Korea Land and Housing Corp. (LH) announced on Feb. 11 that it will take part in 961 public project orders this year amounting to 9.2 trillion won, which is down 2.7 trillion won. The reduction from the preceding year is due to cuts in social overhead projects by the government caused by lower government spending for infrastructural projects.
Construction industry sources said the cuts in the public infrastructure projects are likely to hit the construction industry hard. It would be the first time that government-funded public construction projects were cut since 2014. The value of the projects is down some 23 percent from the preceding year, when 11.9 trillion won worth of public construction projects were ordered by LH.
LH is to announce some 2.9 trillion won worth of orders in the area of land supply (17 square km) while housing projects will total around 6.3 trillion won this year for the construction of 56,000 public houses.
By regions, some 5 trillion won worth of orders will be in the Seoul area, while 4.2 trillion won worth of orders will be in the rest of the country.
According to LH, its public housing construction project orders will amount around 4.8 trillion won this year, down from 7.2 trillion won worth of housing project orders from last year, a key factor for sustaining economic growth. Civil engineering projects amounted to 1.8 trillion won, down from 2 trillion won, with 1.4 trillion won worth of orders to come from the electric and telecommunication sectors. Landscaping orders will amount to 500 billion won.
The construction industry suffered a blow from the National Assembly’s recent national budget, analysts say. SOC is down 14 percent YoY to 19 trillion won, coupled with public orders which also fell.
The industry has been struggling since the second half of last year. Somewhat helping was the fact that five South Korean construction companies won large-scale projects in the Middle East totaling 6,287.6 trillion won, or around $5.4 billion.The amount is the fifth largest amount of overseas construction orders.
Daewoo Engineering & Construction (E&C), Hyundai E&C, Hyundai Heavy Industries, SK E&C, and Hanwha E&C announced on July 31 that they had received letters of acceptance (LOA) on four packages with the Al Zour New Refinery Project (NRP) commissioned by the Kuwait National Petroleum Company (KNPC) between January and March of this year.
Kuwait’s NRP involves the building of an oil refining plant for the production of 615,000 barrels of low-sulfur fuel per day in the Al Zour region on the south coast.
Once complete, it will be the second-largest such plant in the world. Total project expenses are $13-14 billion, with South Korean construction company orders totaling $5.37 billion.
The fifth package and first order was won by a consortium of Hyundai E&C ($600 million), SK E&C ($450 million), and Italy’s Saipem. The second and third packages, which involve the largest scale of construction, were won by a Daewoo E&C consortium with Daewoo E&C ($1.95 billion), Hyundai Heavy Industries ($1.95 billion), and the US’s Fluor Corporation.
The first package went to the consortium of Spain’s Tecnicas Reunidas with Hanwha E&C ($424 million) and China’s Sinopec.
The overseas order is the fifth largest in South Korean construction history after a United Arab Emirates nuclear power plant construction project ($18.6 billion), the Bismayah New City project in Iraq ($10 billion), the second stage of Libya’s Great Man-Made River ($6.4 billion), and the Roy Hill iron ore project in Australia ($5.8 billion).
A bird’s eye view of the S1BL Apartment Complex in the Yangwon District in Seoul.(Photos: LH)