“It’s our thirst for excellence”, said Abdullah S. Al-Marei, president and CEO of Marafiq, when asked to define the main driving force behind his company’s exceptional growth since its inception three years ago. Speaking at Marafiq’s headquarters in Jubail Industrial City, Al-Marei continued: “Our vision is focused on our customers. We are committed to performance and operational excellence to exceed our customers’ needs and expectations. Our entire company, supported by its employees and all its systems, is structured around one common goal — to make sure that we satisfy our customers’ needs, that we support them, add value for them, and help them to succeed. We have stable, credible customers. Our satisfaction is their continued success, and their satisfaction is our success.”
Marafiq started operating in January 2003 as Saudi Arabia’s first private integrated power and water utility company. Its four major shareholders are the Royal Commission for Jubail and Yanbu, Saudi Aramco, Saudi Basic Industries Corp. and the Public Investment Fund. Each holds 24.81 percent of Marafiq. Seven other private companies together hold 0.76 percent.
“We are privileged to have such credible owners who are amongst the most highly respected institutions in the Kingdom,” says Al-Marei. “We stand on solid foundations, and we are proud of our heritage. One cannot truly understand the Marafiq of today unless one goes back to where it all started. Our foundations were laid thirty years ago when the government established the Royal Commission to develop the two industrial cities of Jubail and Yanbu. The objective was to diversify the national economy and reduce our reliance on oil revenue. Part of this vast development plan was to provide utility services in support of the industrial, commercial and residential sectors of the community. This gave rise to the idea of privatizing the utility services in the two cities, which eventually led to the formation of Marafiq as a private enterprise. We went to great lengths to make sure that we tackled our company’s establishment in an orderly, proper and structured manner, progressing through several challenging pioneer stages. We were able to benefit from international best practices and experience, having appointed a consortium of the best international consultants to work side by side with the management of Marafiq. This enabled us to set up the right foundations for a world-class commercial utility company. This solid start has generated confidence in Marafiq and is an assurance to the investor and banking communities.”
“Our focus until now has been to anchor the company, enhance its operations, and add value for our stakeholders. We have reached several milestones in the course of 2005, and it has been a good year to us. Now we are ready to grow and develop, to expand beyond water and power and cement our position as a major player in the utility market,” Al-Marei adds. “Our focus will remain on adding value for all our stakeholders. We are preparing the company to be highly competitive and venture into new, related businesses. We are developing our people’s leadership and technical skills. We want to combine the development of our processes, performance, resources and knowledge through assessment and alignment. The process is underway to put performance enhancement and assessment systems in place to ensure full utilization of our resources and reduce redundancies. We have opted for the balanced scorecard as our management and measurement tool, and we are focusing on asset management and process management of our core functions.
Marafiq is using the balanced scorecard to turn its strategies into action. The balanced scorecard is a management system that differs from other systems, as it is both a measurement and management system. It provides the opportunity for feedback around both the internal business processes and external outcomes to improve strategic performance and results continuously. When developed and used to its full capacity, the balanced scorecard becomes an ideal tool to transform strategic planning from an intellectual exercise into the driving force of an enterprise.
“We have also started to do process mapping for each of our core functions. It will map interaction between different functions, also with external stakeholders, and develop and define the roles, responsibilities, competencies and key performance indicators of each position”, says Al-Marei.
Marafiq has been awarded the coveted ISO 9001:2000 and ISO 14001:1996 certificates in recognition of its compliance with the stringent quality and environmental management standards of the International Organization for Standardization (ISO). Two teams of external auditors from the Geneva-based certification company, Société Générale de Surveillance (SGS), declared Marafiq as ISO 14001 and ISO 9001 certified after an exhaustive audit of the company’s environmental and quality practices, procedures and standards. The auditors’ decision to award the certificates to Marafiq was unanimous.
“This prestigious international recognition brings us more challenges in the utility arena. We are now aligned with the best companies in environmental and quality management, and we look forward to maintaining our standards and improving our management systems continually,” Al-Marei says.
Commercially, Marafiq is very sound. The company made a profit of SR416 million in 2003, and increased it to SR541 million in 2004 with a turnover of SR1.5 billion. Its asset value has risen to SR 3.5 billion, and it plans to spend SR30 billion on capital projects in the next ten years. With this robust performance, the company plans to go public and to launch its first initial public offering (IPO) toward the middle of 2006.
The development of the two new industrial cities of Jubail II and Yanbu II will open up vast new avenues to Marafiq. “The two cities are set to grow at a rapid pace, and Marafiq is the nearest and most viable provider of utility services. We plan to provide integrated services common to all customers in a plug-and-play concept designed to reduce their capital cost. In addition to power and water, we want to provide other essentials such as steam, air and gas as a central utility service. We may even offer other central services such as financial, human resources, materials and communication services that will help our customers reduce their office costs.”
To meet the projected increase in demand for power and water in the two new industrial cities, Marafiq is developing two independent water and power plants (IWPPs) in Jubail and Yanbu. The status of the IWPP in Jubail is to be upgraded from a local initiative tailored to meet the specific demand for power and water in Jubail Industrial City to one of national importance. The project’s upgrading will result in a significant increase in desalinated water output from the originally planned 300,000 to 800,000 cubic meters per day. Power output will be increased from 2,400 to 2,500 megawatts. The additional 500,000 cubic meters of water will be made available to residents in Dammam, Al-Khobar and other parts of the Eastern Province.
A revised request for proposals (RFP) accommodating the amended scope, structure and timing of the project is being issued to prequalified bidder consortia. Commissioning of the Jubail IWPP is expected early in 2009.
Marafiq also intends to increase its power generation and water production capacities in Yanbu. A pre-feasibility study has been carried out on the technical, financial, environmental and economic aspects of the project. These include the demand-supply forecast within Yanbu Industrial City, the availability of fuel, and specific site conditions. The preliminary results show that building approximately 1500 megawatts of new power generation is likely to be feasible by late 2009 or early 2010 to meet the growing power requirement in Yanbu. The shortfall of potable and process water in Yanbu during the same period is likely to be 34,000 cubic meters per day. To optimize the water production capability of the IWPP, surplus water will be made available to users outside the industrial city.
The pre-feasibility study will be followed by a more extensive study and preparation of functional specifications. Marafiq intends to seek expressions of interest from international and Saudi Arabian investors and developers early in 2006. A Request for Proposal for the development of the project on a BOT (Build Operate Transfer) basis is expected to be issued toward the middle of 2006.
“With our international business contacts and the valuable experience we have gained with the development of our IWPP, we are gearing ourselves to become a developer for future IPPs and IWPPs in the Kingdom, the Gulf region and also internationally,” Al-Marei adds.
“Our sound commercial foundation, state-of-the-art technology, and extensive infrastructure enable Marafiq to provide efficient, economical and reliable utility services as a self-sufficient enterprise. With the expertise, resourcefulness and support of our most valuable asset — our employees — we aim to grow and develop, to expand beyond the borders of Jubail and Yanbu, to continue adding value for our stakeholders, and cement our position as a respected player in the international arena. It is a challenge that we have accepted and will continue to meet with passion and with pride,” Al-Marei says.
