINEERING AND PLANNING SECTOR, DUBAI MUNICIPALITY

n today’s performance-driven construction landscape, prefabrication is considered a significant advancement within facility designs, construction and procurement. Through our newly-launched facility in Jebel Ali, KEF Holdings is keen to provide world-class expertise in design, engineering, manufacturing, assembly and project management. The prefabrication concept is fast-gaining popularity in the UAE as site work and construction take place concurrently, rather than one after the other. Big savings can be made with shutteringrobots being programmed on building information modelling (BIM) to create exact shapes using a system of steel shutters and magnets. In addition, KEF’s ‘graphic concrete’ system provides precise wall finishes that exempt external finishing works such as plastering or painting.

Do sustainable, high performance buildings stack up well against the back drop of slump in the oil prices and overall general mood in the GCC region? MARIO SENEVIRATNE, MANAGING DIRECTOR, GREEN TECHNOLOGIES

oday, everyone is talking of Net Zero Energy buildings. The thinking is that we have achieved Green Buildings, so let’s now focus on net-zero-energy buildings. The fundamental purpose of net-zero-energy buildings is to reduce energy consumption by ASHRAE less 60-70%. Net-zero-energy buildings are about PV, or any energy generating mechanism, within the footprint of the building. The easiest way to have a net-zero-energy building is to put a farm of PV next to it; however, it is going to be prohibitively expensive, given the cost of land and the cost of PV. If 100kW is the demand profile of a building, you need 100kW of PV, or more. If you reduce 100kW demand by 40% by doing good engineering and a good envelop, you will need to incorporate only 40kW of PV. Good engineering and good architecture will lead to low solar exposure and reduce the peak demand of air conditioning. It’s a twoway approach; and at the end of it, you will have a net zero energy building. (Source: Climate Control Middle East January 2016)

key aspect of smart sustainable city is sustainable built environment. It is quite a challenge to provide economical and sustainable material to build a city like Dubai which is growing and expanding every year. The first and most important factor in evaluating the efficiency of materials is sustainability. Precast concrete greatly lowers the carbon footprint in construction. However, sustainability in itself may not be sufficient as the economics must make sense. Using circular economy argument instead of conventional economy, the use of more sustainable materials and more sustainable techniques like precast can be justified better. The major benefits associated with precast - Architectural and structural - are time and cost savings and better quality. It is possible to get 50% reduction in cost through proper application of precast methods in comparison to cast in-situ concrete. Material waste is significantly lower in precast concrete compared to in-situ. Using precast fabrications reduces labour costs by up to 25% as compared to conventional concrete. [Excerpted from Eng Rafia’s keynote speech at 3rd Annual ‘Precast for All’ Conference in Dubai]

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50 answers about infrastructure

What Building Information Management (BIM) is not! NADER RESLAN, INDUSTRY SALES DIRECTOR, TRANSPORTATION, BENTLEY SYSTEMS

IM is an evolving technology that deals new and innovative ways of approaching the design and documentation information during different stages of building. When we say building, we refer to it as a continuous verb rather than a physical asset; it is the process of building the infrastructure. BIM embraces the entire lifecycle of the building process beyond the initial design phase to include build, operations and maintenance phases. BIM is not really a product – you cannot really buy BIM; it is not a specific data format or vendor-specific initiative; it is not a massive 3D model or a massive GIS model or a massive 3D/GIS hybrid that you put together. BIM is a process that must be understood by the people and be supported by whatever IT systems and solutions you have in that process. By insisting on the use of BIM to build up the information model right from the planning stage, the project owner can ensure that the information is mobile as the project moves from one phase to another – from design to construction to O&M - and is available to different stakeholders within that phase. The model can be kept up to date with all the information, standards and specifications and more important, the changes to the original design that happen during the construction phase or to the equipment during O&M. This saves them the trouble of doing re-engineering or resurveying when moving between the phases or when a new stakeholder comes into the picture or even when the infrastructure ownership changes hands. You not only end up with a huge, physical infrastructure but also an equivalent digital infrastructure. With BIM, you can integrate all the information in one model and in one place, which is the ultimate goal for the project-owner.

INFRASTRUCTURE MIDDLE EAST

January 2016

38 Where does resistance to BIM come from? CALLAN CARPENTER, VICE PRESIDENT, GLOBAL SERVICES, AUTODESK

esistance comes from two sources – firstly, a lack of understanding of what BIM really is – for many people, BIM is just the next generation of CAD. They say - Do I really need another CAD tool? Let the architect worry about it. I don’t need visibility into this. Secondly, resistance to change is human nature. BIM requires you to do things quite differently than you have before, and even have different skills than you had before. People may be concerned whether their skills become obsolete if move from drawings-based management system to a model-based system. There is a natural human resistance, and that is where the consultancy services that we provide come in because we are trying to help customers understand that BIM is 80% about people and business process change, and only 20% about technology. We tell them that to get better business outcomes, they will have to change the way people work or hire new people with new skills, enter into a different contracting relationships with their supply chain because they have to share information as opposed to hide information. The workers who would actually use this technology, we have to help them understand how to move their skills from what they are used to doing to the new system and convince them about its benefits.

50 answers about infrastructure

What will be the impact of US rate hike on the region’s infrastructure spend?

What is the scope for project bonds in the Middle East?

he rate hike come at a time when gulf economies are suffering from a severe economic slowdown due to the excessive dependence on oil revenues. Also, banks in the gulf region have been hit with tightening liquidity conditions in the recent months owing to the decline in oil prices. A marginal increase in rates would is expected to have minimal impact on gulf economies in the near term. However, subsequent rate hikes, as indicated by the Fed Reserve, would result in higher financing costs for corporates and therefore would in turn affect corporate profitability and performance in the long-run. It would also keep oil and commodity prices under pressure. Governments’ borrowing costs are also likely to increase that would affect infrastructure spending plans in the long run. However, higher cost of financing by the end of 2016 would force corporates to look at other modes of funding. Source: Kamco

