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Kuwait’s Gulf Centre United sets course for expansion

11 August 2023

This month’s special report on Kuwait includes: 

> ECONOMY: Stakeholders hope Kuwait can execute spending plans
> ENERGY: Kuwait’s $300bn energy target is a big test
> BANKING: Kuwaiti banks enter bounce-back mode

 

Kuwait-based Gulf Centre United Industrial Equipment, which specialises in the fabrication and supply of tailor-made construction equipment, has set its sights on expansion within the country, according to the company’s chief operating officer Majed Yazji.

The equipment the company makes includes rock-crushing machinery, concrete plants and asphalt units. It also acts as an agent, importing equipment made in Europe into the Middle East region.

While Kuwait has seen a dramatic decline in infrastructure project activity over recent years, Yazi is confident that the family business will be able to execute its expansion plans.

Road maintenance

One factor fuelling optimism about the firm’s future is that the country has continued to prioritise road maintenance contracts.                                                                                              

In May, it was announced that a road maintenance project valued at about $800m had attracted 36 contractors.

Prospective bidders included companies from Japan, South Korea, France, China, India, the US and Hungary, according to tender documents.

“This is a very big maintenance project and it gives us confidence there is going to be demand for our services within Kuwait for some time to come,” said Yazji.

There are five asphalt factories in Kuwait and Gulf Centre United Industrial Equipment is engaging with them over the correct way to create long-lasting asphalt that can endure the country’s high temperatures.

“This is a very big contract and it is currently seeing progress, but it remains in its early stages and it is unclear at the moment exactly when it will be awarded,” said Yazji.

“Whichever contractor wins this, it is very likely that we will end up supplying them with services, including fabrication.”

Remediation projects

Gulf Centre United Industrial Equipment also expects to benefit from the large oil remediation projects that are continuing in Kuwait.

Many of these clean-up projects are focused on damage done during the 1990-91 Gulf War and are funded using reparations from Iraq that have been put into a fund by the UN.

These projects have seen good progress over recent years as they are not reliant on budgets being signed off by policymakers.

Political instability is one of the biggest factors in the decline in Kuwaiti infrastructure contract awards over recent years.

Kuwait has had three elections in three years, creating policy uncertainty that has significantly impacted businesses and led to a contraction in the country’s energy sector.

The ongoing Kuwait Environmental Remediation Programme (Kerp) is understood to be deploying about $3.5bn of the reparation funds, cleaning up the damage caused by oil spills related to the war.

Approximately 114 square kilometres of Kuwaiti desert surface was contaminated by the burning of nearly 700 oil wells, which were set on fire by the troops forced into retreat by the US-led Operation Desert Storm in 1991.

Treatments include bio-remediation, whereby bacteria breaks down oil, and mechanical soil washing, which uses machines to separate oil from soil.

Gulf Centre United Industrial Equipment has participated in the Kerp projects by acting as an agent and supplying equipment from overseas to contractors carrying out mechanical soil washing to decontaminate polluted areas.

We are very optimistic about our prospects in Saudi Arabia over the coming years
Majed Yazji, Gulf Centre United Industrial Equipment

Saudi expansion

Gulf Centre United is also expanding regionally. It has already opened an office in Oman and is looking to start operations in Saudi Arabia to take advantage of the project boom in the kingdom.

The company is studying a range of locations in Saudi Arabia, according to Yazji.

These include locations near the Red Sea, the Neom project site and close to Al-Khobar.

Gulf Centre United believes there is scope for carrying out significant work related to the Neom project, which is estimated to be worth $500bn.

“We are expecting to make our final decision on the location for our fabrication yard in Saudi Arabia before the end of the year,” said Yazji.

“We are expecting to see a surge in demand for the type of equipment that we make that screens sand and crushes rock so that it can be used in concrete. We are very optimistic about our prospects in Saudi Arabia over the coming years.

“We are keeping a close eye on plans to build new concrete factories in Saudi Arabia at the moment.”

Gulf Centre United is additionally looking to leverage its experience in supplying remediation equipment in Saudi Arabia, where there are also plans for major remediation projects.

“We have a lot of areas of specialisation that are likely to be very valuable as we ramp up our work in Saudi Arabia,” said Yazji.

Although Yazji is confident that his company will see rapid growth both within Kuwait and regionally, the expansion is unlikely to be easy, given the current business environment.

Between the start of 2020 and the beginning of May this year, Kuwait’s total value of all active oil, gas and chemicals projects declined by 65 per cent, from $67.1bn to just $23.5bn.

Many industry stakeholders say that breaking the political deadlock is essential for reversing the slowdown in activity in the country’s industrial sector.

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Wil Crisp

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