Resilient and readyJuly 27, 2020
Sanjay Punj, managing director of Al Muntaser Trading & General Contracting Company (MTC), talks to The Energy Year about how the pandemic and oil price crises have impacted the Kuwaiti engineering sector and expectations for the post-Covid-19 world. MTC is a Kuwaiti engineering firm active in the oil, gas and power generation industries.
How has the crisis impacted your activities?
As you know, it is difficult for all companies. We are also facing it. Our overheads are the same and our money coming in and billings are considerably less. One of the things that has really impacted us is that one of the areas in Kuwait has been under complete lockdown, meaning that you cannot leave the area at all, and one of our labour camps is there. That is a building where we house about 50% of our workers and they are not allowed to leave that area at all.
With the 24-hour curfew that has been put in place we also have a second building in an area where the workers are able to go work on site during this curfew. We benefit from special passes for the oil sector, but it’s not the same level of activity as it was normally. It’s scaled down, maybe to 60% of what it would ordinarily be.
The oil sector is not impacted as much as some other industries. Every two days I have a Zoom meeting with my management and one of the most important things I’ve told them is to conserve cash by any means. We were able to pay April salaries in full and try our best for May salaries. The months from mid-June, through to mid-August will see a lot less funds coming in so I’ve talked to my accounts department and have told them to conserve cash as much as possible.
My last action would be to reduce salaries and organising strategies for the event that things drag out and it gets very tough on the finances.
One thing that has really helped us is that from day one I’ve always kept very low overheads, probably lower than what I should, given the strength and the billing of my organisation. You always face tough times, whether from cashflow shortages or various other reasons. It’s never been this severe, but it has taught me that you cannot go wrong by having low overheads. In any industry, that has been a real motto of mine and even if it means a little more stress and hard work.
Tools like Zoom have been a great help, I must say. I think the same goes for my managers. They’re also happy that everyone can see each other and schedule meetings if they want to. With me being in India, I’ve got one of my managers in Abu Dhabi and the rest in Kuwait; the time difference isn’t that bad.
Do you think this crisis is basically going to push a new work era for the industry in general, and that these new ways of working will be here to stay?
I think so. Wearing face masks and cleaning your hands regularly is going to be a way of life at least until a vaccine is found, and then until a good portion of the population is vaccinated, which will take quite a while. We already wear face masks on work sites. Our work requires it most of the time so as far as workers are concerned, they’re used to that even though everyone is safe and no one has gone out.
We’ve got a camp boss who manages the building, going every day and checking everyone’s temperature in the morning and evening in all of our buildings just to make sure that no one has a fever, and if someone does, he is kept isolated. We’ve kept one full floor empty just to isolate people if need be. Touch wood, we haven’t reached that stage.
There’s also only so much social distancing you can do when you’re at work, because our work requires a team. Unfortunately, you can’t have one person working 6 feet away in a team effort. You do the most you can in an efficient manner.
The industry has been facing the dual shock of Covid-19 and the low oil prices. Do you feel that the operators, NOCs and IOCs will apply a lot of pressure on contractors and subcontractors?
No doubt. I 100% feel that there will be pressure. A lot of the GCC countries, some more than others, have a very socialistic approach to running their country vis-à-vis their own people. With even the pre-Covid oil prices, they were struggling to balance their budgets and I could feel that in the oil sector. They were much stricter on how they spent their money. Now it’ll be much more, no doubt.
Saudi Arabia has increased their VAT by 15%. Kuwait doesn’t have VAT so that’s not an option for them, but budget efficiencies and how money is spent will be scrutinised. I could already feel the pressure from the senior management at KNPC with regards to saving money. KNPC has a separate independent auditing team and it’s almost like another job to supply them with information on the work we are doing and all the details required.
I look at the opportunities in a situation like this. It tends to weed out the weaker people in the industry. We are going through a very rough time and we should make sure that we’re resilient enough to get through this, whether it be through our finances, efficiencies or whatever it may be.
I have no doubt that we’ll pass through it, as long as everyone supports each other. We have a very strong team including some third-generation workers working for us. I have full faith in my team and their support for any decision management takes.
I am upbeat but I’m also looking at downsizing my numbers, only because I don’t see me being able to employ all of my people after this. Kuwait was very busy for the past two to five years because of the fourth refinery, the Clean Fuels Project.
There’s not going to be so much work going forward, and with oil prices down I don’t think they’re going to bounce back up much higher. Budgets will be constrained. There’s going to be less projects and more maintenance, but maintenance jobs are tough.
Do you think there will be less work or a different structure of work from the large petrochemical projects coming up such as olefins 3?
Olefins 3 is still a while away. Our work is more downstream of the project phases. You have the FEED, the civil work and so on. I start getting involved once the construction starts, so it’s still a while away. But then on the flip side, it does weed out a lot of the newcomers so there are fewer companies bidding trying to get less work, so there still might be work there, and I’m still planning in case.
Do you expect any gesture or any assistance from the public authorities in Kuwait to aid during this crisis?
I’ve heard some talk that they might tell the landlords to ease up on the rental payments, which would be a big help. That’s where you really get hit hard. A nice gesture would be some percentage cut on the rentals. I can understand that a lot of people have building rentals as a business. You should get something, maybe not 100%, as everyone is suffering in this.
Saudi Arabia has also said that companies can reduce salaries if there’s a mutual agreement with the workers. Kuwait is trying to do that to ease the burden on companies, but some of the parliamentarians say that they are not going to allow that for Kuwaitis. They have no issue with it being done to the expats, but not for their nationals.
The workers that really get hit the hardest are not the upper management, frankly speaking. It’s the lower guys that really get the brunt of it. They’re the ones who really need help. They are the expats and the ones who don’t have any rights. I’d be happy if the government could find some way to help them. That’s also where it becomes my responsibility, trying to do as much as I can for them, and that’s what I’m trying to work on.
What are your expectations for the post-Covid world and your vision on how things might emerge in a few months once this is all over?
I personally feel that countries are realising that this is something that we have to live with. It’s not something that is going to go away. There will be deaths, there will be people who get it, there will be severe cases, there will be mild cases and we need to move on. I think face masks and social distancing are going to be a permanent thing. Even when I go for a walk, I see people keeping a distance and I’ll walk away from someone coming my way. But then how do you do that on an aircraft?
Delhi has now opened from 7am to 7pm, and I can go to my friends’ places, but I’m not doing so. I’ve still got that fear to some extent. Even if countries open up, the majority of people will have fear and limits as to what they need to do. They’ll probably think, “Do I need to do this? Do I have to do this? What risks am I taking by doing it?” Even if Kuwait opens up on June 1, I’m not going to get on a flight and go back immediately. Luckily I’m able to manage things remotely.
Another thing we learned is that we weren’t very proactive in online banking company-wise. Now we’ve realised that once this is over, we’re going to make sure we can do a lot more online banking for company operations.
Pandemics happen a lot. Even in a country like India, Mumbai has been hit very hard because there are many slums and that’s not the right way of housing people. This is the world’s way of saying “get things back to normal.” The air is now so clean in Delhi. It was the most polluted city in the world and now it’s beautiful. Every night we sit out, the kids play outside with fresh air – it’s fantastic. The birds are out, the trees are looking healthy. It’s nice to see how fast the climate bounces back and it’s amazing how resilient nature is. It is an eye opener for people, and maybe bicycles are the way to go!
I’m sure there are going to be a lot fewer aircrafts flying as they will take a big beating. I’m glad that I’m in an industry that’s not being hammered as hard, unlike hotels, airlines, restaurants and so on. Luckily, our industry is a very vital industry so it’s continuing to some extent.