40 How are projects getting funding in the current environment?

ince the onset of the global financial crisis, many banks in the Middle East that were previously able to lend to project finance structures on a long-tenor basis (10-40 years) have ceased to have the appetite or ability to do so apart from lending to traditional projects in the power and water sectors over the last few years where the majority of projects still continue to be financed on a relatively long term basis (typically 20+ years). It is therefore interesting to observe that financiers providing project finance in the region include a full spectrum of players from conventional commercial and Islamic banks to multilateral agencies and Export Credit Agencies (ECAs). The market is starting to develop solutions to deal with longer-tenor financing challenges, as well as solutions to deal with the more general challenge of lack of depth in the bank debt market. These solutions include: • Development of mini-perm solutions (soft and/or hard bullet), which can help facilitate capital markets access and better economics to infrastructure projects • Development of other capital market solutions to include construction financing/ bridge to bond solutions and additional methods to channel institutional capital into projects (including debt funds, agency models and direct investment/lending units in institutions). • Diversification in sources of financing to include ECAs, Islamic Finance providers, government grants/guarantees and multilaterals (Source: Deloitte GCC Powers of Construction 2015)

he bank market’s role as a source of cheap liquidity is expected to change as Basel III regulations kick in, resulting in liquidity becoming priced higher. As a result, putting out funds for the long term, particularly in US dollars for tenures of 20 year plus or ones that match the initial life of the infrastructure could become a thing of the past. The clamour to develop debt capital markets as an effective alternative to bank finance gained traction thanks to ADWEA’s success with Shuweihat S2 refinancing. The transaction involved issuing $825m in project bonds for the development of Shuweihat S2 IWPP in July 2013 to effectively launch the first tradable power project bond in the GCC. Project bonds effectively recycle bank capital, creating revolving market where banks can exit after 5-7 years or even shorter tenures. Shuweihat S2 also marked the first time that long-term take and hold investors from the US put their money into the region.

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50 answers about infrastructure

Which sectors are being given priority by the GCC governments in their 2016 budgets?

espite the economic downturn, social infrastructure remains a top priority for the region’s governments. The 2016 UAE federal government budget gives priority to services that touch on the lives of the people and more than 50% of the budget has been allocated in the following sectors: education (21.2%), social development (15.5%), public services (11.1%) and health (7.9%). Bahrain is investing in housing for citizens with housing projects securing 35% of the $6bn funds. Housing Minister Eng. Bassim Al-Hammar said 2016 will witness launching new projects to include the Northern City, East Hidd and Al-Ramili Housing projects. In Saudi Arabia, education and healthcare remain the focus of government spending, accounting for 35% of total spending of 2016 Fiscal Budget.

42 Is the utilisation of underground space taking off in the region? NICK CHITTENDEN, REGIONAL MANAGER FOR BASF UNDERGROUND CONSTRUCTION MIDDLE EAST

here are many reasons why underground space utilisation will continue to grow. An increase in population leads to decrease in space, and once you run out of space on the surface, you have got two options - either go up or down. If you go up for storage, that’s utilising space that people want to live in. So you go down and that’s why you have underground car parks, and taking it further, underground storage facilities for oil, water, aggregates. Highly developed countries like Singapore and Switzerland even utilise underground space for factories that require extremely clean or sterile environment, like semiconductor manufacturing or for medical research. In this region, underground space can be utilised for storage of water or agricultural produce or even strategic oil storage. It is a long-term, sustainable and durable option.

INFRASTRUCTURE MIDDLE EAST

January 2016

How is the focus on building healthcare infrastructure on the part of GCC states translating into opportunities?

ccording to GCC Healthcare Construction Market Outlook from the Ventures Middle East Onsite, released last year during Big 5, around $5.9bn in contracts were awarded in 2014, but that figure is set to rise to $7.3bn in 2015, as population growth, higher per capita income, and life expectancy drive demand for healthcare services. The healthcare industry in Saudi Arabia is projected to remain the largest in the region, and register a CAGR of 9.2% from 2015 to 2020. Compound annual growth of seven per cent will see UAE join Qatar in registering the fastest growth as both countries seek to capitalise on an emerging medical tourism industry in the region. According to the report, the UAE is building more than 20 hospitals to care for the half a million medical tourists that are expected by 2020, with medical revenues to hit $300m by 2016. At the same time, the report states that Bahrain, Oman, and Kuwait are also expected to register a significant rise in project completions in 2015. According to a report by Ardent Advisory, the GCC currently has 37 mega hospital projects, worth an estimated $28.2bn. The upcoming projects are expected to add over 22,500 new beds in the GCC. Public healthcare expenditure currently accounts for 70% of the total healthcare spends in GCC. Governments are now looking to get the private sector more involved by promoting PPPs by rolling out mandatory insurance coverage and encouraging private hospital operators to set up facilities across the region. KSA and the UAE lead GCC in terms of PPP deals, evident from the large number of international hospitals in these countries.

50 answers about infrastructure

Is there an affordable housing gap in the UAE?

he issue of affordability has been one that has been quietly bubbling away in the background for some time. With the introduction of the Federal Mortgage caps and the doubling of property registration fees, we saw genuine end users in the market forced into a holding pattern as they attempted to make the transition from rented accommodation to owner occupation. The idea of affordable housing is not a new concept and it has served cities such as London well, where developers are liable to provide affordable housing for developments starting with as little as 10 units. In particular it has aided in the creation of diverse communities, while allowing people from all financial backgrounds to live alongside one another. During the course of expansion of any city, affordable districts often tend to spring up on the fringes of the main commercial districts and this has been the case with Dubai as well. Karama and Satwa have over time been absorbed into the city, but we would strongly argue against deliberately creating affordable areas through the sanctioning of off-site affordable housing provisions as there are social implications to consider alongside the impact it can have on the urban fabric of a city In the case of Abu Dhabi, with the Abu Dhabi Urban Planning Council’s decision to enact legislation requiring 20% of every new development to offer “affordable homes”, it remains to be seen whether these take the form of discounted rental properties, are offered under some sort of rent-to-own scheme or if they are simply sold at a discounted market rate to those who are eligible. The eligibility criteria set for potential buyers will need to be carefully checked and enforced if the scheme is to be a success. No property re-sales for a period of five years may be a way to deter speculative activity and would also mirror moves being mooted by the UK’s conservative government as a way to limit buying activity to genuine end users. Source: Cluttons Middle East

46 How does one deliver affordable housing? Is there a way to reduce construction costs of affordable housing? NESAR REZA KHAN, HEAD, INVESTMENT AGENCY, GGICO PROPERTIES

hese master planned developments are not necessarily skyscrapers; they’re G+4, G+6 or G+8. Typically, we concentrate on studios and one-beds, going up to 2-beds maximum. These projects are for the midsegment, with a household disposable income of between AED 9,000 and 15,000. If the developers could afford in-house financing, where 30% of the construction cost is allocated during the construction process and the balance of the 70%, and if we could get that from the investors or the end-users post-completion, that would make it more affordable for the mid-segment. In a typical project where the developer is also in charge of the infrastructure, it would come to at least AED50-100 per square feet for infrastructure cost. On top of that, we’re looking at AED 100 per square feet for professional cost and project lifecycle management cost; any kind of quality development will cost you AED300 per square feet. That’s already AED500 per square feet, and it’s still without the cost of land. For a private developer, it is very difficult to embark on a project, wherein you want to pass an end-product to an end-user at AED500600 per square feet. We almost have to reach a limit of AED800 – minimum – so that we can ensure profit for private developers. My advice to parties, both from the government side and the private sectors, is to develop a public-private-partnership model that would make affordable housing economically sustainable.

