Without power cables there is no electricity grid. Andrew Shaw, managing director of Ducab, explains why he’s optimistic about the future.
Faltering oil prices may have raised question marks over the future of some infrastructure projects in the Gulf but UAE-based cable manufacturer Ducab is forging ahead with plans to expand its footprint in the region. The company has broken ground on its new aluminium rod and conductor facility at the Khalifa Industrial Zone Abu Dhabi (Kizad) which is set to open by the end of the year. Managing director Andrew Shaw is bullish on the company’s prospects in the coming years.
“I’m pretty optimistic for the GCC as a whole,” he says. “For the next five years we see a real intent from governments to invest. The curves are all showing growth again and the expectation is that this will continue.
“Because of the oil price perhaps things will run a little slower but the population is still growing across the region and governments are still intent on building infrastructure. Saudi has the largest population and will be the biggest driver and will continue to have tremendously ambitious plans. Of course Bahrain and Oman are smaller markets but everyone is following a similar course.”
Shaw’s view is backed up by a recent report by analysts at Frost & Sullivan which forecasts that the Middle East power cable market will grow to $9.2bn per year by 2020 up from $5.8bn in 2014. Large investments in the power, oil and gas, infrastructure and construction sectors have resulted in dramatic growth in the market over the past decade, a trend that will continue as countries including the UAE, Saudi Arabia and Iraq plan to spend significantly on the power sector.
The ongoing interconnection of regional power grids will also spur growth in the cable market. “The Gulf Cooperation Council (GCC) interconnection power grid project, which has been drawing huge investments from all participating countries, will drive the need for power cables,” said Mohammed Faraz Khan, Frost & Sullivan Energy & Environmental Consultant. “The first phase of the project has brought in a capital of around $1.1bn, indicating its potential to rejuvenate the Middle East power cables market.”
The outlook is further brightened by landmark events such as the 2022 FIFA World Cup in Qatar and the 2020 Expo in UAE, the report adds, though the Oman and Bahrain power cable markets will not expand as quickly due to the lack of large-scale infrastructure development plans.
However the market has been adversely affected by the insistence of the Organisation of the Petroleum Exporting Countries (OPEC) – led by Saudi Arabia – on maintaining production levels despite the lower oil price. The decision has discouraged further investment in new oil and gas projects in the region.
“We have a heavy interest in the oil and gas market and that continues to go ok but projects are under review and some have been cancelled in the GCC so that could cause a problem in one or two years’ time but at the moment we’re executing projects awarded in previous years,” says Shaw.
“But governments have made clear they’ll continue providing houses for the inhabitants in the Gulf despite the lower oil price,” he adds. “It’s not explosive growth but it is steady growth. You get different specific drivers in each market. Dubai has the Expo, Qatar has got huge infrastructure build out all aimed at the World Cup.”
Expansion plans
Ducab produces a wide range of cables – from construction to electricity transmission – but has been seeing the strongest growth in its high voltage business, a joint venture started with DEWA and ADWEA nearly five years ago.
“We’ve spent four years building a track record with year-on-year strong growth and we’ve been very successful in winning business in Kuwait and in the UAE in particular and that business is really building momentum,” Shaw says. “So if I look across our product ranges that’s probably the one with the biggest growth over 2014-2015.”
Within the Gulf copper is the main conductor used for a whole range of cables, Shaw explains. There are advantages to both copper and aluminium but copper is a better conductor so for a given size of cable you can put more current through a copper cable. In a dense environment like Dubai it makes sense to run with the most size efficient cable, so DEWA is almost exclusively copper. And within the same circuit it’s difficult to mix the two types of cable.
“Aluminium is cheaper but it’s a bigger cable,” Shaw says. “For a 185 kV copper cable you would need a 240 kV aluminium cable and this becomes an issue if you’ve got very high power usage. For instance if you’ve got a lot of feeders going into a substation then size matters, because if you’ve got bigger cables it becomes a bit of a squeeze to get all these cables into a substation.”
However aluminium is slowly growing in use and Saudi Arabia has announced a major shift towards aluminium within the utilities business. It’s partly because of this regional trend towards a slow substitution of copper for aluminium that Ducab decided to invest in Ducab Aluminium Company.
“We’re building another business,” Shaw says. “This building will take hot metal from EMAL (Emirates Aluminium) and we’ll be casting aluminium rod which is the raw material for cable makers so we’ll sell that along with the copper that we sell to cable makers. But in that factory we’ll also start making overhead lines so we’ll be able to offer a full product range including transmission overhead lines and buried cables.”
Facts:
– $9.2bn expected value of the ME cable market in 2020
– 5 The number of factories Ducab has in the UAE
