Projects Worth $130bn in Kuwait says Largest Contractor in Kuwait

Interview with Tarek Eissa, President of Alghanim International General Trading and Contracting

Can you give us an overview of the construction sector in Kuwait? The government is spending on a lot of different projects. There are projects worth 105 billion or more in the pipeline as well as the Kuwait 5 year plan which is going to allocate further funds. What is your overall assessment?

The sector is growing. I like to divide the construction sector into 5 branches. The first is civil construction which is large and mega buildings. In this country there are a lot of existing projects for all of the Ministries. These will be new constructions for the governmental bodies. We are now working on three mega projects for governmental buildings. Also there are housing projects which include about 50 thousand houses for Kuwaitis.

The second branch is infrastructure, which includes a lot of bridges, roads, drainage, causeway projects etc. that are going on now.
The third branch is power. There are intentions to produce an extra ten thousand megawatts of power in the coming 5 years.
The fourth branch is oil and gas. There are huge developing projects such as a new refinery, clean fuel, renewal of the gathering centre, increasing the production of oil in the north of Kuwait etc.

The fifth branch is environmental and includes projects like soil remediation, solar power, wind power etc.

These projects will be worth about 130 billion US dollars.

Alghanim International is one of the big players in this sector and we are participating in the four branches: building, power, oil and gas, and environmental. There are a huge number of projects in each sector.

With the recent developments in oil prices everyone is currently concerned in Kuwait that oil prices are going down. How is this going to affect the general economy? In your opinion what will happen to the planned projects?

Well it is a difficult question. What I can see is that the plans that are in place for the development of the country will not stop. There may be some shrinkage but in general the budget is there. The projects are still on going. There are no signs that they are going to shrink these projects because they are very crucial for the country, especially the projects for housing, infrastructure, oil and gas and power. When I say power I mean both power and water desalination. Mostly all of our water comes from desalination. These projects cannot be stopped.

You have some key projects. What makes your company number one? What are your key projects?

Now we are building a big cultural centre and a big court complex together with the largest automated carpark in the world for three thousand cars. We are also doing a cancer centre which is a very sophisticated cancer centre in the Middle East; it will be very similar to the international ones. We are also doing another hospital called the Razi Hospital.

In the power sector we are doing two 500 megawatts projects which we are going to hand over by March of next year. These will increase the power in Kuwait by 1,000 megawatts. Before we provided 40% of the total power generation of Kuwait but now we are also working in the power sector in operation and maintenance. In oil and gas we are working on clean fuel projects together with large international companies like HHI and Fluor. We are also working on some projects in soil remediation. Thus we have a large workload and we are also bidding for other projects in power, building and oil and gas.

What are your values and your philosophy? What makes your company number one? What kind of culture are you trying to implement in this company?

Actually our philosophy is “make it happen” because all of the projects in Kuwait are very tough and of course you have to bring people in from outside to do most of the work. Thus it’s a big challenge to finish projects like these in Kuwait. We have approximately a 4 billion US dollar workload nowadays and we are increasing it.

What do you feel is your biggest challenge?

Contracting is always a challenge because of time, weather, logistics, materials, price changes in materials and labour etc. They are all big challenges and we have to make sure we are alert all the time to be able to put things together to make everything go ahead on time and within the planned budget.

Have you worked mainly in Kuwait?

This is our work in Kuwait. We do have some work outside of Kuwait; we have two projects in Qatar, one project in Saudi Arabia and we are working on a project in UAE.

Do you work in Egypt?

We are now targeting Egypt and we have our subsidiary company there. We are starting to work there and we want to get into power projects: IPP projects which stands for Independent Power Producer.

In Kuwait we are the largest company working in power.

We are targeting Egypt, and we are keeping an eye on working in Iraq. We have our own company in Iraq where we have small projects but we are hoping to work with the big players in oil and power there.

What are your priorities in terms of development? Do you want to push international expansion?

For the future of the company we have to expand outside of Kuwait. Now our core is in Kuwait and we have some other projects outside but we are working on further expanding abroad.

Are you facing a lot of competition here in Kuwait?

Of course there is a lot of competition between local companies and international companies, especially in oil and gas, power and environmental projects.

What makes you succeed in some of these projects?

We have a good financial situation. We have good staff and a good equipment setup. We have a lot of experience and all of this makes us succeed. Our top management always pushes us not to delay any projects. Reputation is very important to us. We make sure we don’t have any problems with any clients and we always settle everything amicably.

Can you tell us about your growth?

Of course; in percentage we aim to have growth of 10% in revenues every year. We cannot assure that it will happen for the coming five or six years. It all depends on the size of the projects and the competition. We do have a good team that tries to match all requirements. Contracting is different from trading; you need to know how to get a project, how to execute it on time, how to hand it over and how to maintain it.

Tell us more about yourself, how long have you been in the company?

I have been with the company for more than 35 years. I started as a designer and a structural engineer and then I became a project engineer, project manager, chief engineer before becoming the president of the company. My background is in civil engineering.

How have you evolved with the company and how has the company changed you?

After you work for a long time with the same company of course they trust you more and you know more about the company and sector than others. Thus decisions become easier to make. Of course I am always thinking of how to grow this company, we started as a civil construction company and now we are talking about power, environment, oil and gas… all of these new departments. My role is to make it happen.

What is your ambition now? Where would you like to take the company in the future?

I aim for IPP projects. I would like to invest in big power projects and keep the level of trust in our company.

There is a lot happening with regards to IPP projects across the entire MENA region. The region is very power hungry, there are a lot of young people and so a lot of consumption.

Yes. On the other hand there are not enough resources. So there are a lot of challenges.

Are the new IPPs you are interested in to do with coal, gas or oil?

We are interested in international projects whether oil, coal, nuclear, renewable etc. When you study power all over the world you can see that all these different power sources must continue together. You cannot say that coal will be finished or oil will be finished.

There is a study that says that by 2050 the world will have only 15% renewable power. So it is not easy to say that we will convert to solar power just yet. My personal opinion is that nuclear power will be the principal factor to give the whole world the power that it needs, because there is a tremendous increase in power requirement.

You strongly believe in energy and global energy needs?

Yes. Power is a challenge not only for the MENA region but for the whole world. If you look to Africa, they are tremendously poor in terms of power. I shall give you a small example, in Kuwait we have 14 thousand megawatts and in summer we have a peak. There is a country in Africa, the same size as Kuwait that has about 50 megawatts, can you imagine the difference for the same number of people?

Kuwait has the advantage of home-grown knowledge and companies such as yours that are able to execute IPP projects. There are also the funds available, so do you see the Kuwait Export Bank for example financing projects in these countries while utilising the home-grown companies?

Kuwait has something called the Kuwait Fund, which has its reserves to carry out projects all over the world. There isn´t a great preference for Kuwaiti companies, I think they should give more preference to us but due to political issues they consider this as aid plus investment.

On a more personal note, you have a lot of ambitions internationally and you work in different sectors. What is the outside perception of your company? Is the company well known internationally?

We have very good relationships with all the international companies in power and in oil and gas, thus we have good possibilities to go into joint ventures with such companies for technology partnerships or workload splits. This experience helps us to expand abroad. We don’t target normal projects abroad; we target projects like power, desalination, oil etc.

The revenues are very good if you do get there.

Yes. There are good revenues but not good profits. However, contracting is not only about finishing a job; it is also a big window to everything else in the world such as investments and trading.

Thus it is a long term strategy?

Yes. I consider contracting a good window to see all of the activity going on in the world.