International companies have to engage with prospective clients.
With the lethargy of Ramadan behind them, the executives of utilities and the power and water companies are now bracing themselves for the busy conference season. There will be plenty to discuss for the well-rested delegates.
On a general level, the relentless demand for power and water ensures that utilities are busy showing contracts on international companies with multi-billion dollar contracts.
More specifically, nuclear power is the theme that is crystallising from the power generation story.
In September, Kuwait became the latest country to reveal is nuclear plans. Having signed a memorandum of understanding (MoU) with France earlier this year to ready the sheikdom for the atom, it is now known that Kuwait intends to have four reactors online by 2022.
Apart from attention grabbing headlines, another sub plot is at play here.
The Franco-Kuwaiti MoU was the result of a concerted effort on behalf of the French government to boost the business prospects of its nuclear industry in the region. Even President Sarkozy was not too busy to stop by in 2009, despite being busy trying to convince Abu Dhabi’s rulers to choose France’s European Pressurised Reactor (EPR) for their first foray into nuclear power generation.
Depite high hopes, the French were ultimately unsuccessful here, with the contract being awarded to South Korea’s Kepco.
But this hasn’t dampened the appetite of foreign governments for marketing trips to the region. France was certainly not deterred, with Ubifrance, a SME trade body organising a trade mission in June this year.
Germany, France’s neighbour and competitor, has also been active. In May, Chancellor Angela Merkel visited the Gulf region, a sizeable delegation of German business leaders in tow. One of these was Siemens CEO Peter Löscher, whose company has been active in the region for over a hundred years.
“It was observed by companies that the region has a lot of potential. Company leaders like Peter Löscher had been talking to politicians, and convinced them that the region has huge potential and that its necessary to also work together on a governmental level,” says Dietmar Siersdorfer, Siemens CEO of the energy cluster in Middle East.
In short, countries from all over the world are keen to make their presence felt in the region.
This includes extending a helping hand when it comes to financing major projects.
The project finance for the Sohar 2 and Barka 3 power plants to be built in Oman included a US$416 million loan from the Export-Import Bank of Korea (KEXIM). One of the contractors confirmed in September is the Korean GS Engineering and Construction Company (the other being Siemens).
Similarly, the 2,000MW Fujairah power plant would have never started commissioning in May had the Japan Bank for International Cooperation not loaned around $1 billion to the holding company. Incidentally, one of the two private stakeholders in the project is Japan’s Marubeni.
Apart from calling on their governments to help, companies must do their part in establishing and maintaining relationships.
“Of course you must have the right price, and yes, you have to have the right technology but you must also have good relationships with people, otherwise you don’t get the business,” says Siersdorfer.
An important aspect of this relationship is keeping utilities and government officials in the loop about current and future developments. “We tell them about things that are far ahead of us today, about the technological developments that will happen in the next three to four years, to guide their nation in the right direction.”
Representatives of international companies will do well to take these words to heart when mingling with the region’s decision makers at a conference.