Khaleej Times - Reforms to pave way for sustainable growth

Vijay Valecha, Special to Gulf News November 28, 2021

Abu Dhabi’s National Marine Dredging Co (NMDC) is a prominent contractor in EPC, dredging and marine civil work projects. With a market cap of Dh10.74 billion, the group provides oil and gas and port infrastructure building, land reclamation, coastal defense, and waterway deepening and maintenance.

It owns and runs a fleet of dredgers, as well as support equipment such as tugs, workboats, barges and survey ships. The mega-merger of NMDC and NPCC forms one of the largest integrated oil and gas and maritime service EPC providers.

Geographic spread

The businesses are harmonious, and the transaction provides significant revenue diversification. With strong capabilities across the value chain to support development goals, the firm is perfectly positioned to grasp growth possibilities in the UAE and major regional markets by building a single platform.

For the nine months from January to September, NMDC recorded a strong rise in net profit to Dh501 million. The performance is highlighted by Dh5.38 billion in revenues, up from Dh2.78 billion the previous year. The merger resulted in an immediate increase in geographical diversification, with the UAE contributing the highest (Dh3.11 billion) followed by Saudi Arabia (Dh1.62 billion) and India (Dh235 million).

A heavyweight win

Recently, Abu Dhabi National Oil Company (ADNOC) announced the award of two engineering, procurement and construction contracts totaling Dh5.36 billion for the Dalma Gas Development Project to National Petroleum Construction Company PJSC (NPCC), which is wholly-owned by NMDC. The Dalma field is part of the Ghasha Concession, the world’s largest offshore sour gas development.

This is an important milestone for the company and could further solidify its position as regional EPC champion and support efforts to explore new growth avenues across the value chain. Moreover, Technip Energies and NPCC signed a MoU to advance energy transition in UAE and the MENA region and drive a robust strategy for a decarbonized future.

It is strategically important to have a strong UAE enterprise in the dredging sector. Dredging is a critical instrument for mitigating the devastating effects of climate change and meeting the ever-increasing need for land for rapid urbanization.

Dredging will aid to establish depths in ports, develop/maintain fishing harbors and marinas, and reclamation of land to build urban infrastructure in coastal towns, all of which will benefit the UAE. A dredging business is also required by oil platforms and rigs. The sector has the potential to be a major economic powerhouse as well as an employer.

NMDC pays a dividend yield of 2.3 per cent with an annual payment frequency. Additionally, the strategy of continuing to expand into new markets should be rewarding for its shareholders in the long run.