Iraq offers good prospects for new construction activities

Political and security issues may be playing out in the backdrop, but the prospects for immediate work offered by Iraq's construction activity have the UAE's contracting companies scouting for more. "Certainly there are major projects in the pipeline; we will soon be announcing some we have been contracted which are in the finalisation stages as we speak," said Ali Ghaleb Jaber, CEO of Ajman-headquartered Tech Group. One of its subsidiaries, Piling Tech, yesterday confirmed a $10 million (Dh36.7 million) contract in Iraq, and its first in the oil sector there. "A majority of the [new] ones are for residential and commercial projects in Baghdad and southern Iraq." Seeking projects outside the UAE will be a common theme for the country's many contracting companies as well as those in ancillary services. Iraq is rated the brightest prospect — despite the volatility in recent days — as is Saudi Arabia, which is gearing up for a major spend on social housing projects as well as on infrastructure. In the kingdom's case, the newly unveiled budget surplus will prove an incentive like nothing else can. Some sort of a role — even a lead one at that — in the rebuilding efforts in Libya is not seen as a long shot by local contracting businesses. Jaber is making sure his operations are fully geared to do their part. "We are focusing on Libya as political turmoil is subsiding and stability is returning, while in Saudi Arabia we have a ready-mix factory and will be expanding our presence," he said. "In Sudan, Piling Tech already has a branch which will oversee the execution of projects. "A major share of our projects in 2012 is expected from outside the UAE — compared to our regional project outlook, we do not see much activity in the UAE." For this year, the Group had an order book of close to Dh800 million, and boosted by the recent deal from Iraq. It was in 2009 that the company set up a base there. "Ninety per cent of our project supplies are shipped to Iraq since it is easier compared to the traffic by road and the rush at the border check posts," said Jaber. "We have not faced any risk in shipping our supplies because the Gulf seas are comparatively safe. However, we do incur higher demurrage costs in Iraq because unloading goods takes time at Umm Qasr, the only port in Iraq." That's on the materials side. When it comes to project mobilisation, the group plans to bring in more Iraqi labour into the on-site works. "Our target is to have 90 to 95 per cent Iraqis in our manpower pool running the projects including at the civil engineering levels," said Jaber. "This is because of the advantage Iraqis have in terms of their awareness of local culture, ground realities and the benefit of easier communication with our local suppliers." (The current credit terms for the group's projects in Iraq are 30 to 45 days.) But has the company faced any issues in creating the required labour force? "We have not; what we have is a mix of manpower resources for our projects in Iraq," said Jaber. "Most of the manpower at the project execution level is Iraqis, including labour as well as some professional and on-ground supervisory staff. At the senior levels of management, we have people from the UAE dele-gated from the Piling Tech headquarters driving the projects. "That's obviously because of the advantage they have on the know-how in executing such projects." On the issue of security, Jeber said emphatically: "We do not see any reason to take extra precautions because the projects we are involved in have no linkages to the politics of the country. We do not see any problems coming in the way of executing the projects we have been contracted for." Contract with Lukoil Piling Tech's $10 million (Dh36.7 million) contract in Iraq was awarded by Lukoil, Russia's second largest oil producer with extensive interests in Iraq's energy sector. Under the agreement, Piling Tech will be involved in the installation of piles, foundations and wells for the West Qurna-2 oil field in southern Iraq. Lukoil, in alliance with Norway's Statoil and Iraq's state-owned South Oil Company is prospecting for oil in West Qurna-2. Commenting on the Lukoil contract, Tech Group CEO Ali Galeb Jaber of Tech Group said: "The West Qurna-2 deal is a milestone development for Piling Tech on two counts. One, it is our first foray into the oil and gas sector of Iraq, and second, the deal signifies Piling Tech's growing business footprints across various redevelopment projects in Iraq."