Al Jaber hopes for green light on $2.65bn motorway deal

The Abu Dhabi company is negotiating to build the Mafraq-Ghweifat road link.

Abu Dhabi's Al Jaber Group is close to hearing whether it has been picked to build the largest road project of its kind ever undertaken in the country - a US$2.65 billion (Dh9.73bn) motorway running from the capital to the Saudi border. It is one of three groups bidding to build the 327km Mafraq-Ghweifat road link, one of the largest public-private partnerships being undertaken in the Middle East.

Al Jaber has teamed up with Besix, a joint venture between the local company Belhasa and Belgium's Six Construct, and Australia's Macquarie Capital Group. Other companies vying for the deal include a consortium made up of the German company Strabag and the UAE's Saif Bin Darwish and another that includes Ghantoot Transport and General Contracting Establishment and China State Construction Engineering Corporation.

The motorway is expected to be completed in 2015. "The department of transport [in Abu Dhabi] is still evaluating the tenders," said Fatima al Jaber, the chief operating officer of Al Jaber Group, on the sidelines of the three-day Arabian World Construction Summit, which began in Abu Dhabi yesterday. "We have submitted our price and have been negotiating; we hope to hear before July. This is the biggest project we are bidding for and we hope to get it," she said.

Ms al Jaber added that the group, which owns Al Jaber LEGT Engineering and Contracting (ALEC) and has a project order book worth Dh29bn, is targeting government-backed projects as it diversifies in the economic downturn. Al Jaber is building 5,000 villas for UAE nationals at Al Falah Development, a project being developed by Aldar Properties as part of the capital's 2030 development plan. "These are the projects we're looking for and more will happen in the future as part of the 2030 plan," she said. Still, while there are a number projects in the pipeline in Abu Dhabi, particularly for roads and social infrastructure, contracts are difficult to win and slow to be awarded owing to the Government being "more cautious" following the economic downturn, Ms al Jaber added.

"There have been a lot of tenders in Abu Dhabi; we're just waiting for decisions from the Government," she said. Al Jaber Group, one of the oldest family-run construction companies in the region, is also building up its presence in Qatar and may enter Saudi Arabia in the future. "Saudi is a difficult market. We've had invitations from other companies to partner with them there but haven't taken any of them up yet," she said.

Many contractors and consultants shifted focus to the capital as the financial crisis brought work to a standstill on building sites across Dubai. But several of these companies are being forced to cut their prices to stay afloat as competition intensifies. Simon Kok, the regional business development manager at the engineering company UES Middle East, said it had placed dozens of bids in the capital only to be told its pricing was "too high".

Contractors could command a profit margin of 15 per cent or more at the height of the construction boom, but margins of between 5 per cent and 8 per cent are now more typical. Riad Kamal, the chief executive of Arabtec Construction, warned contractors not to "burn" their prices. "This is giving the wrong message to clients that contractors are desperate," he said. "We shouldn't take work for the sake of it or for continuity; we need to have our project margin in order to sustain our presence and give value to our employees and shareholders."

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