TOGY talks to
A business-friendly marketSeptember 25, 2017
Saad Hasan, CEO of Qaiwan Group, talks to TOGY about opportunities in the post-war Kurdistan Region of Iraq, benefits linked to the privatisation of the region’s electricity sector and the company’s development plans going forward. Qaiwan Group is one of the three largest conglomerates in the Kurdistan Region, with two strategic assets, a refinery and a power plant, in the Bazian district of the Sulaymaniyah province.
Qaiwan is one of the largest diversified groups in the Kurdistan Region, with interests in oil and gas, power generation, real estate, hospitality, retail, pharmaceuticals and education. Qaiwan is the largest oil trader in Kurdistan. In 2007, the company began exporting products to international markets via SOMO. When the region’s refineries started producing products in 2010, the group commenced exporting byproducts to international markets independently.
• On opportunities in power generation: “The power generation side of our business is expected to develop rapidly. Our Bazian power plant is running and it remains an important contributor to the domestic power needs. We had a few initial discussions with the Ministry of Natural Resources and understand that they are preparing regulations and policy towards the partial privatisation of the electricity sector. We will definitely be one of the main players in the management of electricity.”
• On regaining stability: “The recently signed strategic co-operation agreement between Rosneft and the KRG and final settlements reached with oil companies over unpaid revenues brings a more positive sentiment to investors and encourages their return to the region. After the country has passed through all these difficulties, we not only expect to see the light at the end of the tunnel but to take immediate advantage of that.”
Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Saad Hasan below.
What is the outlook for Kurdistan’s business and investment climate as the region emerges out of the war against Islamic State?
The past three years have seen Kurdistan and Iraq face the worst war in the Middle Eastern region, coupled with shocking oil prices globally. Kurdistan has been hit by floods of IDPs [internally displaced persons] and other immigrants fleeing war zones. That added an extra burden on the Kurdish financial and economic situation. The ISIS advancement also brought an end to the economic stability and most of the investments in the region.
Now, with the war hopefully coming to an end and the oil prices having recovered 100% from their lowest point in 2016, the KRG is on the right track to regain stability. The recently signed strategic co-operation agreement between Rosneft and the KRG and final settlements reached with oil companies over unpaid revenues brings a more positive sentiment to investors and encourages their return to the region. After the country has passed through all these difficulties, we not only expect to see the light at the end of the tunnel but to take immediate advantage of that.
How has the KRG dealt with local and international companies in the effort to reshape its economy?
We are not only investors. We see ourselves as a national company and as such we believe more than others in the values of our region. I believe that the KRG has been fair with investors. Many of the investors stood by the KRG despite all the difficulties and the KRG is now taking the right steps to show that it values its continued partnership with the international oil industry.
In the wider region, the KRG is the most business-friendly government with the least bureaucracy and a good level of understanding. They get things done in a much shorter period of time than those in other places. We as Qaiwan believe this country is ours.
What opportunities do you see in the Kurdistan Region’s power generation sector?
The power generation side of our business is expected to develop rapidly. Our Bazian power plant is running and it remains an important contributor to the domestic power needs. We had a few initial discussions with the Ministry of Natural Resources and understand that they are preparing regulations and policy towards the partial privatisation of the electricity sector. We will definitely be one of the main players in the management of electricity.
What are the key benefits of privatising the electricity sector in Kurdistan?
When you have a full chain of any business, you can optimise in every corner and you can do things better. Countries suffer a shortage of electricity for different reasons. However, people were used to getting it in the region by having free power and overusing it without considering what they were doing.
For us, doing things in the right way from generation up to providing power for households is something we believe in for helping the country’s economic growth. The privatisation of the sector brings mutual benefits to the government and the private sector, and it’s a win-win for both parties. It helps reduce the government capex and optimises their resources, while it secures proper services for people, reduces waste, creates jobs for the nation and generates additional revenue for the private enterprises. Every step of it is about adding value for everyone.
Can you offer an assessment of the Bazian refinery expansion project?
By 2012, the refinery was processing 30,000-35,000 bpd. We have since completed a debottlenecking and expansion process as result of which it is now running with a capacity of 40,000 bpd. We are currently looking for the right time to go into the next phase of expansion to further increase its capacity. The next expansion phase will be finished in two stages and within 36 months.
Is Qaiwan looking to expand into the upstream sector?
The interest is there. We are just waiting for the right time to go in and the right stake to take.
What role has Qaiwan played in boosting refining in the region?
Everything we do is in co-ordination with the KRG. When KRG wanted us to optimise the refining process and at the same time they were aiming to increase the country’s crude exports, we saw important opportunities evolving.
We also signed an agreement with Baghdad’s Ministry of Oil to process crude for them. That deal brought extra wealth to the region and added value to the Kurdish economy and Iraq. It gave the opportunity to stimulate employment in a direct or indirect way by moving products around. Baghdad also provided the fuel oil to cement plants in the region at an attractive or subsidised price.
How open are you to creating strategic partnerships with international firms?
Bringing major players to the region adds value to the country’s economy. If you can create a synergy between local values and technological know-how, then combining those will generate positive outcomes for both the companies and the region.
I do not see many difficulties in terms of building strategic collaborations. The objective is always to find a beneficial way and a common ground on which both parties can be satisfied with the result of the co-operation.
How do you see Qaiwan’s role in the region evolving in the long term?
We are a private company and we feel we have long been standing on the side of the government. Our strong belief in the country and its people gives us the sensation of being a national company and it has always been a strategy of Qaiwan to think as a national enterprise.
We still have a lot to do. We always put our targets at the ceiling and there are many steps ahead to go forward. If the country continues to build its economy, we will be part of every step of the developments. It is not about business but about our duty to do more and more.
For more information on Qaiwan in the Kurdistan Region of Iraq, see our business intelligence platform, TOGYiN.
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