January 2016

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50 answers about infrastructure

Why is energy efficiency important for the construction and infrastructure sectors?

47 What are the opportunities in the region’s waste-to-energy sector?

ith 80m tonnes of waste generated per year, the GCC countries produce a higher amount of waste per capita than any other region in the world. As a result, governments have started to look at waste-to-energy as an important mode of waste management and landfill waste reduction as well as a source of power. For example, UAE Vision 2021 aims to raise the percentage of processed waste out of the total waste produced to 75% by 2021. According to a report from the International Renewable Energy Agency (IRENA), the UAE’s waste profile is well-suited for wasteto-energy, although emirate-level government reluctance to raise or, in some cases, charge disposal fees has created complications around financing. It points out that an engineering, procurement and construction (EPC) contract has been awarded for a 53MW facility in Sharjah by Bee’ah, one of the Middle East’s most advanced waste management companies. The facility will use gasification technology and recycle 400,000 tonnes of waste. The UAE has also started to look at landfill methane recovery. Bahrain too is planning a 390,000 tonne per year waste to energy facility. In Oman, the government-owned Oman Environmental Services Holding Company (Be’ah) is overseeing the management and eventual privatisation of the solid waste sector in the Sultanate, and is studying the feasibility of a waste-to-energy project aimed at converting municipal waste to produce electricity for seawater desalination.

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he GCC witnessed unprecedented economic and industrial development in the last decades that led to an increase in domestic energy consumption. Forecasts indicate an increase in domestic energy consumption with a growth rate that could reach 6% to 8% annually. As a result, Saudi Arabia, for example, has established Saudi Energy Efficiency Centre, which is responsible for the demand-side management of energy projects, and the Saudi Energy Efficiency Programme for transportation, buildings and industry. The Saudi Arabian Standards Organisation (SASO) oversees the implementation and standards of the national energy efficiency appliance labelling programme, as well as mandates for appliance efficiency standards. The country is developing a Mandatory Energy Efficiency Plan that will include energy conservation targets. Qatar implemented mandatory sustainable building criteria in December 2011. In the case of Dubai, the Supreme Council of Energy is driving the implementation of Demand Side Management (DSM) strategy, the first of its kind in the region. The strategy has nine programmes to manage energy demand. These include green building regulations, retrofitting existing buildings, district cooling, wastewater reuse, laws and standards to raise efficiency, energyefficient street-lighting, and Shams Dubai initiative to regulate the generation of solar energy in buildings. Dubai Electricity and Water Authority (DEWA) has established Etihad Energy Service Company (Etihad ESCO) to encourage energy service companies in the market and to promote energy efficiency business. Over 30,000 existing buildings in Dubai will be retrofitted by 2030. Dubai Municipality is planning to introduce a new ranking system for rating a building’s energy efficiency and a new law setting minimum standards for retrofitting properties. The GCC countries are also encouraging energy efficiency opportunities in critical infrastructure sectors including oil and gas, utilities and transportation. For example, in Qatar, ExxonMobil has joined with Qatar Petroleum to conduct a thorough review of RasGas LNG trains and Al Khaleej Gas plants to monitor plant performance to identify plant and energy efficiency opportunities. With many countries reducing energy subsidies and raising electricity tariffs, the focus on energy efficiency is expected to be greater than ever.

50 answers about infrastructure

What are the investment opportunities available in Iran’s power sector? ALI MIRMOHAMMAD, SENIOR CONSULTANT AND BUSINESS DEVELOPMENT MANAGER, FROST & SULLIVAN

49 What are the opportunities in Iran’s hydrocarbons sector post-sanctions era?

he international oil and gas industry turned its collective attention to Tehran towards the end of last year as the Iranian Ministry of Petroleum formally unveiled the new Iran Petroleum Contracts (IPC) and dozens of projects that are to be opened to international investment. Two years in the making, the IPC is a step away from the previous buy-back contracts that were unpopular with international oil companies, now in some cases allowing reserves to be booked, covering a period of up to 25 years and NIOC no longer limiting capital spend, in an effort to stimulate interest from international oil companies following the formal dropping of sanctions. Over 50 projects are being offered, worth more than $30bn, which the Ministry hopes will boost total oil production capacity to 5.7 MMbpd by the end of 2020, up from 2.7 MMbpd in October, and further increase Iran’s gas output from its huge gas reserves. HE Roknoddin Javadi, Deputy Oil Minister and Managing Director of NIOC has stated that the framework is negotiable rather than a uniform contract for all investors. A critical addition to the contract framework is the requirement for international companies to form joint ventures with local Iranian companies. Also, more than half of engineering and construction equipment manufacturing needs to be done by Iranian firms. (Source: The Cwc Group)

he electricity market in Iran grew at a Compound Annual Growth Rate (CAGR) of 6.5% over the past 10 years, which is far beyond its gross domestic product (GDP) growth rate, which is currently not more than 3%. Iran has witnessed the emergence of new participants in the manufacturing and agricultural sectors. Additionally, every year, almost 1.4m new consumers are added to the electricity market. These developments require an additional capacity of 5,000MW for each year and enhancement/new investments in the distribution and transmission network. Power generation plants in Iran are the main consumers of natural fuel resources and consume over $30bn per annum of various fuels including Natural Gas (36 BCM), Gas Oil (12bn litres), and Fuel Oil (15bn litres). Poor efficiency in the power generation and transmission infrastructure results in a huge loss to the economy (over $200 million per 1% loss during transmission) that needs to be urgently addressed through new investments. Installing new generation high-efficiency turbines, design and construction of new GIS sub-stations, construction of high-voltage transmission lines, as well as inclusion of renewable and green technologies into the energy mix are major plans expected to be implemented by the Iranian Government in the post-sanction era. In addition, biomass from rural waste is the other key investment opportunity in Iran. [Based on Iran’s energy road map, the Government plans to embrace green technologies to increase nominal capacity of power plants from 74 GW to over 120 GW by the end of 2025. Currently, less than 1% of the total energy in Iran is supplied through renewable energies]

