What role does KAS play in the overall development of Oman’s infrastructure?
KUMAR: KAS Construction Company started out working on small road projects. Now, we are involved in the medium and large projects here in Oman. Road construction projects are playing a key role in the country’s infrastructure development. Oman requires a lot of roads and even the old roads need to be upgraded. As a result, we have become heavily involved in infrastructure projects, which in turn contributes to the development of the nation. Our role will be very significant if we are going to take on major road projects.
What new projects are you currently involved in? What progress has been made to date?
KUMAR: The projects that we are involved in are geared towards benefiting the public. The roads that we are constructing run through the hills and the wadis. These roads will provide people with better access to areas throughout the country. So far people do not have good access. If there was an emergency, it was hard for them to reach a hospital. As a result, people have been really suffering. However, we are currently working on three projects that will provide better access to remote villages. Once these are completed, I believe that all of the traveling problems will be solved. In the past, we have had fair weather roads throughout the wadis. These roads could be blocked for hours because of floods and heavy rains. However, since the cyclone occurred in 2007, the government has been constructing all weather roads throughout the area. This means that even the roads being constructed in the wadis will not be cut off by minor or medium floods and people will have complete access throughout the day. We are really proud to say that the roads we are constructing right now are benefiting the public. Our projects are on track for completion. We have already proved that we are good at constructing roads in tough terrain.
How competitive is the road construction industry here in Oman? What is your market share and how do you see this evolving over the next 2-5 years?
KUMAR: There are two types of contracts that I can speak for here. One is for the major or mega projects. 50m OMR ($130m) projects are considered major or mega. International companies mainly take these projects. Local companies usually take road projects that are in the range of 5m-10m OMR ($13m-$26m) or up to 10m-15m OMR ($26m-$39m). KAS is the youngest among the road construction companies here in Oman. We started in 2000 and over the past 10 years we have reached a level where we are now getting the medium and large size projects. Our performance in these projects has been well recognized by our clients. We can definitely enter into one of these mega projects but we always try to stay within our capabilities. We will analyze a project, and then when it is tendered or announced, we evaluate the size and make a decision. We try to decide if we should tender the project on our own or have an international company partake in it with us.
Many articles have recently stated that the UAE’s cement exports to Oman are on the decline due to improvements in the UAE’s construction sector. As a result, prices and the demand for cement have started to increase throughout Oman. How has the current rise in costs for cement and other base materials affected the overall construction industry here in Oman?
KUMAR: The Dubai boom crashed in early 2009 and they were left with an oversupply of cement. As a result, they used their surplus and started exporting cement at a very low cost into Oman. Local cement companies in Oman had to lower their prices in order to compete. Oman was not affected badly by the economic downturn and its market requirements for cement remained roughly the same. However, the construction boom is picking up again in the UAE and their requirements for cement are increasing. The opportunity of getting cement at a lower price from the UAE is fading away. Oman’s cement companies will have the opportunity to either keep their prices the same or higher. In any case, the potential rise in the cost of cement should not affect productivity in the construction sector.
KAS has recently been awarded a $108.3m road project by the Ministry of Transport and Communications for Phase 1 of the upgrade of the Sinaw-Mahut-Duqm road. What are the biggest challenges that you are currently facing for this project? What is your overall outlook for the company with regards to obtaining similar future contracts from the Ministry?
KUMAR: Presently, it is getting tougher to obtain the required permissions for projects from various government agencies. In the past, getting these permissions and approvals were simple procedures. Most of the contractors are struggling at the beginning of the project because they must obtain the permissions in order to start the project on time. We are also not an exception to this situation. The Sinaw road project goes through towns, certain agriculture lines, and commercial areas. As a result, it is still a challenge to obtain the permissions from the government and to make sure that the different projects start on time. Another challenge is the terrain that we are constructing through. Since we are working in the desert we have to take into account sand storms and weather related instances. Also, another important factor when working in the desert is water availability. Water is very important for the road construction industry. Without available water for your employees it is impossible to construct any road. We are fully prepared to take care of all of these things in order to keep our clients and employees happy. The other challenge that we are facing is with regards to local employment. We are working hard to meet the requirements put into place by the national workforce. We are very keen to employ the maximum requirement from the local work force. KAS is willing to employ more people, train them for 2 years and then put them on their own project. We are trying to promote these opportunities to the locals but it is a challenge because the working conditions in the construction sector are not ideal. Many people are not willing to work outside all day in the sun. They would rather work in the office. However, we are meeting this challenge and trying to solve the problem.
The opportunity of getting cement at a lower price from the UAE is fading away. Oman’s cement companies will have the opportunity to either keep their prices the same or higher. In any case, the potential rise in the cost of cement should not affect productivity in the construction sector.
KAS has stated that it is on the lookout for a foreign partner for very large contracts. Which markets appear to you to have the best opportunities for potential partnerships and collaboration?
KUMAR: Currently, companies from Europe, India, and Malaysia have been approaching us. In fact, we have agreed to join hands with one of the top 5 companies in Spain. They were very keen to collaborate with us on one of our major projects. There are 6 packages involved in the construction of the Al Batinah Expressway. We are tendering all of these packages with this company from Spain. As a result, there are many companies that are approaching us. There are going to be opportunities for us to collaborate with major international companies because we need that type of support to help us enter into larger projects. By working with large international companies, we hope that there will be a transfer of knowledge that will allow us to one day take on larger projects by ourselves.