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Qatar Industry
The government has established heavy industry to
diversify
Qatar's economy. The pattern has been to allow foreign
firms to
provide expertise in planning, construction, management,
and
marketing in return for minority shares in the companies.
Oil
revenues have funded the construction of plants and the
development of infrastructure; natural gas has been used
as a
source of power and as feedstock. The country's main power
generation and water desalination plants are at Ras Abu
Abbud and
Ras Abu Fintas. Electrical generating capacity in 1990 was
1,095
megawatts, and there were plans to add an additional 234
megawatts in the early 1990s. Power consumption in 1990
stood at
4,818 million kilowatt-hours and peak demand at 987
megawatts.
Bureaucratic delays stalled many projects, and poor market
conditions and technical problems doomed others to
unprofitability. Major construction projects such as
factories
are seldom completed on schedule.
The Industrial Development Technical Centre (IDTC),
formed in
1973, directs much of Qatar's industrialization, apart
from
petroleum extraction. The IDTC identifies industries to
meet
Qatar's medium- and long-term needs and coordinates
industrial
planning. In addition, the IDTC monitors the performance
of all
industries on a monthly basis. In the early 1980s, the
center
began assessing the environmental impact of industrial
plants and
production. The IDTC has also been involved in pilot
manufacturing programs: in 1989 it announced the formation
of the
Qatar Industrial Manufacturing Company, owned partly by
the
government and designed to establish small- and
medium-sized
enterprises and to buy shares in existing companies.
The country's center for heavy industry is Umm Said.
Smaller
industries and businesses are concentrated in the As Salwa
Industrial Area. The government encourages business and
industry
by offering, among other things, low-interest loans; free
road,
water, and electrical hookups; subsidized electricity and
water;
land leases at minimal cost; and protective tariffs and
tax
incentives.
The three largest enterprises are the Qatar Fertilizer
Company (Qafco), Qatar Steel Company (Qasco), and Qatar
Petrochemical Company (Qapco). Qafco was established in
1969 and
since 1975 has been owned by OGPC (75 percent) and Norsk
Hydro of
Norway (25 percent). The government took over Qafco's
management
in 1991. The Qafco facility, which uses methane-rich
natural gas
from the Dukhan field as feedstock to produce ammonia and
urea,
has been less affected by periodic drops in oil production
than
plants relying on offshore natural gas. Production
increased
steadily in the 1970s, and a second plant opened in 1979.
Nonetheless, because of a steep decline in world
fertilizer
prices, in 1986 Qafco faced its first operating losses
since
1977, despite record levels of production (660,000 tons of
ammonia and 744,000 tons of urea). In 1990 Qafco produced
710,000
tons of ammonia (down from 714,000 tons in 1989) and
760,000 tons
of urea (down from 778,561 tons in 1989). It had profits
of US$40
million in that year. India and China are Qafco's main
customers.
Qasco was established in 1974 with 70 percent state
ownership. Kobe Steel Company (20 percent) and Tokyo Boeki
(10
percent) of Japan hold the remaining shares. Japanese
companies
initially handled construction, production, marketing, and
export. The Qasco plant, which began producing in 1978,
has
consistently outproduced its 330,000-ton per year design
capacity. Its main products are steel bars used to
reinforce
structural concrete. The plant uses imported iron ore and
local
scrap; its direct reduction and rolling stages are rated
as
highly efficient. Despite high levels of output, lack of
demand
and low prices have contributed to millions of dollars in
losses.
Production levels have risen steadily from the outset,
with
1979 production at 378,544 tons of steel bars. Because of
declines in world steel prices, in 1982 the plant
registered its
first losses despite a 485,000-ton production level. The
mid1980s saw a sharp decline in demand and increased foreign
competition. The company registered a loss of US$13.7
million in
1985. In response to cheaper Japanese and Korean imports,
the
government imposed a 20 percent tariff on bars similar to
those
produced domestically. The plant returned to profitability
in
1988. Qasco took over management of the plant in 1989;
Kobe Steel
Company remained as consultant. In 1990 Qasco produced a
record
565,000 tons of steel bars, up from 556,538 tons in 1989.
Plans
to expand the plant were approved. Saudi Arabia has been
the
principal customer, followed by the UAE and other gulf
countries.
Qapco's petrochemical complex in Umm Said started
production
in 1981 with an annual output of 132,679 tons of ethylene,
well
below its 280,000-ton capacity. The plant also has a
capacity to
produce 140,000 tons of linear low-density polyethylene
(LLDPE)
and small amounts of sulfur and propylene. QGPC holds 84
percent
of the company, and ORKEM of France holds the remaining 16
percent.
Shortages in feedstock caused by troubles in 1982 with
gas
pipelines from the offshore fields caused production to
drop by
one-half. Such difficulties, combined with sluggish sales
in the
early and mid-1980s, contributed to large operating
losses: QR69
million in 1984; QR156 million in 1985; and QR57 million
in 1986.
The end of the decade, however, saw significant
improvement, with
profits of around QR420 million in 1989 and production of
ethylene at 295,000 tons, LLDPE at 181,000 tons, and
sulfur at
52,000 tons.
As a result of the 1989 cabinet reshuffle, the Supreme
Council for Planning (SCP) was formed to coordinate the
diversification of Qatar's economy by, among other things,
encouraging industries linked to the North Field gas
project
(see Oil and Natural Gas
, this ch.). There are plans for a
US$500
million petrochemical complex and also a 240,000-ton per
year
aluminum smelter at Umm Said that will use North Field
gas.
Some industries that are smaller but important
suppliers of
the domestic market include a flour mill and several
cement
companies. The Qatar Flour Mills Company processes flour
and bran
from wheat. It began production in 1969, and output in the
1980s
was 700 tons per day. The Qatar National Cement Company
(QNCC),
owned jointly by the government and private shareholders,
uses
local gypsum in cement production. QNCC was established in
1965
with a production capacity of 100,000 tons per year. By
1982 the
plant had a capacity of 330,000 tons per year. Annual
production
varied as a result of the competition of cheap imports,
and after
achieving an output of 319,740 tons in 1985, production
declined
steadily. Following a low of 160,000 tons in 1988, in 1990
the
plant produced 327,000 tons of cement in 1990.
Data as of January 1993
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