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UTILITIES

ROAD TO MATURITY

‘District Cooling is a challenging market’ Kamal Pharran, CEO of Saudi Tabreed, gets candid in an exclusive interview with Rajiv Pillai of Climate Control Middle East, on the status quo, challenges and the future of District Cooling in the Kingdom ou have an interesting project that involves supplying chilled water to Saudi Aramco as a single customer. Could you share with our readers the key and unique lessons you have learnt from the Saudi Aramco project? Also, do tell us about your current projects in Saudi Arabia. Our first project was with Saudi Aramco, and it was the result of a strong drive and commitment from Saudi Aramco for energy efficiency and green sustainable initiatives. Our close collaboration with them resulted in having a District Cooling scheme with a capacity of 32,000 TR, which we completed successfully by mid-2012. The Aramco District Cooling scheme is one of our flagship developments, when things come to our outsourced District Cooling solutions. The scheme covers the Dhahran area – the heart of Aramco facilities and management structure. We are very proud of this accomplishment, and more importantly, of the trust that we developed with the Aramco management as a result of our long-term partnership. We, at Saudi Tabreed, are bringing the best from our shareholders. We signed the contract for the Aramco project in 2010. The District Cooling plant supplies to the whole of Aramco management buildings and support facilities. Aramco is an oil company. However, at the same time, they plan to go green and reduce electricity consumption and CO2 emissions. Therefore, they were the pioneers in Saudi Arabia when the company went ahead with the idea of District Cooling. It is a partnership at the end of the day, because it is based on a build-own-operate (BOO) scheme. Building upon the success of the Aramco project, Saudi Tabreed was also successful in implementing a project with a 100,000 TR capacity at King Abdullah Financial

satisfy almost 50% of the cooling demand. We aspire to see the District Cooling industry in the Kingdom as big and mature as that of the UAE and Qatar in the coming decade.

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January 2016

District – the largest District Cooling scheme under the design-build-operate (DBO) framework in the Kingdom so far – and the BOO District Cooling scheme with a 55,000 TR capacity in the Jabal Omar area in Makkah Al Mukarramah, which will help in optimising the energy and space allocation within Makkah’s tight land allocations and busy schedules. In addition to all this, we also have our most recent project at King Khalid International Airport in Riyadh, which adds a 35,000 TR capacity to our project portfolio. How do you perceive the District Cooling market in the Saudi region and the Middle East as a whole? Saudi Arabia is a country where six months of the year the climate is extremely hot. Saudi Arabia is really expanding, and it is a large country, and in line with that, the demand for cooling is really growing. It is one of the countries with a population that is growing. I am sure that the government is facing many hard challenges to provide sufficient electricity to the Kingdom. District Cooling is one of the best solutions for the government, and it is an improved technology that will

What are the major challenges that District Cooling faces in Saudi Arabia? When we talk about the full cycle of the development of a District Cooling scheme, the challenges remain in each and every component of the development. Financing, for example, is very much linked to the creditworthiness of the developer/end-user. The BOO/BOT (build-operate-transfer) framework is very much structured for a single off-taker, provided he is capable of handling the financial commitments, and more importantly, is having the capacity needed to secure the financing. We are talking about financial history, shareholder’s creditworthiness, other banking facilities used, etc. Another important component is the means by which revenue is being collected. The billing cycle and the way payments are made. District Cooling regulations are not yet in place to organise and streamline the relationship between the end-user and the developer. Hence, billing and collection cycles are neither clear nor framed in a structure, where responsibilities and limitations are addressed for both parties. Securing financing under private developments without a single off-taker is another obstacle. The availability of water connection points to any District Cooling plant across the Kingdom is a major challenge, which we are trying to solve and mitigate via alliances and partnerships with different stakeholders. What is the penetration rate of District Cooling in Saudi Arabia? From a private sector perspective, the decision-makers in this part of Saudi Arabia are starting to come around to the

UTILITIES

idea of District Cooling and understand the value added behind it. We have aligned our company with most of the private megaprojects in the Kingdom. However, to be more honest, it is, indeed, a challenging market. We are still working on enhancing the exposure of District Cooling to the Kingdom via different stakeholders. Project financing remains a big challenge, particularly, in the private sector, namely, when talking about long-term project financing. The off-taking agreements structure and framework is another challenge. We, in the Kingdom, do not have a regulation yet to facilitate the use, implementation and financing of District Cooling projects. Our portfolio of projects was covered under longterm financing with hand-picked clients with whom banks felt comfortable dealing with. It is not always the case. The District Cooling industry, overall in the Kingdom, is not as matured as the industry in the UAE or even in Qatar. The Ministry of Water and Electricity is recognising how District Cooling will help reduce the consumption of electricity and the associated upfront investments in electricity and infrastructure. However, when things come to boots on the ground, nothing has been achieved from a District Cooling facilitation perspective. It is true that we are experiencing a fundamental change, driven by energy efficiency and cost-effective solutions; more importantly, a ‘need’ rather than an interest. The market and stakeholders in the Kingdom are still evolving, and we hope fundamentals would help us further in reaching out to more clients and end-users, as the District Cooling industry matures. Let us say that we are ahead of the learning curve for District Cooling from an awareness perspective. However, when things come to facilitation and implementation for District Cooling, we are still on square one when compared to other countries in the region. What are you doing as a company to increase the market penetration? We did invest time and effort in going through the learning curve, and following the main principles of District Cooling, with most of the government, semi-government entities and private sectors. We sponsored leading conferences and seminars with an aim to further promote District Cooling platforms

and initiatives. We organised site visits for public and private officials to our plants in Abu Dhabi, Dubai, Qatar and Bahrain. We worked hard on highlighting the valueadd from a macro- and micro-economic perspective for both sectors. We showed people what we did in Abu Dhabi, Dubai, Qatar and Bahrain. Our new project for the King Khaled International Airport is, indeed, the right foundation for government initiatives to outsource cooling requirements under BOT frameworks. We look forward to this trend and hope to capitalise on the potentials of energy efficiency and District Cooling platforms.

