International Construction
Written by Helen Wright
Colas has 11 asphalt plants in Morocco and has contracts to build 150 km of highway near the border with Mauritania as well as a 40 km road through the mountains near Casablanca.
Producing about one-third of Africa’s total GDP and the home of nearly 170 million people, North Africa is a resource-rish area with much to offer the construction industry.
But the region has also been at the centre of the political and social unrest that has spread throughout the Arab world this year, with revolutions in Tunisia and Egypt as well as unrest in Algeria, and a damaging civil war in Libya.
This has led to the delay or cancellation of many construction projects has added a large element of uncertainty to any short-term forecasts for the region.
Nevertheless, the long-term outlook for Northern Africa is bright, with strong investment interest from the EU as well as Brazil, Russia, India and, in particular, China.
Indeed, Thomas Mirow, president of the European Bank for Reconstruction and Development (EBRD), has said the Bank could envisage investing up to € 3 billion (US$ 4.1 billion) a year in North Africa if shareholders approved extending its mandate to the region.
The EBRD is already considering a request by Egypt to become a recipient of EBRD investments and the EU has encouraged the Bank’s shareholders to extend investments to the wider North African region including Morocco and Tunisia.
Director of research company Global Construction Perspectives Graham Robinson told iC that Egypt’s construction market has significant long-term growth prospects.
“The really big market has to be Egypt,” Mr Robinson said. “It is the largest construction market in North Africa. We forecast Egypt will grow on average by +6.4% each year over the next ten years to 2020. It is one of our top ten fastest growing construction markets globally.
“It has passed public private partnership (PPP) laws and there is an emerging pipeline of economic and social infrastructure that will provide interest for investors and contractors – the first PPP project in Egypt was the New Cairo Waste Water facility, for instance. Cairo will be one of the world’s largest mega cities and its urban population is growing fast,” he added.
Power needs
Indeed, the African Development Bank (AfDB) is actively engaging with Egypt’s power sector, and is currently funding four major projects to help the country meet increasing demands for electricity.
These include construction of the 1.3 GW Abu Qir thermal power plant in Alexandria, to which the AfDB loaned US$ 337 million, and the Ain Sokhna thermal power project in El-Ain Al-Sokhna, to which the AfDB lent US$ 339 million. The projects are due for completion in 2012 and 2014 respectively.
AfDB Egypt representative, Khushhal Chand Khushiram, said the country had emerged from the revolution with an increased set of challenges.
“A most urgent focus is on the revival of economic activities and the resumption of the growth momentum. Fundamental reforms will be needed to put public finances on a sustainable path, raise economic efficiency, and enhance external competitiveness,” he said, adding, “As the economy recovers, the country’s infrastructure financing gaps can be met by a greater reliance on public-private partnerships (PPP).”
Algeria, meanwhile, is also looking for private investors to help implement its infrastructure plans. The Algerian government announced this April that it was calling on private national operators to contribute to its aim of generating 20 GW of electricity from renewable sources by 2030 – a programme which will need an investment of US$ 62.7 billion.
And Algerian Minister for energy and mines, Youcef Yousfi, said state-owned utility Société nationale de l’électricité et du gaz (Sonelgaz) would invest US$ 30 billion over the next five years in order to raise national electricity generation from 10.4 GW in 2010 to 15 GW by 2015, according to the Infrastructure Consortium of Africa (ICA), which promotes public and private investment in infrastructure in Africa.
Algeria is the fourth largest crude oil producer in Africa and the sixth largest natural gas producer in the world. Fuelled by revenues from these commodities, its current five-year plan (2010 to 2014) includes US$ 286 billion to be spent on infrastructure projects including roads, rail, ports and housing – all generating high demand for construction equipment.
In transport alone, US$ 85.2 billion is budgeted to be spent over the five-year period, funding tram systems in 13 cities, increased port capacity, a new highway network and an expanded railway network.
But the unrest in Algeria has affected some of the government’s plans – significantly the country’s US$ 11.2 billion, 1216 km-long East-West highway is still on hold long after its scheduled completion date passed in 2010.
The project is being constructed in three phases. The contracts for the 169 km central and 359 km western sections were awarded to a Chinese consortium consisting of China Rail Construction Corporation and China International Trust and Investment Corporation.
The 399 km eastern section, meanwhile, is being constructed by a consortium of Japanese companies known as COJAAL, which is made up of Kajima, Nishimatsu, Itochu, Hazama
and Taisei.
The road will eventually form part of the new 5600 km North Africa highway from Morocco in the west to Egypt in the east, but much of the construction is now on hold indefinitely due to the political unrest in the entire region.
Rapid expansion
However, Morocco is hoping to achieve rapid expansion on its over-stressed transport sector in 2011 and 2012. For example, construction of the 33 km Marakesh to Agadir motorway is due for completion by the end of this year with the help of a
US$ 159 million loan from the AfDB.
A US$ 61 million national rural road development programme is also expected to be completed by 2013, and the AfDB has also lent € 240 million (US$ 327 million) towards construction of Morocco’s third airport project as well as € 300 million (US$ 409 million) towards a project to increase capacity on the Tangier to Marrakech railway.
In Tunisia, too, the AfDB is supporting infrastructure development, and three major nation-wide road-building and rehabilitation projects are currently underway with the help of a total of US$ 792 million in AfDB backing.
The AfDB’s Ralph Olayé summed the situation up, “The development of infrastructure is not something Africa can postpone. It is at the very core of the development of our continent to bring truly inclusive and sustainable economic growth over the long term.”
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