More MRO

Total gas turbine MRO services market: Company market share by revenues (GCC), 2008.
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Efforts to grow power generation capacities in the region have led to a steady increase in the the installation of gas turbines, which is in turn fuelling growth of the maintenance and servicing business.

No edition of Utilities Middle East would be complete without reference to the growing demand for power in the GCC, resulting in a massive expansion of power generation capacity across the region.

It is only natural that the subsequent increase of installed gas turbines in power plants across the Arabian Peninsula should lead to a burgeoning maintenance, repair and operations (MRO) market.

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A study completed by consultancy Frost & Sullivan estimates total 2008 revenue in the GCC gas turbine MRO market across the different sectors of power, oil and gas and process industries at US$246.6 million, with 236 units in operation.

Lakshman Sutrave, senior research analyst at Frost & Sullivan expects the market to grow by 6.5 percent year on year through to 2013, when revenue will reach $337.3 million. The biggest markets are Saudi Arabia and the United Arab Emirates.

The market is so healthy that not even the global recession has done much dent its performance. “In 2008, the seven to eight percent growth of previous years declined to about five percent,” says Sutrave.

“The market completely depends completely on the installations that are happening, so there have been very few cases where the end user has postponed maintenance due to the recession.”

Privatisation and outsourcing
Apart from sector growth, a shift towards private investment has provided a huge boost to MRO service providers, thinks Dietmar Siersdorfer, CEO at Siemens Energy Middle East.

The deregulation of the energy market started when Abu Dhabi paved the way for Independent Power and Water Projects (IWPPs) with its privatisation programme in 2000.

The outsourcing of power generation by the state in the shape of public private partnerships (PPP) has in turn encouraged the outsourcing of repair works.

“The operating requirements of an independent power project (IPP) are different to those of government owned utilities. The financing model differs mainly for two reasons.

Firstly, IWPPs fund their projects through lenders, which expects operators to outsource the MRO with fixed contracts to have a better cost overview and secondly, insurances insist on reliable MRO through competent service providers to manage minimize their risk exposure,” says Siersdorfer.