District Cooling regulations are not yet in place to organise and streamline the relationship between the end-user and the developer To what extent are power subsidies affecting the acceptance of District Cooling in the Kingdom? This is mainly applicable to government projects, as the government is paying for the bills, whether it’s subsidised or not! Other macro-economic fundamentals would also apply for the private sector, namely, CAPEX associated with infrastructure, like power substations and cables. Considering that there are several construction projects planned in Saudi Arabia, how does Saudi Tabreed plan to benefit from them? Our growth strategy is strongly aligned with the Kingdom’s needs and requirements, to further optimise energy consumption for cooling systems. Our main focus is on our outsourcing mechanism via long-term BOO/BOOT (build–own–operate–transfer) frameworks for our District Cooling schemes throughout the Kingdom, namely, for mega projects. Again, if we talk about what the need is in Saudi Arabia, 70% of the consumption of electricity in Saudi Arabia is for cooling. If you compare District Cooling to

conventional air conditioning, we are talking about a 50% savings in electricity. Therefore, by comparing this formula, you will see that District Cooling can reduce the electricity consumption of Saudi Arabia by around 3040%, which is a huge saving. What is your current tariff structure in Saudi Arabia? Do you plan to reduce the tariff for District Cooling? There are three main parameters: connection fee, capacity fee and consumption fee. All reflect the main technical and commercial assumptions in our financial models – each tailor-made for specific project requirements. What success have you had so far with the use of Treated Sewage Effluent (TSE) in the Kingdom? TSE is our favoured and applied water supply for all our District Cooling plants so far. We do have a strategic partnership with the National Water Company (NWC) to provide us with the required volumes and qualities, and more importantly, the connection points to tap into most of our projects in the Kingdom. Desalinated water is too precious to be used for industrial applications, of course! How do you see the District Cooling industry in the next 10-15 years? King Khaled International Airport in Riyadh is, indeed, the jewel in the crown. It is one of Tabreed’s prestigious District Cooling projects covering the GCC region. The 35,000 TR District Cooling plant business model is quite interesting, where it involves an integration of existing assets with a state-ofthe-art plant, with capacities being upgraded as per the airport’s expansion timeline. What we did was that we took over the existing old District Cooling plant supplying the airport area and its support facilities, to enhance its efficiency. After two years’ time, we were able to deliver the newly built District Cooling plant to accommodate the expansion and gradually replace the older plant. This project is under the BOT framework, and has a 30-year concession agreement. It is also the first time that a government entity outsources cooling requirements to a specialised developer. We hope that this project would set a quality benchmark for other government entities to adopt, for their existing and future projects. January 2016

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OIL AND GAS

ENERGY EFFICIENCY

Storage prospects

Africa’s soaring demand for energy creates oil storage opportunities for investors from the Middle East By Thangapanidan Srinivasalu

frica’s annual appetite for gasoil and gasoline is expected to climb by as much as 8%, while demand for liquefied petroleum gas (LPG) has hit double digits. The continent’s growing home-grown energy supply will help satisfy some of the burgeoning demand. Africa produced 8.2m b/d of crude last year - 76% came from Nigeria, Algeria, Egypt and Angola, according to PricewaterhouseCoopers’ (PwC) 2015 Africa Oil & Gas Review. But East Africa is elbowing its way under the spotlight and changing Africa’s energy map – a move easily justified by its wealth of oil and gas assets. For example, Tanzania hopes to use its 55tcf of natural gas reserves to become a liquefied natural gas (LNG) exporter by 2025, while Tullow and Canada’s Africa Oil have identified 600m barrels of oil reserves in Kenya’s South Lokichar basin. Many projects are still in the exploratory stage, but investors’ appetite has strengthened East Africa’s position in the global energy arena. Tanzania, Kenya and Uganda are amongst several East African countries addressing wobbly regulatory frameworks by establishing bidding rounds – a more transparent way to allocate resources. Plus, the East African Community (EAC) hopes to invest around $1.5bn to build 1,454km of intraregional and domestic pipelines over the next few years. The longest pipeline will be the 784km route through Kenya – Uganda – Rwanda, which should significantly bolster fuel trade between the three countries. East Africa must react quickly to satisfy the demand of its thriving middle-class. Such households in eleven sub-Saharan African countries - including Tanzania, Kenya and Uganda - are expected to more than double from 15m people to over 40m by 2030, according to Standard Bank’s 2014 research. The subsequent appetite for oil products

INFRASTRUCTURE MIDDLE EAST

Thangapanidan Srinivasalu

is vast, with a large portion earmarked to powering personal cars on newly paved roads. Most of the liquefied petroleum gas (LPG) demand will be soaked up for cooking to support the rapidly growing populations in Africa’s cities, which will also help boost the region’s green credentials. Robust growth The time is right to explore African assets, but only the strongest players will survive in what is an increasingly competitive space. Tanzania, Kenya and Uganda are spearheading East Africa’s economic prowess, with the eastern region as a whole growing by 7.1% in 2014, with 5.6% and 6.7% growth forecast for 2015 and 2016, respectively. With many energy hubs in the Middle

January 2016

East and North Africa (MENA) beset by political strife, the largely stable democracies in the EAC offers investors respite; the EAC demands strong governance and human rights. Plus, lower crude prices since June 2014 have triggered a rising oversupply and pushed the market into contango - where spot prices are lower than future prices. This has boosted investments in oil storage and traders that have access to physical oil and storage can significantly bolster their profit margins. The outlook for higher future prices has become particularly striking in the last three months as the surplus of crude oil production has increased stockpiles worldwide, exceeding capacity in many trading ports and forcing traders to seek alternatives. The high rates for very large crude containers (VLCC) means floating storage is still an unpopular second choice. The changing market structure has presented a gateway for global trading and storage firms to enter and widen their footprint in new markets in Africa, building on already strong platforms in the Gulf, Asia and Europe. If the oversupply of oil persists, traders may become bolder and secure their own storage facilities. They may also need to incorporate more blending capabilities and roll out additional jetties to widen their mandates to help cater for future growth. Governments and national oil companies are also joining the rush to Africa’s east coast. Oman is looking to build a foothold to promote trade of fuel and crude into the vast landlocked interior of Africa via Oman Trading International (OTI) with a $50m investment in facilities to store fuel in Mozambique or Tanzania. We do not see any new refineries coming in near future in Africa, but Africa’s economy is in a growth phase and we expect good demand; it presents a good opportunity for storage terminals to cater to that demand. (The author is Executive Director, Gulf Petrochem)

EXECUTIVE INSIGHT

Patrice Caine

“Green innovation, which will help bring a sustainable, low-carbon future, brings business opportunities”

