OBG talks to Osama Bishai, CEO, Orascom Construction Industries

Interview: Osama Bishai

Where are the greatest opportunities for engineering, procurement and construction contractors?

OSAMA BISHAI: One of the sectors that offer many opportunities is power. There is an urgent need for the construction of six to eight power plants in order to be able to meet rising demand for energy. It is important to understand that access to funds and determining what source of energy should be used to generate power remain the key challenges. Contractors will also find much potential in the transportation sector, as the country needs to develop an extremely efficient transportation network in order to continue growing. Furthermore, real estate will continue to be an attractive market for both small and large contractors.

To what extent do you see potential for further expansion elsewhere in the region?

BISHAI: Great potential can be found in Algeria, Egypt, Saudi Arabia and Iraq. These four states comprise more than half the total population of the Arab world, and over 60% of their inhabitants are below the age of 30. These numbers translate into large infrastructure needs. One sector that is becoming particularly attractive in the region is health care. There is a large number of hospital development projects taking place, which is a positive sign given the region’s needs in this sector.

How can the current levels of informal construction activity in Egypt be reduced?

BISHAI: One solution could be streamlining taxation procedures, which are currently not understood by many people. The government should also improve permitting procedures, so that permits include the contractor’s construction methodology and sequence.

What impact have shortages in natural gas production upstream had on cement producers?

BISHAI: The gas shortage has led to a considerable increase in the price of locally produced cement. As a result of this, full capacity is not being met by cement manufacturers, hurting the sector as a whole. The immediate development of a range of alternative sources will therefore be necessary to tackle the issue.

What sort of potential do you see for sustainably increasing fertiliser input in Egypt?

BISHAI: Considering that gas is the raw material for producing fertilisers, its availability becomes crucial. Egypt must make the development of potential gas reserves a priority, or find a mechanism to import enough gas to meet demand. The potential of other, phosphate-based sources of fertiliser should also be considered.

To what extent do you see the harmonisation of building codes across the region as a priority?

BISHAI: This is not a major priority. There are other more immediate issues in each country that have to be tackled before making any moves towards standardisation. It is important to take into account that quality is driven by the end-user and by contractors. The fact that different customers have different demands in terms of price and quality results in different final products being offered, which ultimately can bring down its quality. Hence, what really needs to be standardised is the outcome in terms of quality, not only in Egypt, but across the region. This should specifically be the case of Egypt, Algeria and Iraq.

What scope is there for expanding building material production in other North African countries?

BISHAI: Egypt can still produce goods at competitive prices, minimising the need to expand production in the region. Building materials production requires a greater degree of agility in the market than currently exists. Even in a large market such as Algeria, the environment is not conducive to business owing to new laws that require having an Algerian partner with a majority share. The Maghreb countries will need to bridge the infrastructure and development gap, hence opening an opportunity for growth in building materials.