Dubai, UAE 12th December 2012 - PwC launched its first survey for Capital Projects and Infrastructure in the Middle East, titled “Delivering the Middle East’s Mega Projects”.
The survey reveals that investment in major projects remains positive despite challenging economic conditions both globally and in the Middle East. 66% of respondents reported spending over US$100 million on major projects in 2012 across a broad range of industry sectors, with 72% expecting to increase their spending in 2013. Released today, the report seeks to establish issues and challenges facing project owners and explore opportunity markets. The report also sheds light on project financing issues, including funding constraints, perception of private financing and the funding outlook for 2013.
Despite regular project reporting and structured review regimes, the number of participating respondents experiencing performance issues relating to their capital projects was high. 80% of respondents said that their projects had experienced a delay, with 46% saying that they had suffered delays in excess of six months. Completing projects on budget was also a significant issue, with only 36% of respondents saying that their projects were completed on or under budget. However, respondents also said that their projects were subject to regular reporting and review.
“Governance, accuracy and completeness of reporting will dominate the areas of focus of senior management for 2013. Whilst reporting is regular, there appear to be concerns around its transparency and accuracy”, commented Charles Lloyd, Partner and Leader of Capital Project & Infrastructure practice at PwC in the Middle East. “Another issue facing projects in the Middle East is the availability of funding for major projects. Difficulties in the Eurozone financial markets have reduced the availability of traditional project finance funding sources and led many sponsors to explore alternative funding sources.”
Over half of respondents said that their projects had been delayed, scaled down, or cancelled due to funding constraints. Furthermore, two in three respondents expect restrictions to continue into 2013 – and over 60% of respondents expect their projects to be funded, at least in part, by the private sector. Export credit agencies, local banks, development banks and Islamic finance are now active considerations for sponsors looking to fund infrastructure projects. Such alternative funding sources, however, give rise to different challenges and financing considerations including hedging, inter-creditor issues and appropriate risk allocation.
Respondents identified the UAE and Qatar, as their top targets for investing in capital projects and infrastructure, followed by Egypt and Saudi Arabia. This indicates a potential increased level of confidence in post-revolution Egypt –subject to political stability - which is likely to be underpinned by a need to invest in infrastructure projects, particularly in transportation, solid waste recycling, healthcare, water, waste water management and power.
PwC’s team of infrastructure, real estate and capital projects experts, located in the Middle East, help project owners and stakeholders resolve complex issues across all stages of the project lifecycle. PwC combines real industry expertise with deep subject matter knowledge and global knowledge with local presence.
The 2012 Capital Projects and Infrastructure survey was completed by respondents from a broad range of industry sectors, all with a key role in the delivery of major projects. PwC asked the respondents their views on the challenges they faced in 2012 and their outlook for 2013. The survey was conducted the between August and September 2012.
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Established in the Middle East for 40 years, PwC has firms in Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,500 people. (www.pwc.com/middle-east)
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
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