Thursday, May 14, 2009

Galfar - Not in favour these days?

I have noticed for the last 12 months or so that mega-construction firm Galfar are not flavour of the week with the Government.

Lots of snide remarks from my friends in the Ministries about why anyone would pick Galfar.Pointed questions in meetings about their performance, etc, etc. The on-going lawsuit over the [alleged] sub-spec road Galfar built for the Government is part of that perhaps.

Oh, and the Musandam hotel debacle.

But I haven't figured out the deeper reason behind the obvious dog-house treatment. Any ideas readers?

And here's more evidence of it. The recent tender for the airport went to a higher (OK, only just, $40 mln) foreign bidder.

That's gotta hurt.

But clearly the Government is finally becoming more aware that a low bid price isn't everything.

About time.

And Greeks and Turks working together? Cool!

Last trading day Galfar shares down 7%

Their shares took a 7% hit, and that's on top of the recent moves.

Galfar have really been hit surprisingly hard by the slowdown in project growth. I did consider them pretty solid last year, but they (over)invested a lot in capital equipment after the float to pursue the business strategy of never ending growth in Oman's infrastructure projects, plus continued big expenditure in the oil and gas sector. Now they are left with far too much capacity, kit they can't sell anywhere near book value, and cost cutting is the word of the day. So apparently lots of western Expats have been sent home, and its in with the NRIs.

Dr. Hans Erlings, an ex-Shell Engineer who worked in Oman previously and has been CEO of Galfar since public launch, must be under a bit of pressure to deliver. I hope not too much of his probably huge pay packet is in shares...

In the past year, their share price has basically dropped back to their IPO.

Galfar share price since launch

High bidders win Muscat Airport contract
A US $1.3 billion (OMR500 million) contract to expand Muscat International Airport has been awarded to Turkey's TAV Construction and the Athens-based firm Consolidated Contractors Co (CCC).

Oman’s Ministry of National Economy announced a number of contracts it had awarded on Tuesday. The joint venture CCC-TAV was given the contract even though it was not the lowest bidder for the work.

The two companies' price of $1.32 billion was outbid by the local Galfar Engineering and Contracting Company and India's Larsen & Toubro (L&T), which submitted the lowest bid of $1.28 million.

"We've won the contract as a joint venture with TAV (Turkey)," senior proposal leader at CCC in Muscat Zahi Saba told Reuters. "The contract should be announced by the client within the next few weeks and work should start thereafter."


  1. In the original bidding, Galfar bid RO. 473 million and CCC/TAV bid RO509m.

    When the contract was finally awarded earlier this week, the press release from the Tender Board said that the value of the contract was RO. 450 million.

    Did CCC/TAV resubmit a significantly lower bid?

    As for Galfar, I am not an engineer but it is obvious to me that all is not well in this company's work. The new middle road from Madinat Qaboos to Bausher just doesn't feel right. The paving isn't smooth, my car feels like its bouncing on the road. Why is the flyover in front of the Hi FM building built at a slightly lower height than the rest of road? When you drive on to it, your car drops off a bit and then as you drive off it you bounce up again. And if you look at the interlocking concrete on the embankment of all the flyovers you'll notice that it is not level. In fact, in some places it looks like it's bulging from the pressure. It scares me.

    And then look at the safety conditions that their workers work in. Hardly any hard hats or safety equipment. Workers hanging off bridges and high scaffolding without harnesses.

    I have huge issues with Galfar's safety because they have two work sites that are accessed right through my neighborhood. I've written to them many times. At first they used to reply quickly and made an effort. I was happy with their response and even posted it on my blog. But then they stopped responding to me. Due to the heavy loads of their trucks passing through my neighborhood day and night the gravel road is now full of huge potholes. It is damaging our vehicles. Our neighborhood is constantly covered with clouds of dust.

    I can't wait for this bloody southern expressway to be done so that I can stop cursing at Galfar on a daily basis.

  2. I'm really glad I'm not the only one unnerved by that new highway - I thought I was just being my usual paranoid self. If Muscati is of the same mind, though, I think it bears looking at before something awful happens....

  3. Muscati is right the awarded value is not the original tender value and this has been the tender board course of action lately, negotiate or retender big contracts to get a lower price. So I guess CCC/TAV did submit a lower offer after negotiations.

    The southern express highway will always have a problem with quality and standard as the job was awarded to Galfar at a low price and it is taking longer to finish. They must be losing money with every inch finished, so they will tend to drop specs & standard to minimize losses.

    One needs just to look at the latest tenders won by Galfar to see the situation, Galfar is outbidding far much smaller contractors in small contracts, In Salalah Cardic center their price of 15 mln is even lower than Gharbiah who is a small local contractor.

  4. The project market in Oman is completely price driven. We contractors who prepare bids know that the Human Resource Plans, Job Safety Plans, Work Method Statements that we submit with our tender go 'out the window' and all that is left is the Bottom Line Price. And if the Tender Board thinks they can squeeze the contractors a bit, then Quality and strict adherence to standards good flying out behind the first lot. You get what you pay for. Pay peanuts and you get monkey droppings.

    Dragon- you referred to Hans Earling as an Engineer with PDO. Not only was he an engineer but he was a Director with PDO and one of the better ones. Galfar has real problems- so much dead wood at the top, but if anyone can remedy the situation, Hans can. Abd

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    It is clear that Muscat Confidential has a very serious side to it. Rumour from his new lady has it that Dr Erlings is about to jump ship for a more lucrative offer in Dubai. Is this just coffee shop gossip or, if it's true, then shareholders should be concerned.

    I don't agree with Abd. above re Dr Erlings being one of the better Directors in PDO - on line bidding was and still is a complete disaster - and he was responsible for its introduction.

    The lowest price and stuff quality and safety!

    The sooner the shareholders put someone with quality in post the sooner things will improve for all of us in Muscat who are on the receiving end of Gulfar's poor delivery and quality.

  8. 'Harry'

    I reserve the right to delete comments which I consider potentially libelous or which may be considered in breach of Article 61.


  9. Galfar has become useless these days. In a bid to get the projects and personal fame, the CEO and the MD of Galfar went to an extent bribing the Ministry Officials with whatever they ask for, from houses to housemaids (U know what I mean). They lost all the ethics and values. I quit Galfar because of this after having worked for more than 3 years.


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