Closure of ports and road links could have an impact on Qatar's contracting market
The restriction on the use of airports, ports and roads in neighbouring countries could present a major challenge for Qatar’s construction industry affecting the timeline of its preparations for the 2022 Fifa World Cup.
Yesterday, the UAE, Saudi Arabia, Bahrain and Egypt broke diplomatic ties with Qatar and cut off air, sea and land access to the country over Doha’s support for “terrorist groups aiming to destabilise the region”.
Although Qatar is relatively small in size, the major works programmes that have been taking place in the run-up to the forthcoming World Cup has meant that it is a market that has been attractive both to regional and global construction companies for many years.
Most of the major works programmes have been designed and managed by global architecture and engineering firms, and many are being delivered by international contractors – often through joint ventures with Qatar-based companies.
A spokeswoman for Atkins, the British construction consultancy managing several major projects including the Gold Line of the Doha Metro, said that it was still assessing the implications of the restrictions that have been put into place, and that its immediate concern was for the safety of its staff in the country.
George Franks, the managing director of Interserve International – the British contracting company that has stakes in a contracting company and an engineering business in Qatar which employs a combined workforce of about 11,000 – said the country imports much of its building materials by road from Saudi Arabia.
“There’s going to be an immediate impact on some of the materials transported by road, and I think that probably includes quarried materials and precast [concrete] products – the heavier materials that don’t come in by sea or by air.
“Obviously we need to understand what the other implications are in terms of the movements of people. As a business that is headquartered in the UAE, it is not going to make it easier for us to visit. We are going to have to go via other locations.”
He said that if contractors start to experience materials shortages, then fulfilling contracts on time could become a problem, with questions then arising as to where the liability for these delays lies.
“Obviously we’re not there yet, and we’re not going to be there over the next few days, but it could bite fairly quickly if there are some key components we can’t get our hands on or we are having to re-source.”
Vasanth Kumar, who earlier this year stepped down from the Qatar-based Arabian MEP contracting business he cofounded, said that people in Qatar were generally hopeful that the current dispute could be sorted out quickly, but that “contractors in general are a little scared” because of the effect that port closures could have on gaining access to equipment.
“A lot of projects are running critical now, because 2022 is coming closer. People are really running for time,” he said.
A note by analysts at BMI Research said that it believes that Doha “will make considerable efforts to avoid a substantial prolongation or further escalation” of the current situation, but if a prolonged spat developed between Qatar and other GCC states, this could make it more difficult for the country to import materials needed for World Cup-linked projects, potentially leading to delays.
“That being said, gas-exporting Qatar still has huge fiscal buffers and mainly trades outside the sub-region, meaning its overall economic stability is not under direct threat from the cooling of GCC ties,” the note said.
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More on the Qatar row
■ Qatar stocks slump as GCC neighbours cut ties
■ Little risk to UAE-Qatar gas shipments amid diplomatic row
■ Emirates and Etihad to suspend flights to and from Qatar amid diplomatic dispute
■ Qatar rift could lead to credit rating downgrade and lower non-oil growth
■ DP World: ‘Too early to comment’ on Qatar row implications
■ UAE Exchange chief says it is monitoring Qatar row and trading on riyal is normal
■ Closure of ports and road links could have an impact on Qatar’s contracting market
■ UAE retailers keep a close eye on Qatar developments
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