The Middle East power cables market has witnessed dramatic growth over the past decade due to large investments in the power, oil and gas, infrastructure and construction sectors, said a report.

The market will continue its uptrend, as developing countries including the UAE, Saudi Arabia and Iraq plan to spend significantly on the power sector, according to Frost & Sullivan.

With the private sector’s contribution to power generation expected to grow from 7.4 per cent to over 17 per cent by 2020, Saudi Arabia alone will account for an investment of around $100 billion.

Thus, significant opportunities are on the horizon for cable manufacturers in the region, stated Frost & Sullivan in its strategic analysis of the Middle East Power Cables Market.

The market earned revenues of $5.81 billion in 2014 and estimates this to reach $9.22 billion in 2020.

“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,” remarked Frost & Sullivan Energy & Environmental Consultant Mohammed Faraz Khan.

"The first phase of the project has brought in a capital of around $1.1 billion, indicating its potential to rejuvenate the Middle East power cables market," he added.

According to him, the expected boom in infrastructure and construction projects over the next decade with several GCC countries preparing for landmark events such as the 2022 FIFA World Cup in Qatar and the 2020 Expo in UAE brightens the outlook for power cable manufacturers.

"With copper prices anticipated to continue to drop over the next two years, end-user industries in the region will be in a better position to demand superior discounts and purchase power cables," he stated.

"However, the Oman and Bahrain power cable markets will not expand as quickly as the UAE and Qatar markets due to the lack of large-scale infrastructure development plans. Kuwait too will experience only moderate growth on account of delays in awarding long-pending projects," he added.

Further, the Organisation of the Petroleum Exporting Countries’ restrictions on oil output have led to surplus production capacity in Saudi Arabia, discouraging investment in the short term and adversely impacting the power cables market, according to Frost & Sullivan .

While recent sanctions on Iran have created an oil supply gap, countries like Saudi Arabia have agreed to fill it, thus suppressing the need for power cables and other associated equipment, it stated.

Along with these market dynamics, the limited success that the KSA has witnessed in the exploration of urgently-required non-associated natural gas to fuel power generation and for use as a feedstock in petrochemical plants has dampened market prospects.

“Competition in the Middle East power cables market has intensified and tier II and tier III suppliers have instigated price challenges,” noted Khan.

“To rise above these competitive pressures, power cable suppliers should adopt best practices to improve production efficiencies and achieve economies of scale to reduce manufacturing costs and maintain profit margins,” he added.-TradeArabia News Service