TOGY talks to
Dredging KhalifaFebruary 17, 2017
TOGY talks to Yasser Zaghloul, CEO of the National Marine Dredging Company. Founded in 1976, NMDC executes dredging projects in the regional waters of the UAE.
The NMDC was founded as a dredging services company, but later evolved into an EPC contractor. In August 2016, the NMDC was awarded a contract for the Khalifa port expansion. The contract covers adding 1,000 metres of quay wall to the port and deepening its main channel and basin from 16 to 18 metres.
• On the Khalifa port expansion: “We used to work alongside other companies, and this helped us make partners out of competitors. Now, however we’re looking to work as an independent player, managing everything from A to Z. After completing this project, we will be qualified to do any job in the world.”
• On opportunities in the GCC: “On paper, there is always a raft of opportunities in the GCC, but it’s hard for us to assess when or even if the projects will effectively be carried out until they receive the final go-ahead. This is why we are always carefully weighing the risks and opportunities before scaling up our capabilities in order to enter a bid.”
• On new clients: “Our client acquisition strategy is everything but haphazard, we are very focused. We are in the GCC, in Africa and in India, because these are the areas best matching our approach. India has given us very good business in energy, and Bahrain and Saudi Arabia are providing promising tenders.”
Besides touching on these topics, TOGY talked at length to Yasser Zaghloul about his company’s activities in Abu Dhabi and the region, the competitive environment and new additions to its fleet. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Herbert Klausner below.
Can you tell us about your role in the expansion of the Khalifa Port?
This is a prestigious project, very important to us. In addition to dredging we are building a quay wall at a depth of 21 metres, and a 30-metre-high breakwater. This is the first time we’re building a quay wall at such depth, so this is a very important addition to our portfolio.
I doubt that any of our dredging competitors can claim such an achievement, they usually don’t go beyond dredging and building breakwaters.
Why build the quay wall at such a depth?
Some big container ships and tankers have a 18-metre draft, so they need 21 metres of depth to navigate. When building such huge infrastructure, you need to think long-term, to look beyond today’s requirements and prepare for those of the next generation.
Our company is handling the whole project. To be honest it’s unheard of. This kind of project is normally run by a joint venture of several operators. We used to work alongside other companies, and this helped us make partners out of competitors. Now, however we’re looking to work as an independent player, managing everything from A to Z. After completing this project, we will be qualified to do any job in the world.
Speaking of joint ventures, how did the Suez Canal project go?
It was an important project for the Egyptian and Emirati companies involved. We want Egypt to regain its former positioning in the region. Hence the importance for us to meet the deadline, however challenging it may have been. The president had given us one year to complete the whole project, but we made a point of getting it done even sooner, in 267 days.
How intense is the competition these days?
Competition is fierce, but we succeeded in penetrating the market. As a matter of fact, we led three of the big four in the Suez Canal project in our consortium with Jan De Nul, Boskalis and Van Oord.
We have created our brand and established ourselves as a global leader in the dredging industry, and we intend to sustain our effort.
Our fleet can’t be compared to those of the big four, but we’re not even trying to compete with them on this matter. Bringing our fleet up to their levels would require an investment of USD 10 or 15 billion. It makes more sense for us to hire them to provide us with additional capacity whenever we need it. Competition doesn’t rule out co-operation and partnerships.
On the other hand, we are more competitive on a lot of things such as marine construction and engineering such as quay walls and breakwaters. We are building up our reputation, our image, our name through our performance and our history of success.
How about your project in Bahrain?
It was mainly about creating new land to build housing for local people. We dredged 28 cubic metres of material. We reclaimed the land and we are now at work on protecting the shores. We’ve been working on this project for almost two years now, and we have about eight more months to go.
Do you have projects elsewhere in the world?
Our strategy is to expand into Africa. We are watching the local market and participating in tenders. We have several promising projects in East Africa, where we are making ports and navigational channels.
We also have LNG projects in India, a USD 316 million contract for EPC in Gujarat. But when it comes to tenders, India is a difficult market with a lot of uncertainty. Awarded contracts can be put back out to tender, and no one really knows when the projects will start.
Working in India or Africa is not so different from what we’re used to in the Gulf Co-operation Council (GCC) in terms of technical process and equipment. However, the business environment and culture are completely different. Market entry is a critical stage. It takes time to gain experience and move up the learning curve, but then it gets easier.
How rich in opportunities is the current context?
On paper, there is always a raft of opportunities in the GCC, but it’s hard for us to assess when or even if the projects will effectively be carried out until they receive the final go-ahead. This is why we are always carefully weighing the risks and opportunities before scaling up our capabilities in order to enter a bid.
What is your strategy for the next three years?
This past year was somewhat alarming and taught us caution. We have been focusing on geographic expansion and on diversification outside oil and gas.
We restructured the company to make it more efficient and flexible, notably by revamping HR to evolve into a project-based organisation. This allowed us to reduce our overhead costs.
We are now at work on the second phase, the rationalisation of our fleet. We are taking advantage of this calmer period to screen our assets and rationalise them. We are upgrading certain vessels, and getting rid of disused or underperforming ones. We’re making sure we are ready for what comes next.
Have there been any recent updates to your fleet?
We ordered a new hopper dredger, which we should get in the first quarter of 2018. This will bring our fleet to a total of around 100 vessels.
We have 14 dredgers so far. The new one will be our first hopper. The others are cutter-suction dredgers, stationary vessels that swing back and forth while dredging and pump the materials up to the reclamation area through a pipeline. As for the hoppers, they load the dredged material using a suction pump before transporting it to the dumping area. Cutter-suction dredgers can work efficiently close to the shore, in protected areas, while the hopper can work offshore and much deeper, at about 50 metres deep.
How do you find new clients?
We reach out to cities and to their financial partners, or we directly partner with financial institutions. This approach brought us many interesting contracts – the one in Bahrain for example.
Our client acquisition strategy is everything but haphazard, we are very focused. We are in the GCC, in Africa and in India, because these are the areas best matching our approach. India has given us very good business in energy, and Bahrain and Saudi Arabia are providing promising tenders.
We are now looking to get increasingly involved in the gas business, as it is more resilient than the oil business right now. 2017 will be difficult, but I am sure we can keep going.
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