There are more than 570 individual projects worth more than $77bn under commercial bid evaluation in the region, and more than $109bn if this is extended to contracts tendered, almost the same as the value of deals let in 2017 as a whole, MEED’s GCC Projects Forecast noted yesterday.
According to MEED, one of the unanticipated benefits of the projects slump since 2016 has been the growth in the backlog of awaited projects. Following the subdued project activity of 2016 and 2017, the outlook for the year ahead provides cause for optimism, it said.
For 2018, to improve on the previous two years, the taps will have to be opened on the backlog. Although bidding contractors have been compliant in extending their bid bonds year after year on delayed tenders, there is no guarantee they will continue to do so. If they do not, clients may find themselves retendering projects, losing both time and money, just as they are given the green light to go ahead. Equally uncertain is how the market will cope with another year of sluggish project spending.
Outside of Dubai, the majority of GCC firms are at breaking point having faced a squeeze on their order books and cash flow as work has dried up. For further contraction of the market to be avoided, the industry has to keep pushing governments to move ahead with their project programmes.
Oman is the only country that gained on the Gulf Projects Index in the week ending 9 February, on account of the revival of the $1.2bn Sur urea plant debottlenecking facility owned by Oman India Fertiliser Company.
However, Oman’s 0.7 percent gain was unable to keep the index from registering an overall loss of 0.1 percent. Iraq registered the biggest loss of the eight countries at 0.9 percent . This is due to the putting on hold of the Samawah refinery, budget at $2bn by the Oil Ministry, due to a lack of progress – as well as the completion of $800m-worth of projects, including the $700m first phase of the Basmaya power plant.