AC­CIONA EYES $8BN IN MID­DLE EAST PROJECTS

▶ Span­ish firm is look­ing to bid for schemes in the UAE and Saudi Ara­bia

The National - News - - BUSINESS - JENNIFER GNANA

Span­ish com­pany Ac­ciona is eye­ing up to $8 bil­lion worth of projects in the util­i­ties and in­fra­struc­ture sec­tors in the Mid­dle East this year as re­gional gov­ern­ments ramp up in­vest­ment on vi­tal de­vel­op­ments.

Large-scale multi­bil­lion dol­lar de­sali­na­tion schemes on the Saudi east coast, the Jed­dah to Riyadh land bridge, sewage treat­ment schemes an­nounced re­cently by the Dubai util­i­ties reg­u­la­tor and Jor­dan’s plan to link the Red Sea and the Dead Sea are some of the projects Ac­c­ciona plans to bid for in the re­gion.

“All to­gether, if ev­ery­thing came this year, we’ll be bid­ding be­tween $5 and $8 bil­lion worth of projects. If you look con­ser­va­tively, that will be be­tween $3bn and 5bn,” said Jesús San­cho

Car­ras­cosa, Ac­ciona man­ag­ing di­rec­tor for the Mid­dle East, to The Na­tional.

Saudi Ara­bia, the re­gion’s big­gest econ­omy, an­nounced ear­lier this year plans to de­velop nine de­sali­na­tion plants along its Red Sea coast at a to­tal cost of more than two bil­lion Saudi riyals ($530m).

The de­vel­op­ments are par­al­lel to mega-projects such as the $20bn oil-to-chem­i­cals com­plex and other in­dus­trial schemes it is de­vel­op­ing as part of efforts to di­ver­sify its econ­omy away from oil in­come. Op­por­tu­ni­ties such as the planned $500bn Neom city project strad­dling Egypt and Jor­dan as well as the proposed $200bn so­lar scheme that Saudi Ara­bia re­cently signed with Ja­pan’s SoftBank have whet­ted the appetite of sev­eral in­ter­na­tional play­ers.

Ac­ciona, whose Gulf turnover for the fi­nan­cial year 201718 is close to $800 mil­lion to $900m, de­rives around 10 to 15 per cent of its global busi­ness from the re­gion, a port­fo­lio it ex­pects to reach $2bn to $3bn over the next five years.

In 2018, Ac­ciona is pre­par­ing to bid for Saudi Ara­bia’s Yanbu, Rabigh and Shuqaiq de­sali­na­tion schemes with a col­lec­tive ca­pac­ity of around 1.5 mil­lion cu­bic me­tres per day that are cur­rently un­der ten­der.

“They should be awarded by Q4, 2018 and com­ple­tion will take at least 13 months, so we’re talk­ing about 2021, [when] they will be al­ready com­mis­sioned and ready for rev­enue,” said Mr San­cho.

For this scheme to take shape, he es­ti­mated a cap­i­tal ex­pen­di­ture cost of around $1.5bn to $2bn.

In Abu Dhabi, Ac­ciona is pre­par­ing to par­tic­i­pate in the 100 mil­lion im­pe­rial gal­lons per day ca­pac­ity Tawee­lah de­sali­na­tion project an­nounced by the emi­rate’s util­i­ties reg­u­la­tor in Jan­uary.

Re­quest for pro­pos­als to ad­vance the project will be re­leased in the third quar­ter of this year, and Mr San­cho ex­pects the project to be awarded “within the first quar­ter of 2019”.

Ac­ciona, which nor­mally par­tic­i­pates in schemes that al­low for “de­sign and build” and typ­i­cally have up to four or five other com­peti­tors, is cur­rently pre­par­ing with its busi­ness part­ner to be part of the es­ti­mated $10bn Red Sea-Dead Sea project in Jor­dan.

The am­bi­tious scheme will trans­port wa­ter from Jor­dan’s Red Sea port city of Aqaba to the shrink­ing Dead Sea via the Lisan penin­sula in the king­dom. The project, which has been put on the back burner for sev­eral years be­cause of its ex­pense and re­gional tur­moil, was re­vived by Jor­dan ear­lier this year, de­spite the fact that Is­rael, a part­ner on the scheme, with­drew its par­tic­i­pa­tion. Once com­pleted, the project would sup­ply drink­ing wa­ter to the arid re­gions of Jor­dan, Pales­tine and Is­rael.

“We’re re­ally hope­ful and we’re very com­mit­ted to that project. The idea is bril­liant, it is much needed and it has an eco­log­i­cal com­po­nent and to help the Dead Sea to not dis­ap­pear. Many coun­tries of the world are wait­ing for this idea,” said Mr San­cho.

The Span­ish player is also “def­i­nitely” in­ter­ested in be­ing part of Neom, for which it would look to mo­bilise its power, wa­ter, health­care and trans­porta­tion units. It is wait­ing for the right mar­ket op­por­tu­ni­ties to dive into the renewables mar­ket space open­ing up in Saudi Ara­bia.

The Saudi en­ergy min­istry’s new re­new­able en­ergy de­vel­op­ment of­fice is set to ten­der around 4GW of so­lar pho­to­voltaic and wind projects this year. How­ever, for the Span­ish com­pany, the record low tar­iffs seen in the GCC in the renewables sec­tor have proven a “chal­lenge,” said Mr San­cho.

“An ex­tremely low tar­iff for the pro­duc­tion of en­ergy means that the re­turn on in­vest­ment will be di­rectly pro­por­tional to that,” said Mr San­cho.

Ac­ciona de­rives around 10 to 15% of its global busi­ness from the re­gion, and ex­pects to reach $2bn to $3bn in five years

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