The construction industry has long had to weather the storm of fluctuating fuel costs, with the plant, machinery and vehicle sectors being particularly vulnerable. But that doesn’t mean to say that sudden price hikes come as any less of a shock.
Construction firms in Qatar, which is in the midst of a building boom ahead of the 2022 FIFA World Cup, had a rude awakening in May when Qatar Fuel (WOQOD) raised the price of diesel by 50%. It was the first hike since January 2011, when the cost of petrol, diesel, and kerosene climbed more than a quarter.
Prices have also been creeping up elsewhere in the region. Last year, Bahrain announced controversial plans to gradually increase the price of diesel, almost doubling it by 2017, as a way of reducing the heavy subsidy burden on the state. The authorities there argued that despite the hike, the price of diesel there is still cheaper than in neighbouring countries. In Dubai last September, the price of diesel at ENOC and EPPCO pumps went up by AED 0.2 per litre.
High fuel prices can have a devastating effect on the building industry, especially in a region where the pace of construction is at the breakneck speed last seen in 2008, with fleet companies either having to absorb the burden or pass it on to their customers. As well as the impact they have on transport, building material costs, and project estimates, fuel prices can also throw a building project into disarray, with contractors either delaying work or downing tools completely due to rapidly escalating costs.
However, they can also have a positive impact, forcing car buyers to replace fuel-guzzling vehicles with more efficient cars, whilst the fleet industry has also had to come up with novel ways to manufacture fuel-efficient plant, machinery, and vehicles.
This only really started to happen in the Gulf at the height of the last construction boom in 2008, a year when the cost of heavy oil jumped by two-thirds within 10 months in Dubai alone. But even in an oil-producing region, the construction sector has realised that high fuel costs are here to stay, and it’s taking steps to produce cleaner, more efficient vehicles.
One company that has adopted this approach is India’s Tata Motors, which has operated in the Middle East since the early 1990s. Gurshaman Singh, the company’s area manager for the UAE and Oman, told CW that fuel efficiency has become a pressing priority for GCC fleet operators.
“According to my interactions with fleet owners, about 30% of the total expense of a vehicle’s operations is spent on fuel,” he said.
“With fuel prices rising, the total expense is bound to go up until – and unless – we look for products that are more fuel efficient.”
Singh added that Tata Motors, the world’s fifth-largest truck manufacturer, is “always looking at making more fuel-efficient vehicles using the latest technology in diesel engines in order to keep operating expenses under control”.
In March, the company unveiled 10 heavy-duty trucks as part of its Prima LX range of vehicles. These trucks have been designed with the combination of “power, fuel efficiency, and affordability” in mind, according to Singh.
The company is also working on alternate fuel variants of its Prima-model trucks, which will be available commercially in the GCC in the medium-to-long term, whilst plans are also underway for the introduction of diesel-electric hybrid trucks from Tata.
“These days, there is a trend of deriving extra power from smaller cubic-capacity engines, unlike in the past where bigger engines meant more power,” Singh said.
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