Market study: Yemen Infrastructure spending to grow 33% by 2013

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) December 15, 2009 --

The prospects for Yemen's construction industry are unexciting. We envisage that spending will rise from US$0.6bn in 2007 to US$0.8bn in 2013. Construction spending will likely remain at below 2% of GDP through the forecast period. Conversely, the outlook for capital investment in infrastructure is rather more promising. We are looking for investment to increase from US$4.4bn in 2007 to US$6.4bn in 2013. Investment should remain at around 15% of GDP through the forecast period. We are looking for the government to account for about one-tenth of investment in infrastructure. In essence, infrastructure development is being driven by protagonists who are insensitive to the risks and challenges of doing business in Yemen. Aside from the government, these protagonists include multilateral lenders such as the World Bank, multi-national energy companies such as Total of France and several well-established local contracting firms such as HAWK International. Broadly speaking, the risks and challenges can be categorised as being of a long-term or a short-term nature. The long-term challenges include the lack of skilled workers, widespread poverty, a tribally-based political system and a consistently poor environment for business. The short-term challenges include the impact of the global financial crisis on the prices of oil and gas - Yemen's main exports - and political instability. The latter, as we explain, is being exacerbated by the return of Yemeni detainees from the USA's Guantánamo Bay prison at a time when long-scheduled elections have been postponed. Early 2009 is something of a landmark for the infrastructure development of Yemen. This is because Yemen LNG Company Limited's LNG operations are due to begin working. The construction of new processing facilities in the Marib oilfields of central Yemen, a 320km pipeline to the coast (together with two smaller pipelines) and a new port and handling facility at Balhaf represents the largest single project in the country to date - with an estimated capital cost of US$4bn. When working at full capacity, the project - which began in 2005 - will enable the participants to capture LNG that would otherwise have been lost, and to export 6.7mt per annum to customers in the USA and South Korea.

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