As Saudi Arabia wilts under increasing demand for electricity, the products manufactured by SAFID are becoming ever more important. In a rare interview, Sheikh Mohammed Al Rahbani, SAFID’s chairman, talks about why his company is making a difference in the kingdom
If you were under the impression that the air conditioning market isn’t vital to Saudi Arabia’s future, think again. As a rapidly growing population — with a propensity for more modern comforts, including larger homes and vast shopping malls — builds up in the kingdom, demand for power is skyrocketing. In the heat of the Gulf summer, air conditioning takes a particularly heavy toll on Saudi Arabia’s grid.
And as demand for electricity and water increases, by around 8 percent every year according to local estimates, Saudi Arabia has to siphon off more of the crude it would ordinarily export, and use it instead to fuel power and desalination plants at subsidised rates. The cost to the Saudi economy runs to not far $100bn a year, with Citigroup warning in 2012 that the kingdom could become a net oil importer by the end of this decade.
So where does Sheikh Mohammed Al Rahbani fit into all of this? As the chairman of Saudi Finn Ducting Company Ltd (SAFID), and one of the Middle East’s richest men, he owns perhaps Saudi Arabia’s largest manufacturer of air distribution products.
“Saudi Arabia is our heartland, and we have a very successful track record in the kingdom,” says Sheikh Mohammed during a recent interview in Dubai. “In fact, if you take the road from Riyadh’s airport to our headquarters in the city’s industrial area, many of the buildings that you will pass contain our systems.”
As power demand rises, the heating, ventilation and air conditioning (HVAC) market in the Gulf is similarly hotting up. According to industry analyst TechNavio, the sector is set to grow annually by an average of 7.4 percent between 2012 and 2016, with local vendors like SAFID posing a huge challenge to the established international players. Saudi Arabia is by far the biggest market, largely due to its fast-growing 28-million-strong population. Another analyst, TechSci Research says that the sectors’ compound annual growth rate between 2013 to 2018 will hit 10 percent.
All this, of course, is good news for SAFID. Founded in 1979 as a joint venture between the Rahbani Group and Finnish tech giant Nokia, with just 60 people making a single type of duct, the firm has quickly grown to become one of the largest providers of air distribution products in the kingdom. As a private company, SAFID keeps its numbers close to its chest, but Sheikh Mohammed says that turnover grew by roughly 10 percent in 2013, while he expects to see “low double-digit growth” for this year. The firm’s performance is also being driven by the kingdom’s colossal infrastructure spending plans, which involve billions of dollars being spent yearly on new houses, new schools and new hospitals.
Right now, SAFID is currently working on at least 35 projects in Saudi Arabia. These aren’t just any projects either; included in the roster is work on the King Abdullah Financial District in Riyadh, King Abdulaziz Airport in Jeddah and last, but not least, the expansion of the Masjid Al Haram (Grand Mosque) in Makkah. In fact, you would be hard pressed to find a major Saudi ministry or developer that doesn’t rely heavily on SAFID’s products for its projects.
“We have a very strong pipeline of projects and our current order book is also looking very healthy,” says Sheikh Mohammed. “We are confident that 2014 will be a landmark year in our history. Construction in Saudi Arabia continues apace, and SAFID is well-placed to capitalise on that growth in the wider economy.”
The firm is working hard to build the kind of products that will help keep the use of electricity demand to a minimum, thus also helping to reduce Saudi Arabia’s carbon emissions, which are some of the highest, per capita, in the world. To that end, SAFID has developed its own research and development facilities, including a state-of-the-art acoustic laboratory.
“One example of innovation is the development of cylindrical ducts as opposed to rectangular ducts,” says Sheikh Mohammed. “Not only does this prevent stale air from being trapped within the system, it also allows a more efficient flow of air. While, of course, we don’t control the energy usage in buildings, it is up to us to ensure the most efficient delivery systems possible.”
Article continued on next page...