Low-carbon transition Patrice Caine, Thales Chairman and CEO shares his company’s strategy on fighting climate change and the opportunities it affords for modernisation he United Nations Conference on Climate Change - COP 21 - which opened a couple of weeks ago in Paris declared a long-term objective of limiting global warming below 2°C. These negotiations are between state and government representatives, but it is the industrial participants that will bring the solutions to help the world meet this target. We cannot simply be spectators of climate change; we must act to bring our contribution to this important cause. Climate change is no longer an abstract notion that could potentially concern our distant descendants. Its concrete effects - droughts, flooding, rising sea levels - can already be seen today, and the geopolitical consequences could be immense. These and ever more tangible threats are really beginning to mobilise nations and their leaders, as we saw in Paris for COP 21. Earlier this year, 59 CEOs of large groups signed the ‘Business proposals for COP 21’, demonstrating the level of mobilisation of industry in this domain. When COP 21 got underway, the figure stood at over 100 CEOs and nine organisations and our shared statement

declared, “Business is ready to contribute to the success of such an agreement, to efficiently achieve the low-carbon transition and to bring solutions to the market.” In light of this, Thales’ strategy towards fighting climate change can be summarised in a few words: reduce our emissions, understand climatic phenomena, make the sky cleaner, develop sustainable mobility and make cities more intelligent. This means intersecting our expertise and our large capacity for innovation with the fight against climate change. In the same way that we transfer our military technologies to the civil domain and vice versa, we will put our know-how in the fight for climate change. Our role as industrial actors is important and can contribute to this mobilisation. By proposing concrete and applicable solutions that reduce our energy consumption, we make the fight against climate change a unique opportunity for modernisation, sustainable growth and prosperity rather than a burden. Partnerships with other manufacturers, research laboratories and universities constitutes another area of commitment. To this end, in Quebec, working alongside the local municipality and several academic

partners, we recently created an urban science joint research lab. It represents a truly unique urban laboratory of the future, bringing together the expertise of universities, manufacturers, urbanists and urban planners. Its objective is to improve urban life by precisely studying elements including sustainable mobility, the management of drinking and waste water and that of infrastructures. Green innovation, which will help bring a sustainable, low-carbon future, brings business opportunities, but the respect of the environment is, above all, one of the Thales Group’s ethical engagements. Our clients are more and more vigilant on this subject. Take ground transportation, for example. In the context of growing urbanisation, creating the conditions that enable sustainable mobility in and between cities is one of the most efficient ways to fight against CO2 emissions. Another important sector to consider is the space sector, a crucial domain for the observation and analysis of the effects of climate change. However, we must not forget that the efforts must be global. Both developed and new economies must show solidarity and share intelligence in the face of climate change. January 2016

INFRASTRUCTURE MIDDLE EAST

EVENT REPORT

YEAR IN INFRASTRUCTURE

The 2015 ‘Be Inspired’ awards The awards programme, organised by Bentley Systems, showcases excellence and innovation in the design, construction, and operations of infrastructure projects around the world entley Systems announced the winners of the 2015 Be Inspired Awards at its The Year in Infrastructure 2015 Conference, held from November 3-5, 2015 in London. The awards honour the extraordinary work of Bentley users improving the world’s infrastructure. At a ceremony and gala held on November 5, 18 Be Inspired Awards winners and five Be Inspired Special Recognition Awards winners were acknowledged. The Year in Infrastructure Conference is a global gathering of leading executives in the world of infrastructure design, construction, and operations. The agenda also includes presentations by finalists in the Be Inspired Awards programme, culminating in the selection of the winning projects.

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January 2016

For the 2015 cycle, 10 independent panels of jurors, comprising distinguished industry experts, selected the 18 Be Inspired Awards winners from 54 project finalists. These finalists had been previously chosen from over 360 submissions by organisations in 66 countries. Candidates for Bentley’s Be Inspired Special Recognition Awards were selected by the jurors from the top finalist projects as well as other exemplary nominations. This selection was based on the projects’ uniquely innovative and visionary achievements that transcend the narrower focus of the standing Be Inspired Awards categories. Bentley Systems CEO Greg Bentley said, “This has been a year of major achievements for Bentley Systems that include the introduction of our CONNECT Edition infrastructure engineering software, providing a common environment for comprehensive

project delivery. But the achievements that my colleagues and I are most proud of are those of our users. For while our goal at Bentley is advancing infrastructure, we can only accomplish it through the vision, talent, and dedication of the architects, engineers, constructors, and operations professionals who creatively apply our technology in pursuit of effective strategies for achieving new levels of project and/or infrastructure asset performance.” The Be Inspired Special Recognition Awards winners for 2015 are as follows: Advancing Collaborative BIM • Morphosis Architects – Bill & Melinda Gates Hall – (Ithaca, New York, US) Advancing Comprehensive BIM ‘Playbooks’ • Hatch Ltd – Keeyask Hydroelectric Generating Station Project – (Nelson River, Manitoba, Canada) Advancing Construction Modelling • Jacobs – NAG Project – (Baytown, Texas, US) Advancing Information Mobility in Operations • Western Power Distribution – EMU for iPad – (Exeter, UK)

EVENT REPORT

Advancing Integrated Projects • HDR – Union Station to Oak Cliff Streetcar TIGER Design-Build Project – (Dallas) The Be Inspired Awards winners for 2015 are as follows: Innovation in Asset Performance Management • SA Water – Predictive and Operational Analytics Tools, Adelaide Metro Water Distribution Network – (South Australia) The North South Interconnection System Project was proposed to improve water security for the Adelaide region by linking the city of Adelaide’s separate northern and southern water zones through a series of new transfer pipelines, new pump stations, and other enhancements to the existing water network. As part of the overall project, AssetWise Amulet provided decision support tools that deliver real-time operational analytics.

with their faience cladding were potentially unique. Below ground, the basement – which at the time was the largest excavation in London after Crossrail – had to function independently for a number of years before the second phase started. Innovation in Construction • Vic’s Crane & Heavy Haul, Inc. – Unit 25 Project – (Rosemount, Minnesota) Flint Hills Resources chose Vic’s Crane & Heavy Haul to transport a 160-foot-long, 750,000-pound process vessel by barge and trailers to its Pine Bend Refinery in Rosemount, Minnesota. The two-year feat involved coordinating the loading and unloading of transport vehicles, permitting the load on highways, coordinating with utilities, and redesigning roads and bridges that were not designed for such a heavy load. Bentley software allowed Vic’s Crane & Heavy Haul to detail every aspect of this $100m project. Innovation in Government • Singapore Land Authority – Mapping Singapore in 3D The Singapore Land Authority led this $5.54m government initiative to create and maintain a high-resolution 3D map of the country. The project involved capturing large amounts of data, creating 2D/3D datasets in several data formats, and supporting the interoperability of the data and management of datasets in a single repository.

