Abstract
Venezuela is likely to be hit hard by the recent decline in the price of oil.
As a country whose economy is
reliant on oil and gas revenues it is
vulnerable to the volatile prices of the commodity. Therefore when
price
is in decline, government investment ability is also reduced. High levels of
inflation are also
offsetting any real growth potential from activity in
the industry. For 2009 inflation is forecast at 36.5%.
As such, in 2009 we
are forecasting negative real growth of 22.9% year-on-year (y-o-y) in the
construction industry.
Activity in the transport sector was fairly limited
in 2008. Key projects included the US$500mn upgrade
of La Guaira Port. A
contract for the project was awarded in 2008 to a consortium led by
Portugal’s
Teieira Duarte and including Mota Engil and Spain’s
Consulmar. There are also plans to construct a
new US$700mn international
airport at Barrancas in the state of Barinas.
The power sector has seen a
fair amount of activity. The biggest project currently under development
is
the US$3bn Tocoma hydropower plant, located on the Caroní River.
Argentina’s Impsa was awarded a
contract for the design,
construction and installation of turbines in 2008. The plant will have 10
turbines
and a capacity of 2,330 megawatts (MW); it is due to come online
in 2014. The development of
Venezuela’s first wind farm, which is
located in Falcon state and will have a capacity of 100MW, also
took place
in 2008, with Gamesa awarded the contract to supply the 76 wind turbines.
Another
development in the power sector was agreements with Russia to help
Venezuela develop nuclear power
for civilian usage.
In the residential
construction sector SNC-Lavalin was awarded a contract to construct three new
towns,
which will involve the construction of 2,000 houses. Industrial
construction saw Petrobras awarded a
contract for construction of an
industrial complex at Suape Port.
BMI believes that Venezuela’s
construction industry will be hit hard by the global financial downturn
and
its symptoms. Not only will the shortage of financing and the
contracting economy (-5.6% real GDP
growth y-o-y forecast for 2009) reduce
activity, but the declining price of oil will mean less government
revenues, reducing the level of government investment into infrastructure.
These factors, combined with
high inflation, which will undermine any real
growth in the industry, mean that BMI is forecasting
Venezuela’s
construction industry to contract by negative 10.9% between 2009 and 2013.
In BMI’s 2009 Venezuela Infrastructure Report we are launching our new
Project Finance Ratings. The
ratings provide a globally comparative,
numerically based assessment of the risks facing major
infrastructure
projects. Venezuela came seventh out of nine countries assessed in the
Americas region,
with a score of 47.6 out of 100.
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