Drake & Scull ends Saudi work drought with Dhahran wastewater plant

LONDON: Drake & Scull International (DSI) has ended a near three-year major order drought in Saudi Arabia.
The Dubai-listed contractor was chosen to help build a wastewater plant that will also generate biogas.
The contractor which was hit hard by the construction slowdown in the country, won a SR268 million ($71.5 million) order to build the South Dhahran Wastewater Treatment Plant in Eastern Province.
It is part of a consortium that includes Germany’s Passavant Energy & Environment and Aziz Company for Contracting and Industrial Development, a Saudi contractor, DSI said in a bourse filing.
Drake & Scull CEO, Wael Allan, who was appointed last October to help turn the contractor around, described the order as a “significant win.”
When complete, the plant which is located in Al Khobar, will treat 70,000 cubic meters of water per day.
The three-year contract was awarded by the National Water Company. It will be one of only a few in the country that also harness bio-gas to generate electricity.
The contract comes at a crucial time for the contractor as it embarks on a turnaround strategy that includes a move to extinguish its accumulated losses through a capital reduction program.
The last major Saudi contract award listed on the contractor’s website was for a hospital in Riyadh announced in September 2014.
Drake & Scull picked up contracts worth more than SR1 billion that year in Saudi Arabia, but it was quickly hit by escalating labor costs and later by the fallout from the weakening oil price which slowed spending across the construction sector.
But a recent recovery in the industry represents a positive development for Drake & Scull as the contractor looks to reduce its debt pile and cut overheads.
Saudi Arabia was considered to be the second-best market in the region in terms of potential opportunities thanks to its “scale and long-term growth prospects,” according to the latest Risk/Reward Index published by BMI Research.