Innovation in Bridges • LCW Consult – The Ceira River Bridge – (Coimbra, Coimbra District, Portugal) The new Ceira River Bridge provides a fast connection between Lisbon and Coimbra, Portugal. Spanning 250 meters and rising 140 meters over the river bed, this $29.49m structure has a 26.4-metre-wide box girder cross section and a 700-metre curve radius. LCW Consult used Bentley software to ensure precise geometry during the cantilever construction. Innovation in Building • Robin Partington and Partners – One Merchant Square – (London) There were many challenges on this $726.02m, 42-story building project. Above ground, the complex curved profile of the tower meant that all cladding, structural floors, and perimeter structural columns

Sweden. To reduce the impact on sensitive natural and cultural environments, 18 km of its 21km are in tunnels. Adopting BIM methodology and applying a common data environment permitted opportunities for more rigorous optioneering during design development and a more streamlined process for collaboration, review, and checking during design. Innovation in Mining • Tetra Tech Proteus – Kvanefjeld Rare Earth: Uranium Project – (Narsaq, Kujalleq, Greenland) Greenland Mining and Energy engaged Tetra Tech Proteus to contribute to a feasibility study, including multi-discipline design, capital cost estimates, and implementation planning assistance. Innovation in Offshore • Keystone Engineering Inc. – Block Island Wind Farm – (Block Island, Rhode Island) Keystone Engineering adapted deep water jacket-type support structure design from the oil industry for use on five, 6-MW wind turbine generators on America’s first offshore wind farm. The innovative design significantly reduced the amount of steel required, resulting in installed costs savings of 20% and making the project economically feasible. Innovation in Power Generation • MWH Global – Tyseley Resource Recovery Centre – (Birmingham, West Midland, UK) Generating power through the gasification of waste wood, this $69.70m Tyseley plant will be the first of its kind in the UK.

Innovation in Land Development • Tata Consulting Engineers. – Detailed Design of Utility Infrastructure – (Dharampur, Gujarat, India) On this $30m project in Dharampur, India, the SRM Ashram Committee requested that Tata Consulting Engineers provide a detailed design for an economical ashram and surrounding infrastructure that would be sustainable for the next 100 years. A primary challenge was the site’s sloping terrain and it being hemmed in by valleys. The team also had to plan for considerable pedestrian traffic of up to 8,000 visitors per day. Innovation in Megaprojects • AECOM – E4 Stockholm Bypass FSK02 Rock Tunnels Design Contract – (Stockholm, Sweden) The E4 Stockholm Bypass is a new motorway linking northern and southern Stockholm,

Innovation in Process Manufacturing • Giprotyumenneftegaz – Preliminary Water Removal Unit: North Vankor Field – (Igarka, Krasnoyarsk Territory, Russia) Located in the Turukhansk District of Russia’s Krasnoyarsk Territory, the UPSV-North oil and gas field is operated by Vankorneft, a Rosneft subsidiary. Located in a permafrost soil zone, this highly complex facility requires the separation of an oil-gas-water sludge to exact industry standards. For this project, Giprotyumenneftegaz designed the preliminary water removal unit which included surveying to create a digital terrain model and soil sampling for weight and pressure calculations. (Rest of the categories have been put up on www.infrastructureme.com)

January 2016

INFRASTRUCTURE MIDDLE EAST

INFRA PEOPLE

WSP | Parsons Brinckerhoff appoints senior healthcare lead WSP | Parsons Brinckerhoff have appointed Frank Lang as technical director to lead their healthcare initiative. Frank joins WSP | Parsons Brinckerhoff from Australia, where he led operations, business development, strategic direction and sales for a subsidiary of EDF and Veolia energy group. He has over 20 years’ experience in the

energy and engineering industries, leading growth strategies for a variety of different businesses. His role will be to develop the business’s healthcare offering regionally, capitalising on both the local capabilities and the strength of its global expertise particularly in Asia, Sweden, the UK and the USA – through specialist companies CCRD Engineers and MMM Group Ltd.

Gulf Navigation confirms CEO Dubai-based shipping company Gulf Navigation Holding has confirmed the appointment of Parag Jain as the company’s new Chief Executive Officer (CEO). Jain has been serving in the capacity of acting CEO since May of this year. The newly appointed CEO first joined Gulf Navigation Holding in January 2010, originally serving as the company’s General Manager for the Agencies and Marine Products Division.

Koch Membrane announces executive management changes Koch Membrane Systems (KMS) announced executive management changes appointing Manny Singh as President and Mark Farrell as Chief Operating Officer. Manny Singh has been the Senior Vice President of Technology for KMS for the last five years where he was responsible for development and commercialisation of a number of new products for both the Water and Wastewater (WWW) and Industrial and Life Sciences (ILS) Businesses. More recently, under his guidance KMS launched the PULSION Next Generation MBR and Dairy-Pro product lines. Mark Farrell has been with KMS for 15 years in multiple engineering and leadership roles, most recently serving as the Vice President of Global Manufacturing and Engineering. He was recently responsible for upgrading and increasing production capacity and automation for all KMS product lines and in 2015 building and commissioning the new PURON Supported Hollow Fibre membrane manufacturing plant in Wilmington Mass. “Manny with his technical and commercial background and Mark with his operational experience bring complementary skill sets to grow KMS business. We see very high growth potential for both the WWW and ILS businesses. These executive management changes will help refine and implement our business strategy while providing better value to our customers,” said David H Koch, Chairman of Board for KMS.

INFRASTRUCTURE MIDDLE EAST

Point of View

January 2016

Achim Steiner, Executive Director, United Nations Environment Programme (UNEP)

....when it comes to delivering the 2030 Agenda for Sustainable Development, it is the UN that is looking to the private sector. For example: today, the transport sector is responsible for a quarter of all energy related CO2 emissions and this will grow to a third by 2050 - faster than any other sector. By then there will be up to three times more cars than in 2010 and while more car-makers are gearing up and more car buyers are shifting from filling up to plugging in, according to the International Energy Agency (IEA) we actually need three quarters of all new vehicle sales to be electric to keep warming below two degrees Celsius. Ambitious? Of course. But then, why not? After all, just adopting fuel-efficient technology already on the market could save over 8bn barrels of oil a day and 50% in CO2 emissions from cars and light-duty vehicles. What’s more, developing countries could actually leapfrog developed countries right into low-carbon, low-impact transport technology. China has replaced over 150m two-stroke motor bikes with affordable electric ones: cutting air pollution and health damage, launching a fledgling green export industry and inspiring countries across Asia and Africa to follow suit.

