Press Releases

Interview of CEO of Al Hassan Engg. Co. SAOG published in Times of Oman (13 Sep 09)

Mr. Peter Hall, CEO of Al Hassan Engineering Company SAOG (AHEC) was recently interviewed by Mr. PK Vinod Kumar, Senior Sub Editor-cum-Reporter, Business Desk, Times of Oman.

MUSCAT — Al Hassan Engineering Company 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 early in 2009, only essential projects were going ahead in the country and the GCC at large as a result of the financial crisis coupled with reduced oil prices. “However, 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,” Peter Hall, CEO, AHEC, told Times of Oman.

The company has had a particularly strong order booking in last year that was carried over into the business year in 2009. “Hence, despite an increased level of competition between major contractors this year the company was successful in securing new businesses in its core sectors,” Hall explained.

The strategy planned in 2008-2009 by the company has produced the desired results and given AHEC improved market share in its targeted sectors. The company’s contract income in the first half of 2009 increased by 18 per cent over the same period in 2008. “We expect that the turnover will further improve in the rest of the year with the resulting net profits and are optimistic in securing number of significant orders in the second half of the year,” the CEO added.

The recent Kawther Gas Compression and Amal Power Plant orders clearly demonstrate the customer confidence that the company has built in its ability to execute major projects in Oil &Gas, Petrochemicals and Power sectors. In the Power sector, Hall says that Al Hassan has till date installed more than 40 per cent of the generating capacity in the power sector of Oman.

Mr. Hall provides an insight into the company, its activities, major projects, challenges and expansion plans. Excerpts:

What targets have you chalked out to reach higher level of growth?
As an established EPC contractor in the country 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 in Oman. 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 Oman’s 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?
Clearly, 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 adjacent UAE market within our core business sectors.

How was the company’s 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.

Did you adopt 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 ‘S’ and ‘U’ 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.

Have you observed an overall cut in investment spending by the governments?
Essential projects in the oil and gas, power and water sectors have proceeded on a reasonably stable basis and we now see renewed interest in infrastructure projects throughout the GCC.

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 LTI Free 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 company’s 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 Gulf Steam Generators for Occidental at Mukhaizna and providing Erection Services for a 60 MW Cogeneration Plant for Hirbodan/ORPC. In wastewater treatment sector, we are executing Civil Works for A’Seeb Waste Water Project for JV of Hyundai – Rotem.

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 company’s 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 customer’s 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 is how the companies can retain the staff. Thankfully, AHEC is recognised as a good organisation to work for as we treat our people well, train them and give them challenging jobs.

Can you elaborate on some of the company's unique projects?
Ever since its inception, AHEC has had a deep commitment to regional development. This led it to accept challenging first-of-a-kind projects such as the first petrochemical plant in the Sultanate, namely Oman Polypropylene, built in 2006. The company also takes pride in having linked Oman with the UAE on the first 220kV electrical grid, involving 260km transmission lines and nine sub-stations.

Earlier, we have been associated with the Shams Gas and Condensate Development Project carried out for PTTEP which was adjudged by Construction Week Dubai as the best “Small Project of the Year” for 2007. In a Joint Venture with SNC Lavalin, Canada we have built the Saih Nihaya Gas Treatment plant which was adjudged the Best project in 2005 by PDO as well as Oman’s Best project by Construction Week.

The Company has recently completed two landmark projects, The Sohar Aromatics Project for GS E&C and the 1000MW Sohar Aluminium Captive Power Project for Alstom, the largest power plant in Oman. The completion of the Salalah Methanol Project will mark another landmark for AHEC, as with this the company will be involved in the successful implementation of all the three major petrochemical plants in Oman including Oman Polypropylene, Sohar Aromatics and Salalah Methanol.

AHEC has also been entrusted with a major power plant execution order from PDO on EPC basis. This is the first time that any Omani Company will undertake a power plant project on EPC basis. It clearly demonstrates the customer confidence that we have built in our ability to executing major projects in power sector, having installed more than 40 per cent of the generating capacity of Oman.

AHEC is also executing the biggest Sewage Treatment Plant at A’Seeb (80,000 m3/day capacity). AHEC is proud to be associated with all these prestigious projects for the development of the Sultanate.

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