Page 5 - TunnelTalk Annual Review 2012

Examining the
global project league table
At the beginning of 2012, as the world struggled to recover from the financial crisis of 2008-2009 and the austerity and public spending controls put in place as a result, new data showed signs of promise.
Financial services information provider Dealogic reported that global project finance volume in 2011, excluding real estate, shipping, aircraft and manufacturing projects, grew 13.2% on 2010, to US$405 billion. A record 945 projects reached financial close during 2011, 8% more than the 875 in 2010, and 33% more than the 712 in 2008.
In the Dealogic study, India topped the country rankings by a comfortable margin with $87.7 billion worth of new project finance deals signed during the year. At the start of 2012, the world’s second most populous country accounted for more than a fifth of the total value of new projects (Table 1).
Whichever way one looked at it, India was where the money for large scale projects was being spent. It was the only region out of eight that recorded project spending growth in each of the three years since the 2008 global economic crisis. In just four years India had gone from the bottom of the league to the top: from $18.8 billion in 2008 to $88.2 billion in 2011.
Asia project financing, excluding India, remained quite static throughout the four- year period 2008-2011, while Latin America and Eastern Europe saw significant project spend increases during 2011, enough to return these regions to pre-economic crisis 2008 levels.
Project numbers on the North American continent also remained static at 114, although financing levels were 28% up on the $31.2 billion low of 2009, which at that time was North America’s lowest spend since 2005. In a separate country-by- country calculation, the USA slipped behind Australia for the first time, and into third place in a league which it once headed.
In Western Europe, as it continued to suffer its Euro Zone debt crisis, spending levels on major projects remained static at $75 billion. This represented a significant improvement on the 2009 total of $54.3 billion, although project financing was yet to recover to the 2008 peak of $83.5 billion and the total number of projects was down significantly to 265. This was in spite of the 330km high- speed rail extension between Bordeaux and Tours passing through the books in France in June2011.Valuedat$9.15billionthiswasthe world’s second largest project financing deal oftheyearbehindQatar’s$9.8billionBarzan Gas Project.
Looking forward, in Western Europe there was the prospect of the UK’s £32 billion High Speed 2 rail project linking London and Birmingham, which is programmed to start in 2017.
It was in the Middle East where the worst effects of the financial downturn were being felt.
If it were not for Qatar’s Barzan Gas Project, which closed financing 18 days before the year end and was the world’s largest value project of 2011 at $9.8 billion, the decline of the last few years would have been more marked.
A reversal was also expected for the region as a result of Qatar’s hosting of the Soccer World Cup in 2022. In February 2012, delegates from some of the world’s largest infrastructure construction companies gathered in Qatar for a conference that outlined more than $106 billion of projects expected to be let between now and 2022. Of particular interest to the tunnelling industry is that some $65 billion of this will be spent on projects including the $35 billion Doha Metro, design and construction procurement of which began in 2012.
Encouragingly for the tunnelling industry, an analysis of the figures by sector reveals that transport infrastructure continues to grow with indications that the future is to be in rail rather than road.
The Bangalore Metro project in India, the Bordeaux-Tours high-speed rail extension in France, and the Hong Kong- Zhuhai-Macao Bridge project, which includes in its scope a 6.7km immersed tube tunnel, all made it into the top ten of individual projects in 2011.
In 2009, financing for road projects accounted for 40% of all infrastructure spending. In 2011, it stood at 25% with
Sector volumes by year (2006-2011)
much of the difference being made up by port and rail projects. The $1.5 billion Guri Pocheon Highway Project in South Korea at $1.5 billion was the largest road project of 2011 to reach a final close.
The worry remains that a headline growth in both the number and value of global projects stay many years in the planning, design and environmental assessment stages. The pipeline contains projects that have been in this process for several years.
Planning of projects needs to continue through the current difficulties, with a cautious expectation that by the time it comes to financing construction the financial climate will have improved. n
References
• Bad debts and downturn left Halcrow exposed - TunnelTalk, September 2011
• Qatar drives forward with Doha metro -
TunnelTalk, December 2011
• China’s mega sea link moves forward -
TunnelTalk, June 2011
• 2012 perspective - TunnelTalk,
December 2011
TunnelTalk reporting
Table 1: Project financing totals by region (2008-2011)
2011 US$bn
2010 US$bn
2009 US$bn
2008 US$bn
Top 10 by value projects (2009-11)**
India
88.2 (229)*
81.4 (163)
54.4 (81)
18.8
7
western Europe
74.4 (247)
75.0 (315)
54.3 (265)
83.5
3
Asia (ex India)
51.7 (110)
48.4 (91)
49.6 (160)
47.5
6
Middle East/Africa
49.4 (70)
48.5 (47)
39.7 (63)
55.0
5
North America
47.3 (114)
42.9 (114)
31.2 (93)
36.9
1
Australia
39.6 (82)
19.4 (43)
18.8 (47)
21.2
1
Latin America
30.2 (55)
19.2 (52)
34.2 (67)
29.8
4
Eastern Europe
27.6 (36)
19.9 (27)
10.8 (16)
27.8
3
* Total projects financed per year
** Number of projects recorded in Dealogic’s world top 10 of largest financially closed projects for 2009-11
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