(Excerpted from the speech made at the Sustainable Innovation Forum [COP 21] in Paris last month)

events

THIS MONTH

Abu dhabi sustainability week 16-23 JANUARY 2016, Abu Dhabi n Abu Dhabi government initiative, Abu Dhabi Sustainability Week (ADSW) is the largest gathering on sustainability in the Middle East and a significant forum in stimulating international dialogue and action. ADSW is recognised as a path-breaking global forum, which unites thought leaders, policy makers and investors to address the challenges of renewable energy and sustainable development. Key events that are part of ADSW include the IRENA General Assembly; Zayed Future Energy Prize; the World Future Energy Summit (WFES); the International Water Summit (IWS); EcoWASTE and The Festival at Masdar City. At WFES, key themes include Solar Village, which brings solar project developers and entrepreneurs together with investors, exhibitors, solution providers and thought leaders; the Solar Expo; the Sustainable Transport Zone; Energy

Efficiency TechTalk and the ninth edition of the WFES Conference, which is hosted by Masdar. In 2015, the conference was addressed by over 150 speakers, Heads of States and Ministers who discussed the most critical issues surrounding the future of energy in front of more than 2,000 conference attendees from over 50 countries. IWS, which celebrates its fourth edition in 2016, will bring together world leaders, field experts, academia and business discuss sustainable strategies and technologies in the water industry. A key theme, apart from the IWS Conference is Innovate@ IWS, which aims to find and accelerate nextgeneration technologies in water sustainability. EcoWASTE is a leading international platform for advancing sustainable waste management and recycling across MENA and beyond.

Mark your diary... The Saudi Water & Electricity Forum 7-9 February 2016 RIYADH Held under the patronage of HE Abdullah A Al Hussayen, Minister of Water & Electricity, SWEF is the premier strategic meeting place for the Kingdom’s water and electricity industries. Contact: Chris Hugall Tel: +44 20 7978 0084 Email: SWEFenq@ thecwcgroup.com www.saudiwaterelectricity.com MIDDDLE EAST RAIL 8-9 MARCH, 2016

Contact: Mai Ismail Tel: +971 50 526 6736 Email: mai.ismail@reedexpo.ae www.abudhabisustainabilityweek.com

DUBAI In its 10th year, Middle East Rail is an annual regional event for railway operators, government departments and world-class

middle east electricity 1-3 MARCH 2016, Dubai iddle East Electricity (MEE), the world’s largest power exhibition, will celebrate its 41st edition in 2016 at theDubai International Exhibition Centre. Running alongside the MEE is the Solar Middle East exhibition, which will bring together a notable line-up of exhibitors from all over the world to showcase their products to an audience of key decision makers from across the region. After a successful debut in 2015, MEE 2016 will once again feature a dedicated area for the lighting industry.

solution providers from across the globe. Contact: Jamie Hosie Tel: +971 4440 2501

Other highlights include The Solar Agenda 2016 conference and the MEE 2016 Awards. The MEE awards celebrate the outstanding achievements of individuals, departments, teams and organisations that contribute to the growth and development of the energy industry with a focus on the power, lighting, new & renewable energy, nuclear and water sectors.

Email: jamie.hosie@ terrapinn.com LuxLive 13-14 APRIL, 2016 ABU DHABI With more than 4,000m2 of exhibition space, and over 70 of the world’s leading lighting brands, LuxLive is set to repeat its success in the UK. Contact: Peter Rowledge

Contact: Feroz Parkar Tel: +971 4 407 2406 Email: feroz.parkar@informa.com www.middleeastelectricity.com

Tel: +44 7740 110 261 www.luxlive.ae

January 2016

INFRASTRUCTURE MIDDLE EAST

Infrastructure Milestones

#022 Wind power, utility-scale The 117MW Tafila wind farm in Jordan is the largest in the Middle East; it was the first private wind project to reach financial close in MENA outside of Morocco he first and largest utility scale wind power plant in Jordan and the Middle East, The Tafila Wind Farm, was inaugurated last month under the patronage of His Majesty King Abdullah II. The 117MW wind farm is directly connected to the national grid and will produce 400 gigawatt-hours of electricity annually. The Tafila Wind Farm was developed in response to the 2010 renewable energy law, calling for around 10% of electricity to come from renewable sources by 2020. Jordan imports around 96% of its energy needs at a cost equivalent to 20% of the country’s GDP. The wind farm, developed on an independent power producer (IPP) model, is owned and managed by the Jordan Wind Project Company (JWPC),

INFRASTRUCTURE MIDDLE EAST

an international coalition that includes France’s InfraMed Infrastructure Fund (50%), UAE’s Masdar (31%) and Cyprus’ EP Global Energy (19%). Tafila was chosen due to its steady, unobstructed wind flow, speed and direction. At JD85 per megawatt-hour, the wind turbines will produce electricity at less than half the cost of generation for conventional power sources. The project will save the government around $50m every year, and will supply approximately 3.5% of the country’s annual electricity consumption. All the output generated is sold to the country’s single buyer, National Electric Power Company (NEPCO), under a 20year Power Purchase Agreement (PPA). With Jordan’s domestic electricity demands estimated to grow five per cent annually through 2020, Tafila is a quantum leap, not only for Jordan but the Arab world as a whole, as it

January 2016

Fast facts Location: Tafila region, South of Amman, Jordan Number of wind turbines: 38 CO2 emissions displaced: 235,000 tonnes Enough electricity to power: 83,000 homes Project cost: $287m

is the first to implement an effective solution for the Kingdom’s energy challenges through an effective publicprivate partnership (PPP) model. The project’s foundation stone was laid in April 2014; it achieved financial close in November 2013, and Vestas won the design, build, operate and maintain contract in the same month. The construction was completed in August 2015. Tafila incorporates 38 VESTAS V112 wind turbines, with each turbine 150 meters high including its blades. The International Finance Corporation (IFC), and the European Investment Bank (EIB) arranged the financing of the project, while participants in the lender syndicate included the Dutch Development Bank, Europe Arab Bank, and OPEC Fund for International Development, with the Export Credit Agency of Denmark providing a guarantee for a portion of the loans.

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14 – 16 FEBRUARy 2016 · MADINAT JUMEIRAh · DUBAI

Conference Highlights Plenary Session

Global Market Trends Factors Shaping the Future of Reﬁning and Petrochemicals Implementing Optimisation and Management Tools Project Updates from KNPC, Takreer, ENOC, SABIC, Sadara Chemical Company, Liwa Plastics Industries Complex (LPIC)

Refining and Petrochemicals Integration Major Project Experience EPC Contractor Viewpoint and Guidance A Licensor’s Perspective

The Meeting Place for the Middle East Downstream Industry Conference and Exhibition Creating Competitive Advantage via Application of Latest Technologies

Petrochemicals

Market Outlook and Key Drivers Latest in Advanced Oleﬁns and Polyoleﬁns Technologies Latest Developments in Petrochemical Technologies

Refining

Market Outlook and Reﬁning Trends Clean Fuels Technologies & Latest Catalyst Innovations Technology Update - Achieving Increased Conversion

For Sponsorship & Exhibition Opportunities or to Register please contact us: Euro Petroleum Consultants | Tel: +971 (0)4 421 4642 | Email: oﬃce@europetro-me.com | www.me-tech.biz