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                                                                                                                          Local Partner Negotiations

Stage 1- The First Meeting (First Course) Material Below

Stage 2 – The Initial Tender Negotiation (Second Course) Material Below

Stage 3 – Problem Solving and Finalizing the Bid (Third Course)

The first meeting

  •  What do you want from a local partner?
  • What are the advantages of having a local partner in the tender process?
  • What do you think a local partner looks for in a foreign bidder?
  • What are the difficulties of working with local partners?
  • Give examples of good/bad experiences
  • What criteria do you look for in a local partner?
  • Are there any specific difficulties of working  with local partners in the Arab world /UAE etc

 

 Background

Given Oman’s relatively small population of only 2.8 million people, the scale of the construction and infrastructure development projects that have already been committed to, or are under construction, is impressive.

The public sector is by far the largest procurer of construction services in the Sultanate of Oman. In the 2015 budget, the government announced Oman’s eighth five-year plan, to run from 2015 to 2023. It envisages a total capital outlay of US$79 billion, of which the bulk is to be invested in large construction projects across the country. The chief beneficiaries of this investment programme will be the following sectors:

  • Transportation: particularly airports, ports, highways and, in the longer term, railways.
  • Tourism: several up-scale resort and hotel projects are planned or under construction across Oman, capitalising on its: 
– mountain, desert and coastal scenery; 
– ecotourism potential.
  • Oil and gas: although making steady progress towards diversifying into more downstream-orientated industries such as petrochemicals, steel and aluminium, Oman remains at heart a hydrocarbons-based economy. It has a number of world-
class exploration and production projects under development, including investment-heavy enhanced oil recovery schemes.

In addition, significant projects in the power generation and transmission, wastewater treatment and water desalination, healthcare and housing sectors are also under construction or in advanced stages of planning.

* According to Government guidelines, Oman has a commitment to sustainable development projects.

 

Need for local contractors

Projects requiring specialist expertise and resources that are not available locally (for example, in the airports, power and water and hydrocarbons sectors), are likely to attract foreign and local contractors working together in unincorporated joint venture structures.  ( Omani web site on the construction industry in Oman)

Omani law states:

A foreign company must establish a formal presence in Oman. There are various requirements to be satisfied, such as:

  • Omanisation levels (that is, minimum employment levels of Omani nationals). 15%

 

Civil Engineering Company

Your company is very interested in the potential of the Omani market and are interested in collaborating with local construction companies. They have set up a local facility abroad to work together with local partners on public tenders.

Ideally, they would work with one local partner, bidding on a variety of public tenders.

Logically, the local partner would,

  • Be an Agent already registered in the utilities vendor ́s lists, with the qualifications to act as partners in national tenders
  • Local System Integrators with the capacity to handle local purchase, implementation and first level support.
  • Be prequalified for road/water projects etc
  • Able to share the financial risk
  • Reliable, with good references and attractive rates.
  • Experience of Joint ventures with foreign companies.
  • Be able to meet sustainable development requirements

 

First meeting

You have a first meeting with the directors of Sarooj, a local construction company.

  • What do you want to obtain from this first meeting?
  • What are your objectives?

Brain storm a list of questions, things you want to find out from Sarooj in that first meeting. Think back to the criteria you need for a local partner.

Think about what kind of partnership you want to have, leadership roles, team leader breakdown. Financial risk sharing etc.

At the end of this meeting, some sort of loose consensus needs to be reached about future work together.

 

Sarooj Construction

Sarooj Construction is one of the top construction companies in the country and is part of the famous Al Taher group. Today, their diverse project portfolio encompasses marine works, roads & highways, oil & gas, general civil, earthworks, dams, and infrastructure services.

Services on offer:

  • Civil Infrastructure:
    • Water Supply Schemes,
    •  Sewage Networks,
    • Airstrips & Helipads,
    • Highways & Roads,
    • Dams,
    • Tower lines.
  • Oil & Gas:
    • Rig Locations,
    • Mud Pits,
    • Cellars,
    • Conductor Pipes.
  • Marine Works:
    • Breakwaters,
    • Quay Walls,
    • Skiff Beaches,
    • Dredging.
  • Environmental:
    • Reed Farms.

Flagship projects:

  1. Design & Construction of Internal Roads in the A’Sharqiya Region. The contract covers the design and construction of 45 Km of paved internal roads with all related works: drainage, road marking and road signs.
  2. Barr Al Jissah Resort – Cyclone Gonu – Marine Restoration Works. Cyclone Gonu has severely damaged the marina at this important resort. The contract is to re-build the main breakwater, the Lee breakwater and the berthing facility.

 

 Company Environmental policy:

  • Comply with the laws and standards of the Sultanate of Oman.
  • Minimize the environmental impact from operations.

Examples of agreements/Joint ventures with foreign companies:

  • Agreement with CATERPILLAR industries through Oasis Trading to be the sole distributor of their machinery in Oman.
  • Synergy partner with BAUER to implement and co finance a 25 year project to recycle waste water in the south of Oman
  • Local supplier for INTERPIPE based in Paris and Houston. Interpipe specialize in the design, provision and fabrication of highly insulated pipelines. These pipes are ideal for transport of steam in steam injection projects and transport of heavy oil. Public contract won in open tender process.

 

First meeting

You have a first meeting with the civil engineering company who are interested in working with a local partner to bid for Public tenders within the Sultanate.

Sarooj doesn’t have the infrastructure or capacity to bid for Public Tenders on their own and working with your civil engineering company would be an ideal way, not only to increase revenue from these large projects, but also to increase the company’s profile.

However, you want to be sure that:

  • Your civil engineering company has experience in working in the UAE area
  • Experience working with local contractors
  • A commitment to the environment.

Brain storm a list of questions:

  • Things you want to find out from the civil engineering company in that first meeting.
  • Think back to what a local partner looks for in a foreign bidder.
  • Think about what kind of partnership you want to have, leadership roles, team leader breakdown. Financial risk sharing etc.
  • Remember, you are not a small local partner just to provide the required 15% Omani workforce. You have experience of working with foreign bidders and a large portfolio.
  • At the moment you don’t need to go into details here, this will be done on the next course when you are negotiating a specific tender, but some basic groundwork here could be useful.

At the end of this meeting, some sort of loose consensus needs to be reached about future work together.

Map of Oman and surrounding area Civil Engineering Material | Melton Language Services

 

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