Egypt’s expanding construction ambit

Egypt

Mohamed Ibrahim Mahlab, chairman of Rowad Modern Engineering, talks to TOGY about the environment for construction companies in Egypt, the impact of the Tahrir Petrochemical Complex project and the country’s potential as an electricity exporter. Rowad Modern Engineering is a Cairo-based construction company operating regionally.

How would you define Egypt’s construction ambit and how has its development impacted the oil and gas industry?
Egypt is a very mature country when it comes to construction. Within the MENA region it is the country with the largest and most mature construction projects. In this sense, we are lucky that the government, in the last four years, has heavily invested in infrastructure to boost the Egyptian economy. Construction companies are very busy, which at the same time creates jobs at every level, including in the oil and gas sector.
Moreover, there is an ambitious plan to improve infrastructure in the country, seen in the 1,000 kilometres of roads being built, the construction of the new capital, Alamein city and even the works carried out in the Zohr field. It is clear that the construction industry in Egypt has been leading the market in recent years and this momentum is a great opportunity to take a step forward and export construction capabilities and experience abroad.
With the opportunities the government has created in the country, construction and engineering companies will have the chance to take the experience they have gained and work all over Africa and the Middle East. We have already done this, but you can see other companies that are beginning to do the same.

What window of opportunity do you see for EPC companies in the oil and gas industry?
The hydrocarbons momentum in Egypt is reflected in the Tahrir Petrochemical Complex project, for example. This will create a lot of opportunities for construction companies and engineering firms. Such big projects move the whole market due to the huge amount of investment they represent.
The Tahrir project specifically will involve most construction companies and will bring on board the biggest EPC contractors in the world. It is an ambitious initiative which will transfer knowledge and experience to the local community. Projects of this calibre change the direction of a market completely.

Could Egypt transform into a refining hub in the near future?
Yes, the country now has all the necessary resources to achieve this goal. The strategic investment directed towards a revamping of old refineries and the construction of new ones, – along with the investment in ports, infrastructure and petrochemical complexes – reflect this. It will happen, and projects such as the Tahrir complex are an example. These types of initiatives are changing the way Egypt is working towards the future.

Egypt is considered the third-largest market in the MENA region for project awards. What attractions does the country have for domestic and international EPC companies?
First of all, we are talking about a country with over 100 million inhabitants. It is a large market when compared to others in the Gulf region and for this reason there are plenty of opportunities. The government is trying to bring FDI into the country. Yet local investment is also crucial.
Looking at the situation in perspective and after all we have been through since 2011, things are now getting to the right place. There have been so many changes and it is now the time to invest. And indeed, over the last two years, local and foreign investors have poured money into the country.

What steps can Egypt take in order to retain qualified human resources in the country?
Egypt is a natural exporter of manpower to countries in the Gulf region such as the UAE and Oman. Nowadays, you see Egyptian engineers everywhere. Instead of exporting human resources, the country should work towards exporting Egyptian companies and services. This will also bring foreign currency back into the country.
With the boost in the local market, there are new needs for human resources, labourers and different trades here. There is a lack of qualified in-country manpower. To address this, the government is encouraging investments in technical education in order to ensure there are qualified and prepared labourers for the next decade.
Here, not only does the country need the government’s encouragement, but it also needs the private sector to realise this goal. The involvement of the private sector is mandatory as they are fully aware of the products and procedures needed. Therefore, incentives for more technical education are essential for the country’s development.

Considering the rise in population and consequent energy demand, how important are power generation projects for both the country and EPC companies?
Egypt has invested heavily in power over the last five years. We have been very lucky to be part of this plan. We worked on the construction of the Beni Suef power plant, which is one of the biggest power plants in the Middle East. In the future, companies will be investing in clean energy power generation, such as wind and solar.
An example is Benban Solar Park, which has 1.5 GW of capacity. In regards to wind, there are also many projects starting based on the IPP model. Investment in power in this country is striving towards green energy. As for the conventional systems, Egypt has put 12 GW on the national grid over the last three years. We do not need more power plants: What we need now is to use this power.

To what extent do projects such as Benban Solar Park contribute to realising Egypt’s renewable energy plans?
The 1.5-GW Benban project took around six to nine months to complete, which is quite an achievement. All of this is private investment. However, it took a long time to close the financial procedures with the government. Doing something for the first time is difficult but doing it again should be easy. The development of laws for models such as IPPs and PPPs has taken some time, but they are now firmly grounded. For this reason, the development of wind and solar projects is an important step in the country’s quest to diversify its energy mix.

Do you see Egypt becoming a leading electricity exporter within the African continent?
We are already electricity exporters. In this regard, we are sending electricity to Jordan and there is also an ambitious plan to finish the grid between Egypt and Saudi Arabia. We could also sell electricity to Sudan or Libya. Egypt’s geographical location and potential is essential to the country becoming a true energy exporter in the continent. However, I insist that even better than exporting energy would be to use it.

What importance do these different power plant projects have for the portfolio of Rowad Modern Engineering?
The involvement with power-related projects was a big change in the portfolio and experience of the company. The Attaqa power plant project came at a crucial time for Egypt as we had a general lack of power at the time, seen in the numerous power cuts. The project was finished in six months and represented 700 MW. It was a very big challenge but we had a national incentive as we were doing it for the country.
We could say that Attaqa was our head start when it comes to working with power. It also gave us the opportunity to work on Beni Suef, which was even a bigger power plant and an even bigger challenge. It is such an honour for us to contribute to building our country via these projects. Hence, projects involving power plants are an important part of our portfolio today.

What plans do you have for expanding the business across the African continent?
When it comes to construction, Africa is a land of opportunity. Egypt is set in a location which allows us to serve the whole continent, and our direct goal is to expand across Africa. Furthermore, we have experience working in countries such as Algeria, Mozambique, Chad and Nigeria, so we see it as our market.
At the moment we are looking for wind and solar projects in countries such as Djibouti, Ivory Coast or Senegal. We are also carrying out projects in Uganda and Tanzania. We realise that this experience will help us shape the future of the continent and our company.

What competitive advantages do you have compared to foreign companies penetrating the continent?
When we develop projects in Africa, we concentrate on contributing to advancing the market. African countries have been misused for years by governments, companies and investors. There is a lot to be done. When we go to Africa, we integrate into the community; we try to add value by training locals and providing them with services. Our ethos revolves around the idea that if we go there to make money, we must also give back to the people. We also bring finance to these countries so we are more than capable of competing with Chinese or other foreign companies.

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