Even as West Asia is witnessing aerial attacks and counter-attacks as well as destruction of oil infrastructure and other vital assets over the past three weeks, Larsen & Toubro (L&T) Group, which has about 100 live sites as well as yards and other facilities in Saudi Arabia, UAE, Qatar, Kuwait and Oman said 95% of the sites in the region were safe and it was business as usual.
Also, all its employees, their family members and workers under contact were safe and no one had been evacuated from this region, which was the company’s second home, a top company executive said.
“I am glad to say that while the developments are unfortunate, we have 100 sites operating as the group of which roughly 95% are working as business as usual,” said Subramanian Sarma, Deputy Managing Director and President, L&T, on the company’s first reaction since war broke out in West Asia.
“There is no disruption on those 95% of the sites. There are about 5% of the sites which are suspended or disrupted because they are closer to the army bases and either we have chosen to suspend that because we saw that risk was little bit too much or in few instances the customers have recommended us to suspend the operation for some time,” he said.
“By and large the business is going well. The safety and security of our people in the region are important. Next priority is the safety of the assets, and both these aspects are kept in mind,” he emphasised.
About the 5% impacted projects, he said damage had been made to parts of either transmission lines in some other areas which were closer to the military bases.
“And some little bit on the water projects, but nothing sizeable, fortunately. All our people are safe, all our assets are safe, and everyone we are working with, they are well protected,” Mr. Sarma said.
The company’s Risk Committee and Situation Management Committee were continuously monitoring the situation for calibrated response, if any.
Besides, it had very senior leaders who included six or seven senior vice-presidents permanently stationed in West Asia.
“What we had done over the 30 years as part of our businesses management [in West Asia] has now come handy and it is helping us in this current situation which is of course unfortunate but not something which we had not been prepared for,” Mr. Sarma pointed out.
“We are constantly in touch with our senior staff, regional representatives and government officials, industry partners and local government in India and we are constantly in dialogue and calibrating as well as assessing the developments on a daily basis. We are in touch to see if any course correction is required,” he said.
However, new manpower mobilisation had been halted.
“All the employees [8,000 employees, 2,000 family members, 20,000 people on contract] are there and they are not evacuated, because we don’t see the need yet and at the same time we are little bit watchful about mobilising additional people,” Mr. Sarma said.
According to him, the main challenge ahead was logistics and supply chain issue for which the company was working on finding a solution.
“The only possibility of having impact will be if the supply chain issue does not get resolved in the next three months. But it is a long period of time to find solutions for securing supplies,” he said.
“Now we have enough material in the stock that is required for executing our work for next three to four months. But in the last two weeks there has been disruption in the supplies. Some of the supplies come from China, some from Europe and some come locally. What is coming locally is not a problem,” Mr. Sarma said.
Alternative modes
Within the GCC countries, while road transportation was doing well but moving a bit slower, maintaining supplies from China and Europe, the disruptions in shipping liners and logistics had posed a challenge.
After disruptions at Strait of Hormuz, people had started talking about alternative modes of transport.
He said war-affected countries would now be looking at alternative routes for energy evacuation and might build some cross-country pipelines and have an evacuation point in Oman or an evacuation point in Red Sea or in the Mediterranean.
“All this process will start which is good news for us because we are present in all of this and there will be more opportunities,” he said.
Also as oil and gas prices go up, energy transition would get back into the momentum, he added.
Most of the company’s projects in West Asia were mixed contracts. Some of them were fixed and others in price adjustment formula.
He said different mechanisms were available in the contract to recover any additional cost to be incurred due to the war impact.
He said new projects would move faster and announcement of new projects would happen because of certain amount of disruption in the capacity.
Now the region would think about strategically different automated routes to evacuate the oil and gas from the place.
He said “in all our businesses, none of the awards has been deferred or delayed because of the war. Everything is moving as per the plan. We are bidding on many prospects, even today.”
“It has just slowed down a little bit, which normally happens because of the Ramzan month and the Id holidays. But nothing has changed because of the war,” Mr. Sarma added.
“And going forward I am not expecting any significant change in that outlook.”
He said most of the ongoing projects were already covered under insurance and for the new contracts which were in bidding stage the insurance premium had gone up.
Through price adjustment mechanism or entitlement, the logistics cost increase matter could be addressed. “I am very confident that we will be able to recover that from our customers,” he said.
Answering a question on Iran, he said if the sanctions get lifted and Iran became part of the free world, then opportunities would be humongous. “It will be a new market all together and it will be great for all the Indian companies,” Mr. Sarma said.
Hoping that the current situation in terms of the company’s operation would not get disrupted and it continued as it had been, he said then the whole crisis would settle down.
“The current operations whatever is happening is unfortunate and I hope it ends soon because it is very disruptive for the whole world,” the official concluded.
Source: https://www.thehindu.com/business/95-project-sites-all-staff-assets-in-west-asia-safe-its-business-as-usual-lt-deputy-md-sarma/article70772500.ece
