international
construction
september 2013
WORLD NEWS
RUSSIA
A £ 10 billion (US$ 15.4
billion) residential development project
in St Petersburg covering over 900
ha has been launched. Scheduled to
take 15 years to complete, consultant
Turner & Townsend has been chosen
by developer SPb Renovation to help
deliver the project, which involves
constructing 1,200 new buildings
across 22 sites around the city.
SUDAN
A new international airport on
the outskirts of the capital, Khartoum,
is to be financed with a US$ 700 million
loan from China, according to Sudan’s
state news agency. Construction of
the airport, which is planned to include
an 86,000 m
2
passenger terminal and
handle 6.8 million passengers a year, is
due to start at the end of 2013 and last
three years.
VIETNAM
The Asian Development
Bank has approved a US$ 410 million
loan to support construction of the
Second Southern Highway, connecting
Ho Chi Minh City in Southern Vietnam to
the Mekong Delta and southern coastal
regions. Construction will include two
cable-stayed bridges with a combined
length of 5 km, as well as access and
interconnecting roads totalling 26 km.
US
Employment in the US construction
industry hit its highest level since 2008,
according to data for June from the US
Bureau of Labor. The total headcount
increased +3.4%, to 5,812,000 year-
on-year in June, while unemployment
fell to 9.8% from 12.8% in June 2012–
the first time the rate has fallen below
double digits since 2008.
EUROPE
Contractors are increasingly
looking outside the region for growth,
with 65% of respondents to a survey by
QBE of over 500 businesses planning
to expand their operations into new
countries over the next five years. 32%
of respondents planned to expand in
Asia and South America, and 20% in
Africa.
AFRICA
The World Bank is to
provide US$ 340 million in funding
for East Africa’s Regional Rusumo
Falls Hydroelectric Project, which will
provide power to Burundi, Rwanda and
Tanzania. The 80 MW project is located
97 km west of Lake Victoria, Africa’s
largest lake by area, which borders
Tanzania.
HIGHLIGHTS
GLOBAL
Saipem battles
corruption allegations
Former executive arrested amid Algeria probe,
while company fined for separate offenses in
Nigeria
O
il and gas contractor Saipem faces corruption investigations relating
to alleged offenses in Algeria, financial penalties over a historic case
in Nigeria and a probe into accounting irregularities.
In August, Pietro Varone, a former head of its engineering division, was
arrested in Italy over a bribery investigation relating to Algerian gas contracts.
Nearly € 200 million (US$ 266 million) in bribes is alleged to have been
paid to officials in Algeria.
Saipem and its parent company Eni have denied any wrongdoing in
Algeria, and said an internal investigation found no evidence of payments to
public officials in the country.
At the same time, Saipem has also entered into a so-called “tolling
agreement” with the US Department of Justice. This extends the limitation
period under which it could be held liable for violating federal laws by six
months. However, it said this did not constitute an admission of guilt.
Meanwhile, a subsidiary of Saipem was found guilty by a Milan, Italy
court of separate corruption offenses in Nigeria. The decision resulted in
the seizure of € 24.5 million (US$ 32.6 million) pending an appeal, and a
€ 600,000 (US$ 800,000) fine.
The case relates to Saipem’s Snamprogetti Netherlands business, which was
part of the TSKJ consortium that bribed Nigerian public officials over a
decade in order to win contracts to build liquid natural gas plants on Bonny
Island, Nigeria. Saipem said it would evaluate the justification for the new
ruling in Milan, and would appeal.
This news also comes as Italian market securities regulator Consob started
separate procedures to sanction Saipem after uncovering irregularities in its
2012 accounts.
Saipem revised its 2013 earnings guidance and its outlook for 2013 at the
start of this year, but Consob said it had found evidence of a number of
violations including a delay in announcing January’s profit warning to the
market.
6
The global construction equipment
market will see average annual
growth of +6% between 2012 and
2017, according to market research
company The Freedonia Group.
The value of the sector will rise from
US$ 142 billion in 2012 to US$
189 billion in 2017.
According to Freedonia, the
strongest growth will be in the Asia-
Pacific region, where the market for
equipment will grow an average of
+8.3% per year to US$ 93.4 billion
by 2017. This is more than double
its value of US$ 40.6 billion in
GLOBAL
Equipment market growth forecast
2007, and will represent almost half
of global demand.
All other regions are expected to
see growth below the +6% global
average. The strongest will be Africa
and the Middle-East, where the
market is expected to see an average
annual rise of +5.5%, to reach
US$ 9.6 billion by 2017.
Western Europe is also forecast for
relatively strong growth of +5.1%
between 2012 and 2017. However,
this was the weakest region of the
world in the crisis years, with a
-3.4% annual average decline
between 2007 and 2012. This
means that at US$ 23.1 billion, the
value of its construction equipment
market in 2017 will only just be
above the 2007 level of US$ 21.4
billion.
In North America, growth will
average +2.9% per year to 2017,
bringing sales to US$ 47 billion.
Latin America is set for a +4.6%
annual average increase, taking the
sector to US$ 8.3 billion by 2017.
Eastern Europe, including Russia,
will rise +4.7% per annum to US$
7.7 billion by 2017.
