Al Hassan upbeat on new openings.

Byline: Vinod Kumar PK

MUSCAT Eoe1/4" Al Hassan Engineering Company (AHEC) SAOG (AHEC), the first contracting company to be listed on the Muscat Securities Market (MSM) in 1998, is upbeat and optimistic about securing significant new business opportunities in the latter half of the current year.

During the last quarter of 2008 and in early 2009, only essential projects were going ahead in the country and the GCC at large as a result of the financial crisis coupled with low oil prices. Eoe1/4EoHowever, the recent increase in oil prices have stimulated further investments on a much larger scale that have begun to emerge in the region. This presents our company new opportunities to exploit,Eoe1/4A[yen] Peter Hall, CEO, AHEC, told Times of Oman.

The company has had a strong order book last year that was carried over into the business year in 2009.

Eoe1/4EoDespite an increased level of competition between major contractors this year, the company was successful in securing new businesses in its core sectors,Eoe1/4A[yen] chief executive Hall explains.

The strategy planned in 2008-2009 by the company has produced the desired results and given AHEC improved marketshare in its targeted sectors. The companyEoe1/4aos contract income in the first half of 2009 increased by 18 per cent over the same period in 2008. Eoe1/4EoWe expect that the turnover will further improve in the rest of the year with the resulting net profits and we are optimistic of securing a number of significant orders in the second half of the year,Eoe1/4A[yen] the CEO added.

The recent Kawther Gas Compression and Amal Power Plant orders clearly demonstrate the confidence that the company has created among customers in its ability to execute major projects in oil and gas, petrochemicals and power sectors.

In the power sector, Al Hassan has till date installed more than 40 per cent of the generating capacity in Oman, he explained.

In an exclusive interview Hall provides insights into the company, its activities, major projects, challenges and expansion plans.

What plans have you chalked out to reach higher levels of growth

As an established EPC contractor in Oman we want to take the skills that we have developed over a period of time to a more international level so as to capitalise on the good name and reputation that we have already achieved. At a later stage we may think of diversifying into related sectors where we have acquired sufficient expertise.

Did the financial crisis affect investments in the infrastructure sector

The infrastructure sector was clearly affected during the global economic downturn. However, many of the government-backed essential infrastructure schemes such as roads, airports, power generation and transmission systems, water treatment facilities, etc have still gone ahead in the Sultanate as well as in the rest of the region. The power and water business sectors are the businesses in which the AHEC is strong, in parallel with its equally strong position in the oil, gas and petrochemical sector.

How did the company manage to tide over the downturn

AHEC had a particularly strong order booking during 2008 that was carried over into the business year 2009. Although the company faced an increased level of competition this year, it was successful in securing business in its core business sectors. The most recent contracts being the Kawther Gas Compression Project for PDO from Petrofac and Amal Power Plant for PDO that will be executed on an EPC basis. Clearly the financial crisis has had a slowing effect on investments in various sectors, but the recent increase in oil prices has, however, stimulated further investments and investments on a much larger scale have begun to emerge. This presents our company with significant business opportunities.

Do you think banks and financial institutions should do more to improve the liquidity situation

We believe that banks are already helping within their limits to improve the situation. Their concern was difficult international situation and liquidity. The Central Bank of OmanEoe1/4aos policies have been effective in this respect. The climate is improving and the liquidity from banks and financial institutions can be expected to improve visibly in the next six months. AHEC being a financially sound public company has never faced any limitation on funding projects from any of the banks.

What expansion plans have you planned both within and outside the country

Within Oman, business expansion will be based on our already considerable reputation for delivering high quality projects safely and on time in the oil and gas, petrochemicals and power sector. We will also continue with our penetration of the neighbouring UAE market within our core business sectors.

How was the companyEoe1/4aos performance in the first six months of this year

The strategy planned in 2008-2009 had produced the desired results and given us improved market share in our targeted sectors. Contract income in the first half of 2009 increased by 18 per cent over the same period in 2008 and we expect the turnover will further improve in the rest of the year with the resulting net profits. We are also optimistic in securing number of significant orders in the second half of the year.

What are the challenges faced by EPC companies

Due to the current economic climate, we are seeing increased competition from a greater number of contractors in the EPC business. This will clearly result in greater price pressure. We are, however, confident that with our experience and reputation, coupled with the various initiatives that have been implemented, we will be in a strong position to effectively compete in this changed environment.

Has the company adopted any strategy to ward off the challenging conditions

Yes, we have implemented a number of initiatives to address the challenging conditions created by the current market situation. These initiatives include many efficiency improvements in the areas of organisation, procurement, plant and human resources. This will help the company to make significant cost savings, which the company hopes to achieve during this year.

Also, AHEC further strengthened its reputation for quality by securing authorisation from the American Society of Mechanical Engineers (ASME) for the use of Eoe1/4Y[pounds sterling]SEoe1/4ao and Eoe1/4Y[pounds sterling]UEoe1/4ao stamps for its production facilities for the manufacture and assembly of power boilers and pressure vessels. In addition, we have taken steps to upgrade our ISO certification from ISO 9001:2000 to ISO 9001:2008.

What are your current ongoing projects

We are executing a number of high value projects at various stages of completion and activity levels. The Oman projects being worked on include the execution of Nimr-C Full Field Water Injection Project for PDO. This EPC project is progressing extremely well and to the satisfaction of PDO. We have achieved 60 per cent progress so far with 1.5 million lost time injuries free (LTI) man-hours. AHEC is in the final stage of completion of the Salalah Methanol Plant for GS E&C and have achieved 5.6 million LTI-free man-hours. We are also executing on EPC basis Burhan to Harmal DSS pipeline for PDO-Govt gas department. The work is progressing in full swing on this fast track project with the long lead procurement items already ordered and main line welding also completed. This project demonstrates our companyEoe1/4aos professional capabilities in handling of the specialised materials including DSS welding.

What about the projects in the power and wastewater sector

In the power sector, AHEC is executing Once Through Heat Recovery Steam Generators for Occidental at Mukhaizna and providing erection services for a 60m cogeneration plant for Hirbodan/ORPC. In wastewater treatment sector, we are executing civil works for AEoe1/4aoSeeb Waste Water Project for the HyundaiEoe1/4"Rotem joint venture.

Besides the Oman projects we are also undertaking the civil works for Dubailand 2, 400/132KV substation for Siemens. Work is progressing in line with the agreed project programme for this contract. This was indeed a breakthrough project establishing the companyEoe1/4aos first presence in the UAE. We are already building a strong reputation for delivering the promises made to customer with the achievement of rapid and record-breaking manpower and equipment mobilisation in accordance with the customerEoe1/4aos targets for the project.

Can you highlight some of the initiatives that you have undertaken

We have undertaken several initiatives aimed at strengthening the procurement department and ensuring supply stability. Also we have invested heavily in making sure that we have the right people. I think people are very important for any organisation and I am happy that we have a strong loyal workforce here. Just as important as getting skilled workers are how the companies can retain the staff. Thankfully, AHPC is recognised as a good organisation to work for as we treat our people well, train them and give them challenging jobs.

Muscat Press and Publishing House SAOC 2009

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