Gulf Construction Online - Revival expected this year: Nass CEO

Bahrain

Jumeirah Gulf of Bahrain Resort ... recently completed by Nass’s contracting division.

Revival expected this year: Nass CEO

01 January 2023

Confidence in the market has returned and Bahrain’s construction and allied sectors can expect to see a revival this year, says a veteran of the industry.

“Generally, the market has shown improvements which have led to new investments and new work being released in the kingdom. The year 2022 was a challenging one for Nass Corporation, with a huge focus on reducing costs, while retaining our core skills,” Shawqi Alhashimi, CEO of Nass Corporation, tells Gulf Construction’s Sree Bhat.

“It was a challenging year for us, especially coming out of the pandemic and then the Ukraine War ordeal. The resultant inflation affected both the industry and Nass Corporation,” says the CEO.

However, the uncertainty caused by Covid-19 has eased, he says, thanks to the extraordinary response from the government, and the market is now showing signs of steady growth.

Alhashimi ... confidence has returned.

The construction industry in Bahrain has been subdued with fewer new projects having been awarded last year. Concerns over high material costs resulted in delayed decisions on awarding new projects. “We are starting to see the first indicators of a recovery with an increase in the number of new projects being tendered and subsequently awarded. This should enable an increase in construction activity during 2023,” he says.

Alhashimi, an experienced project engineering director who has proven credentials working on Alba’s Line 5 and 6 and the aluminium projects in Oman and Saudi Arabia, was appointed to lead Nass Corporation in November 2021.

Since his appointment, various initiatives have been rolled out across the business, which are aimed at enhancing the reputation of the corporation, and focusing on efficiencies and cost savings. “Relationship-building with our key partners, the supply chain and our customers will be a focus for all our divisions in 2023,” he adds.

The publicly-listed company suffered a loss in 2021 and despite the challenges in 2022, the corporation has showed marked improvement in its financial results.

Alhashimi says most of the contracting divisions did well in securing work and increasing turnover for last year. However, the mechanical division, like similar businesses, struggled to secure projects. The Nass Landscaping Division performed extremely well after the pandemic with the reopening of economies supporting greater demand for its services.

Al Fateh Highway upgrade ... a key ongoing project for Nass Corporation.

One of the initiatives launched by Alhashimi was to ensure better cooperation between the company’s various divisions. Last year, the company focused on how it could improve the relationship between its affiliates. Nass wanted the staff to view the corporation as a whole rather than individual companies and began to centralise things.

“We have been successful in bringing our 10 constituent companies together into one team to optimise our capabilities, reduce duplication and enable more efficient and faster project delivery. We believe now that the business is in a much stronger position, and will be able to build on its core strengths and deliver successfully into the future,” says the CEO.

Alhashimi highlights that the corporation’s main assets are its people and he is committed to their welfare. “This is something important to us and we want our employees and workers to know that they are valuable to us,” he adds.

The company provides a high standard of healthcare for workers and has partnered with leading healthcare providers to launch a programme of mental well-being.

CONTRACT TERMS

An issue Alhashimi wishes to highlight is that the contract terms and conditions favour the client, and are unfair towards the contractor. He hopes for changes to those terms in the near future.

“The way a contract is written in Bahrain, it doesn’t offer a level playing field for contractors and is mostly in favour of the clients. This is something that affects the contracting business environment in general, and most of the contractors have been affected. Whatever happens in the market, the contractor is forced to bear the burden. The recent examples are cost escalation due to the Ukraine war and Covid-19.

“We are working with the government and the chamber to improve this situation and the government has been receptive,” he says.

“If the contract is not realistic, contractors will suffer and if big contractors go out of business, it’s a step down for the country. We are here to make money in the right way and impartial deals will be a win-win for the client and the contractor,” he reiterates.

“The global inflation has seriously impacted Nass Corporation. We are working with clients on the matter, although this is something the contractor has to deal with. But now we have started to talk to the client and we have seen a positive reaction,” he adds.

“The way the government is dealing with issues today, we can see a very positive future for the sector. We can approach any minister today to talk about our issues. We have started to work as a team rather than as owner and the contractor. Once you break the barrier, conflicts and disputes will be less,” he says.

Another challenge for the industry is collection of dues, he points out. “We have a lot of money that we're not able to collect. Either the receivables are not followed up properly or they are caught in some disputes. In some cases, the clients are affected by the pandemic and we have to bear the brunt,” continues Alhashimi.

However, the corporation set up proper collection policies and procedures last year and will follow the money trail vigorously.

NEW PROJECTS

The increased diversification efforts of the GCC economies away from oil and gas and the nations’ focus on tourism will bring in new business for the construction industry, he says. “As with other GCC countries, the understanding and realisation that the economy cannot survive on the oil and gas sector alone has led to investment in tourism in Bahrain.”

The corporation completed or was awarded some interesting projects last year. The contracting division completed the Jumeirah Gulf of Bahrain Resort, where its landscaping division also undertook enhancement works on a fast-track basis, and a few other private developments.

Among the projects it won in 2022 are The Avenues mall Phase 2 expansion – after Nass successfully completed the first phase – and the Hawar Hotel Development.

The company’s asphalting division completed an Equestrian Horse Racing Centre, while the scaffolding division is currently engaged in large-scale projects in Saudi Arabia, including the Qiddiya Water Park in Riyadh, and is working on the IMI Rig 2 in the UAE, which is a prestigious and highly skilled project.

The contracting division is currently engaged on the Bapco Modernisation Project, involving the civil works and underground piping of the refinery. It is also working on the Al Fateh Highway upgrade which comprises a 125-m four-span U-turn bridge, and a 367-m nine-span left-turn bridge, a 595-m underpass and associated infrastructure to improve connectivity between the landmark investment projects of Manama Northshore and Mina Salman Junction. Other ongoing work includes the Four Seasons Residences project, the infrastructure for the East Sitra Housing project and some developments by the Electricity and Water Authority (EWA).

SAUDI OPPORTUNITIES

Given its vast experience and expertise, the corporation is keenly eyeing opportunities in Saudi Arabia.

“What is happening in Saudi Arabia is tremendous. When we read about the mega projects there, we wonder if they’re realistic. However, I have just returned from a visit to the kingdom and you can see them happening at a quick pace – Neom, Qiddiya and other projects.

“It's a big opportunity for Nass Corporation and we have already initiated discussions with potential partners. Nass is well equipped to participate in this Saudi journey,” Alhashimi remarks.

On the sustainability initiatives of the company, he says Nass’s Delmon Readymix and Precast has been focusing on reducing or eliminating waste through recycling and re-use, as well as developing lower carbon alternatives, especially in the manufacturing of concrete.

“With the focus on ESG (Environmental, Social, and Governance) across the region, we are anticipating requests for greener approaches to building operations, and the corporation is also launching a number of new sustainable initiatives for the upcoming year 2023. One example is our investment in renewable solar power to reduce cost and our carbon footprint.

“Nass Corporation sees ESG as a great opportunity to introduce sustainable design concepts and sustainable materials in all our construction projects as part of anticipated ESG mandates. We recently appointed a chairman for our ESG Committee which will support our ESG roadmap starting in 2023,” he says.

Nass is also up-to-date with technology. “Technology has come a long way in the construction industry, although the key aspect will be looking at how this technology is right for us and the kingdom and how it will benefit the company or its end users,” says Alhashimi.