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PUMP UP INFRASTRUCTURE
Dubai needs to follow the example of China and India and
closer still of Oman where construction projects are continuing
despite the slowdown. This has been possible due to the government’s
resolve to build infrastructure. Government sponsored infrastructure
projects open up more areas for development and some critical
locations continue to see restraint in prices as the other
options hold the tendency of prices from going wild.
Oman’s Muscat Airport development, the Batinah Coastal
Road, and a major housing and rehabilitation scheme linked
to the coastal road project are on the project list. Also
due to be awarded this year are a host of smaller, but capex
intensive projects, such as regional airports, water distribution
schemes, wastewater networks, flood protection dams, port
related improvements, and at least one major power and desalination
plant.
The main construction package linked to the modernisation
of Muscat International Airport, a joint venture of Galfar
Engineering & Contracting and Larsen & Toubro (Oman)
is the lowest bidder (RO 473 million) for the contract, involving
the construction of a new runway, as well as several taxiways
and aprons, utility buildings and the complete landside redevelopment
of access roads to the terminal.
The project promises significant spin-offs for a wide spectrum
of Omani businesses from suppliers of construction materials
and heavy equipment to transport firms and assorted service
providers. The Batinah coastal road project, the first phase
of which is out to tender has a total outlay in excess of
RO 300 million. Then there is the 241-km-long dual carriageway,
which will run parallel to the Gulf of Oman coast from Naseem
Garden to Khatmat Malaha on the Sultanate’s border with
the UAE. Several thousand modern homes will be built alongside
new access roads, utilities, souqs and other amenities as
part of smart, new residential neighbourhoods that will be
created to house those displaced by the venture. Further,
the government’s plan to develop regional airports around
the Sultanate will unravel many more opportunities. Construction
of at least four airport projects at Sohar, Duqm, Ras al Hadd
and Adam is expected to get under way this year. The total
outlay towards these projects is in the range of RO 400-500
million. Then a host of water supply schemes, in Al Jabal
al Akhdar, Al Musannah and Adam involving capital allocations
in excess of RO 150 million will flow. The Port of Sohar is
preparing to award a contract valued at around $200 million
for the construction of a deepwater bulk jetty to support
a huge palletising plant and iron ore distribution centre
being developed by Brazilian mining giant Vale at a cost of
$1.356 billion. All in all Oman has put into motion first
a manufacturing capacity build up and now an infrastructure
build up which will see it through for most part of this economic
slowdown and probably will be the first one to move into opportunities
with a ready infrastructure.
Meanwhile, Dubai has received its shot in the arm. The first
companies seeking to draw on funds from the Dubai Government’s
Dh 36.7 billion ($10 billion) bonds will soon be able to do
so, according to Nasser Bin Hassan Al Shaikh, Director General
of the Dubai Finance Department. Further two huge new suburbs
are to be built in Dubai to accommodate growing residential
demand. This column had suggested that housing needed to be
made affordable. The schemes will add housing units stock
for the larger population of Emiratis and meet their needs
till 2015.
Government spending has to revive the confidence among the
business community and investors. A harder dollar has been
a boon and along with a scaled down inflation, making business
prospects look better. But the realty model is still suspect
and will remain for a while but infrastructure projects would
find takers. It is time to focus on infrastructure and revive
confidence.
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