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Qatar projects market to gain further momentum in 2014, says NBK [CPI Financial](CPI Financial Via Acquire Media NewsEdge) Qatar's projects market, the third largest in the GCC with a value of $277 billionn, is set to gain further momentum in 2014 after a relatively buoyant 2013 and continue to support GDP growth. Data for Q1 2014 show $4.6 billion worth of contracts awarded, an increase of 58 per cent y/y, reports NBK in its latest Economic Update. Last year, the country's projects market grew by an impressive 26 per cent after $20 billion in development contracts were awarded. Qatar's was the second fastest growing projects market in the GCC. This comes as welcome relief for project owners after a couple of years of relatively underwhelming movement, both in terms of contract awards and capital spending. This also represents a boost for the government's Central Planning Office (CPO), which was established in 2012 to coordinate the country's projects amid concerns that organizational, expertise and capacity constraints were leading to significant delays in the rollout of projects. Among the largest projects entering the execution phase in 2013 were the Doha Metro, part of the Qatar Integrated Rail Project (QIRP), and the Barwa Al-Khor residential development project, valued at $8.3 billion and $9.8 billion, respectively, according to MEED Projects. Contracts for Phase II of the Ras Laffan condensate refinery, totalling $1.2 billion, were also awarded. Meanwhile, the Public Works Authority, Ashghal, continued its infrastructure spending program with $2.7 billion worth of projects awarded for work on the country's expressways, schools and hospitals. So far in 2014, more contracts have been awarded for work relating to the Doha Metro Red Line and Ashgal's Expressway program. Contracts worth at least $40 billion are expected to be signed this year, according to MEED, the bulk of which will be construction and transport-related. As well as continuing work on the Doha metro, high profile projects anticipated to kick off this year include the $7.4 billion Al-Sejeel petrochemical complex, the $6.4 billion Al-Karaana petrochemical package. Both are currently in the bidding phase and both are key components of Qatar's downstream development and revenue diversification plans as per Qatar's National Vision 2030. As to Qatar's World Cup 2022 stadia, five will see actual construction commence in 2014, according to the Precinct for the Supreme Committee for Delivery and Legacy. The long-delayed $15.5 billion Hamad International Airport should also finally be set for a phased opening in 2014. The airport will have the capacity to handle 30 million passengers upon launch—three times as many as the current airport and second only to Dubai in regional comparisons. Government spending on projects was given a further boost with the announcement by the Ministry of Finance of another expansionary budget, for fiscal year 2014/15. Development expenditures on 'key projects' are forecast to rise by almost 17 per cent on last year to $24 billion (QAR 87.5 billion) and account for 40 per cent of total expenditures. Having said that, actual development spending has consistently fallen short of budget forecasts, averaging 30 per cent of total outlays and approximately 8.7 per cent of GDP during the last five years. Reflecting the difficulties of project implementation on such a grand scale given the country's capacity and organizational constraints, Qatar's development spending growth was noticeably muted during the 2012/13 fiscal year, increasing by only 0.5 per cent. Indeed, recent reports indicate that the authorities may be considering adopting a more phased approach to the rollout of projects and may be considering rescheduling at least 15 per cent of planned construction projects in order to direct spending towards higher priority projects, such as the World Cup in 2022. Apart from capacity issues, the authorities may need to be cognizant of the potentially rising costs of manpower and materials in view of increased competition for such resources from Dubai's Expo 2020 and other ambitious development projects in the Gulf. Nevertheless, projects and spending momentum is expected to continue through 2014 given the strategic importance of the projects mentioned above and in view of recent measures adopted by the government. These include the establishment of the CPO and the introduction of a new law setting penalties on developers who fail to start projects six months after securing approval from the authorities. (c) 2014 CPI Financial. All rights reserved. Provided by Syndigate.info, an Albawaba.com company |