Construction Abroad

Turkey

Economic News

22 Jul 2010
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Turkey's heavyweight construction companies are continuing to win big contracts abroad, with a large number of tenders being won in neighbouring states. While energy infrastructure continues to propel business forward, the construction of transport, residential and tourism facilities are also earning Turkish contractors strong profits in the Arab world, Commonwealth of Independent States (CIS) and Africa.



According to the Turkey's state planning organisation, half the foreign tenders in the period between January and July of 2006 were won in the Middle East (equivalent to $3.4bn at the time), followed by Africa ($1.6bn) and the CIS ($1.5bn) Analysts say that the proportion of foreign construction bids won by Turkish construction firms in each region continues to grow today.



A swell in petrodollars over recent years, along with the demand for new infrastructure in countries with public money to spend, has played into the hands of Turkey's large contractors. In September for instance, Turkish Minister of State Kursad Tuzmen confirmed that Turkish construction companies had won contracts worth $2.5bn in Libya in the first eight months of 2007 alone. This comes as a large part of the $15bn worth of construction projects expected to be undertaken by Turkish contractors in 2007 according to data from the state planning organisation in 2006. Some construction analysts now expect the figure to surpass the projection by a couple of billion.



"In the global construction market we have seen an acceleration of business in our field, especially in the construction of industrial plants and particularly in power plants," Ergil Ersu, an executive member of the board of directors at Gama Holding, a Turkish engineering and construction heavyweight, told OBG.



Gama is also currently working on energy-related construction projects in Qatar, Yemen Saudi Arabia, Libya, Russia, Macedonia and Ireland. Three natural gas power plant tenders have been won by joint ventures including Gama Power Systems - a subsidiary of the holding company - in Ireland, Russia and Macedonia, amounting to $600m. "We're in a fortunate position in that we have excess demand for our services," said Ersu.



Turkey's construction companies are not focusing purely on energy-related tenders abroad. Gama Energy for instance is involved in a $880m four-year construction project, known as the Disi Water Conveyance Project, to supply water from southern Jordan to Amman. In September, it was announced that Turkish construction company Yuksel Insaat along with Qatar-based Midmac won a $202m road construction tender in Qatar as part of the Ras Abu Aboud road enlargement project. In August, Ucgen Insaat ,a subsidiary of Turkey's constructing and contracting Ucgen Group, announced that it had been commissioned to build 20 hotels in Iran over three years, securing a $140m loan from the Central Bank of Iran to this end.



Turkey's airport development, management and operating brand TAV - now separated into two companies, TAV Havayollari and TAV Insaat - has also developed a reputation as an airport constructor and operator both at home and abroad. In early October TAV Havayollari participated in bids for the management of three Saudi airports (Riyadh King Khaled International, Damman King Fahd International and Jeddah King Abdulaziz International airports.) TAV Havayollari's sister company, TAV Insaat, also won the tender for the construction of Tripoli International airport as part of a consortium in August. The company built the Tbilisi and Batumi airports in Georgia and is involved in the construction of the Enfidha airport in Tunis, Doha airport in Qatar and Egypt's International Cairo airport.



However, not all is positive for Turkish contractors plying their trade abroad. "We are suffering substantially from a weak dollar and strong lira because most of our contracts are paid in the US greenback," Ersu told OBG.

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