Apr 10 2012
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Bahwan Engineering plans to expand operations to Qatar
BEG has already carried out a market survey and is looking for a local partner, Suresh K Virmani, managing director of Bahwan Engineering Group , told Times of Oman.
Virmani, who bagged the prestigious life time achievement award from Construction Week recently, said Qatar has a lot of potential due to its ambitious development plans as the country is going to host FIFA 2020. "Qatar has a lot of gas wealth as well."
Libya is another country where the group is looking to enter for tapping business opportunities. "As far as Libya is concerned, we will proceed with our plan the moment we find a right time," noted Virmani.
BEG, which has Bahwan Engineering Company, Bahwan Contracting Company and Universal Engineering Services in its group, has been instrumental in building the country's major infrastructure, power, hospital and LNG projects over the last three-and-a-half decades.
The BEG chief said that in the United Arab Emirates (UAE), the company is confining its operations to high-tension electrical projects and petrochemical projects due to ongoing economic slowdown.
"We are limiting our operations to these fields. Presently, we have about 800-900 people in Dubai. However, we will go need-based, do the project and then return to the headquarters in Muscat."
Virmani added that his group, which also won the Sub-Contractor of the Year Award from Construction Week, has grown to such a level now to employ 15,000 workers, from merely 14 employees when it started operation way back in 1977.
Referring to growing competition in Oman, he said that the net margins of local contracting firms must have come down by 30-40 per cent in the last two to three years -- from 7-8 per cent to 4-5 per cent.
Foreign firms are trying to grab business opportunities in Oman primarily due to lack of projects in the neighbouring UAE, Turkey and European countries like Spain.
"Therefore, there is a pressure on bottomline," he said, adding; "For instance, five of the seven pre-qualified companies for Al Ghubra desalination project are either directly or indirectly Spanish firms."
Apart from foreign firms, he said, several home-grown companies, which were in small to medium category few years ago, are also active players. "Competition is also from within the country."
Virmani said with the growing competition, contracting firms have to be very careful in booking projects, which is very critical now. The firms also have to take utmost care in achieving optimum utilisation of manpower.
"These are the days of internal efficiency, which is more critical now." Apart from competition, the introduction of five-day week has also affected margins of contracting firms. "It will take at least two years to adjust itself (to overcome the additional burden arising from wage bill)."
Elaborating on growth in construction sector, he said the projects that are in different phases of planning and development in the country are need-based. "As long as the oil prices remain high, the growth will also remain healthy. I expect a healthy growth in business over the next three to four years."
Virmani said the developments in tourism projects, power sector and huge investment in Duqm are driving the construction sector. "By mid-2014, the expanded airport will be ready, which will enhance inflow of tourists. In the first few years, the growth in tourist inflow will be around 50 per cent, which will go up to 100 per cent, before coming to saturation levels."
The power demand will also go up, along with these developments. "We are one of the major players in power and water projects. Our group is also a major player in hospital construction." Bahwan Engineering has built the state-of-the-art Al Masara Hospital in Al Amerat, which is a testimony to the company's expertise.
The group has also built hospitals in Ibra and Sur. Other prestigious completed projects include Oman LNG , civil, electro-mechanical and plumbing work for the prestigious Royal Opera House."
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