New growth in construction and infrastructure

Martin McGinty, CEO of Western Bainoona Group (WBG), talks to The Energy Year about the demand for construction and infrastructure works in the UAE, bottlenecks in the sector and how the company competes via its integrated value chain. WBG provides quarrying, transportation and construction services to the energy industry.

How would you assess the current market demand for construction and infrastructure works?
In comparison to last year, the dynamics across the industry have shifted dramatically. We are witnessing tremendous growth as demand and tenders continue to increase. Over the past five years competition has become fiercer, in a similar fashion to the early 2000s, when there was a boom in the construction industry, attracting new competitors to the market.
Growth is seen not only in the UAE but also across the GCC region. We have been doing work on a highway in Bahrain and are currently looking out for tenders in Saudi Arabia, which is the biggest market for construction in light of the scope and number of projects being developed.
However, we do not expect international work to represent more than 30% of our turnover in the near future.

What would you say is Western Bainoona Group’s competitive advantage?
Our major strength is the integrated value chain we operate as a company. We mine and procure our own raw materials, we manufacture asphalt, we own and operate our transportation vehicles, we have a fleet of construction equipment and we provide the construction services to our clients. We are almost a one-stop-shop company.
We also have our own electrical division and sanitary division, and we are registered with all the authorities. This broad array of skillsets allows us to be more flexible as we are not dependent on third parties and definitely gives us a competitive edge for clients regarding time and cost.
We also are a local company with broad knowledge of the market and experience dealing with other local players as well as the different authorities. We are constantly working on our ICV [in-country value], where we score high. We’ve also worked successfully with ADNOC, known for the very high standards they expect in terms of operational practices.

Could you describe your activities at the Barakah nuclear plant?
We were involved in the first stage of the Barakah plant. Once it is fully operational, the second stage will begin, which will add another four reactors to the complex. The Barakah nuclear plant is one of the most influential projects across the energy value chain and we want to keep playing a part in its development. Once the next tender is organised, we will participate in it.
Our participation so far revolves around two major axes. We have supplied all the aggregates and built all the roads and infrastructure for the plant. In addition, we constructed all associated infrastructure surrounding the complex. This project was awarded to WBG eight years ago and we have been present ever since. It has allowed us to increase our competences and aim for higher standards across our operations due to its strict requirements.

What kind of bottlenecks are you confronted with in the construction sector?
A major issue that the construction sector faces is supply chain disruptions. As the demand for raw material increases sharply with projects being developed across the GCC and worldwide, commodities such as steel, copper, cement and bitumen can temporarily become scarce.
The increased pressure on international supply chains for raw materials and the growing gulf between demand and available supply could cause massive problems in the coming years. The authorities have started to address this issue by adapting and fostering growth within national capabilities regarding sourcing and manufacturing of the needed products.
We have developed a certain resilience to such scenarios through the integration of these capabilities within our own value chain. Furthermore, it is important to grow organically and not expand too fast, putting emphasis on the quality of the staff, procedures and policies you operate with. This helps form stronger relations with the stakeholders with whom you work.

What opportunities are you looking out for in the near future?
We are looking to work more in the oil and gas sector and grow from 5% of our operations to about 20% in the next five years. We are monitoring the opportunities that will flow from ADNOC’s ambitions to further develop oil and gas projects, which will require a lot of infrastructural work and construction.
We have recruited personnel with experience within the energy sector in anticipation of future tenders that ADNOC will issue, and we expect to grow our revenue by expanding towards this high-potential sector. Additionally, we are monitoring the renewables sphere and looking to get involved in such projects in the future.
A key driver of competitiveness is the integration of innovative technologies in our operations, and one way to resolve certain challenges – such as fuel price volatility and the need to reduce emissions – is to electrify our truck fleet. Together with Mercedes, we are investigating the possibilities of bringing in these trucks next year. However, there remain challenges such as the lack of charging infrastructure.

Read our latest insights on:

• Bahrain
• Saudi Arabia
• UAE