Financing ‘critical issue for 2013 projects’
Doha, December 19, 2012
Contract financing will be a critical factor for project roll-outs worth $159 billion in the region as the banking sector adjusts new regulations and cuts back on long-term lending activity, said an expert.
“Financing is a critical issue that must be addressed as the project sector continues to recover and grow,” said Edmund O’ Sullivan, chairman, Meed Events, which is organising the Qatar Projects 2013 conference, scheduled on February 17 to 20 at the Grand Hyatt Hotel in Doha.
The event will feature a comprehensive review of contract financing opportunities and challenges in Qatar.
With bigger contracts looming as Qatar enters the next critical phase of its preparations to host Fifa World Cup in 2022 and to bid for the Summer Olympics in 2020; project owners and contractors must explore other opportunities beyond traditional bank lending to ensure the realisation of the projects.
Before the financial crisis hit the world economy in 2008, government infrastructure projects in the GCC were financed mainly through syndicated loans led for foreign banks. At the height of the crisis, the availability of project finance dried up while at the same time propelling debt costs upwards, explained O’Sullivan.
Nowadays, with the Basel III accord and new banking regulations throughout the region, multi-currency loans came in vogue to permit local banks to lend in local currencies, with new and tighter caps introduced in recent years, he said.
In addition to major regional banks, the gap in project financing was filled by credit agencies and the bond markets.
According to Meed, industrial projects, such as the Emal Aluminium Smelter Complex in the UAE, are proposing bond issues to fund expansion.
Others, such as the Shuweihat independent power and water plant in Abu Dhabi, are considering using bonds to refinance debts. Sukuk, or the Islamic bond, is also under consideration, with Saudi Arabia’s Sadara Chemical said to be considering a riyal-dominated project sukuk.
At Qatar Projects 2013, the premier projects industry international conference supported by Qatar’s Ministry of Business and Trade, Ashghal, Qatar Chamber of Commerce and Qatar Petroleum, key examples of successful contractor financing and the current requirements to support the development of planned and future mega projects will be discussed in a dedicated session.
Providing an important context to these discussions and setting a tone for the entire conference will be the keynote address to be delivered by Abdulla Bin Saoud al-Thani, Governor, Central Bank of Qatar, who will share insights on how government initiatives will drive project developments in the country and broader long-term economic aspirations.
Among the hot topics that will be discussed at the conference include how banks will provide huge volumes of contractor finance to fund private-sector government contracts; exploring the role of Islamic finance, local banks and international players in alternative financing; developing frameworks for safeguarding long-term financing deals; adapting project finance structures to secure long-term funding in a tighter lending framework.
Meanwhile, economic advances and developments in Qatar’s financial sector will be the subject of the opening address to be made by Jabra Ghandour, managing director of ibq, which has signed up as Platinum Sponsors of the event.
“We’re pleased to be part of the Meed Qatar Projects conference 2013 as we firmly believe that it is one of the key platforms for business networking, giving participants the opportunity to meet key Qatari businessmen, decision makers, developers, and investors. This is the fifth consecutive year we participate in the conference, and we look forward to fruitful and insightful discussions with peers and future partners during this important gathering,” said Ghandour. – TradeArabia News Service