Despite low oil prices, profits rose 11% at Woqod (Qatar Fuel) and its solid performance is continuing with an expanding network of gas stations and flourishing bitumen and burgeoning natural gas businesses. Chairman of the unique fuel distribution company Sheikh Saoud Bin Abdulrahman Al-Thani explains its rising star and commitment to giving back to society with knowledge sharing initiatives and long-term thinking.
The drop in commodities’ prices has had a major impact on the economies of the region. Nevertheless, Qatar seems to stand in a strong position: the economy is still growing, there are still large investments in the energy sector and 50% of the GDP is now coming from the non-hydrocarbon sector. How does this new scenario affect your business?
Your question has two aspects. One pertains to the macroeconomic question, and the other refers to Woqod specifically. The steps that the government has taken in terms of keeping the sustainable growth rate have been successful. I mean, the diversification of the economy has accelerated in recent years where the contribution of the non-oil sector to the gross domestic product (GDP) approached 60%, which makes Qatar less dependent on the oil sector. For more than a decade, we managed to utilize our financial surpluses to build our infrastructure and establish feasible foreign investments for our future generations.
On the other side, the drop of oil prices taking place in the last two years has had a minor impact on Qatar and on the region to a certain extent. However, the conservative and precautionary steps, and the strategies adopted by the government, have resulted in utilizing our available resources more efficiently and productively to ensure our sustainable growth during the coming years. We have huge projects in infrastructure that we will continue to develop. We have the National Vision 2030 and the five-year business plan that the country is committed to. Besides all this, we were honored to host the FIFA World Cup in 2022. All of this helps us to keep engaging.
In terms of Woqod, we are in every single business that the country needs. This includes diesel and gasoline for vehicles, boats and industry, and aviation fuel. The company also trades in bunker fuels, ship-to-ship bunkering, bitumen blending and LPG for cooking and other uses. In addition, we build modern branded service stations across Qatar.
Woqod is a perfect example of how strong Qatar’s economy is, as it grew 11% in terms of profits last year. Regarding management strategies, did this have an impact on the five-year plan for the company? Has it been reshaped?
Our five-year business plan has not changed much despite the drop in oil prices. The only part of the plan affected was exploring international investments outside Qatar. We are now focusing more on the core business and our aims, targets and objectives are to build more gas stations in the State of Qatar. We are targeting 100 petrol stations before the year 2020, and we think that that will be sufficient. If we had more land available, we would be passing that number before the World Cup.
However, we have a broad strategy that we revisited in 2015, and I think we have to move towards building more stations and reducing the traffic around the existing ones. We fear shortages in terms of the availability of gas stations in the State of Qatar. Woqod started with its first station in 2006, and when I took on the chairmanship of the company in 2014, Woqod had 21 stations. Now we have 34 stations in operation and by the end of 2016 we will have 55 gas stations.
We also introduced into our five-year business plan the mobile-station solution, in order to reduce the traffic around the cities of Qatar. This is state-of-the-art technology, dynamic and flexible. It can be fixed in one day and it can be removed in a safe and secure manner. It is very robust, and we started getting excellent feedback from our customers when using this mobile station in rural areas, where we want to reduce the traffic flow towards the city.
So by investing in innovation with a clear management strategy, Woqod will be able to tackle all of the challenges that the upcoming World Cup implies in terms of infrastructure?
Yes, we are preparing to be ready two years before the 2022 deadline. As I said, our main target is 2030 in terms of reaching our goals, but we break it down into five-year periods. Our target is to make sure that every project related to the World Cup that Woqod handles has to be ready before 2020.
How are you working with Ashgal in this regard?
Our relationship with Ashgal, or with the Ministry of Communication and Transportation, is very important. Some organizations like the Ministry of Municipality and Environment assign the lands for Woqod, and Woqod has to coordinate with Ashgal and with the Ministry of Communication and Transportation in order to make sure the roads and service roads are accessible for when the petrol station is built.
In terms of the new project, we are always in coordination with Ashgal in order to facilitate the project with the management team by providing the fueling site and the location inside, rather than bringing the vehicles inside. When it comes to the gas station, we are managing their logistics within the sites themselves. Woqod also provides Ashgal with bitumen 60/70 and modified bitumen (polymer) for road networks and other major projects constructed by Asghal.
You are planning to invest QAR 70 million in Mesaieed, is that correct?
Yes, we are building a new bitumen plant in Mesaieed. As you see, in Qatar most of the growth is coming from infrastructure businesses, because infrastructure has to be completed before the World Cup in 2022. Ashgal has a huge demand for bitumen and though Woqod is not the sole supplier of bitumen, we want the company to be a leader of this in Qatar, and provide a high-quality product.
How does Woqod, as a public company, ensure efficiency and best quality?
Woqod is unique in the region. Woqod is the first publicly owned company whose aim is to distribute hydrocarbon products to be listed in the stock exchange. Normally, the distribution and handling of petrol belongs to governments in this region. His Excellency Abdullah bin Hamad Al-Attiyah broke the tradition when he had the idea of establishing a public fuel distribution and marketing company.
Woqod’s capacity to be dynamic and its profit-seeking nature for investors give us the ability to optimize the business. This can be a successful model within this region; with partial support, it can even release the burden from the government in terms of subsidies.
Having this profit-driven mind, was it a big challenge in the early stages of the company?
First of all, we need to understand that the company’s top priority is providing the right services. Customer satisfaction is very important for us, which is why we work so that our employees receive this direct message, by motivating them, giving them the right training. This is key to achieve the objective of customer satisfaction. At the end of the day, it is all about optimizing the business, improving the performance, finding new tools that will help us balance between the services and the profitability of the company. It is not easy, but the qualified people we hire help us to reach this goal.
You are also working towards other areas, such as human, social and environmental development, working with the Qatar Foundation and Texas A&M, for example, to promote knowledge transfer. Where is Woqod focusing when it comes to these comprehensive areas of development?
We continually endeavor to make positive contributions to our society and environment. As part of our corporate responsibility initiatives, we sponsor many students and programs in Qatar University and Qatar Foundation. Working with research institutions within Qatar Foundation helps us to integrate and absorb new ideas. We support the institutions financially and provide internship programs. We are now reaping the fruits of our collaboration in the form of many Qatari graduates from Qatari institutions that we sponsored and they will be accommodated within Woqod. Certainly they will transfer the knowledge towards our company.
When it comes to economics, our focus is to make our growth steady for the benefits of our shareholders and society. This will be reflected in maximizing our profit and ensure a good return for our investors, which is very important to us. To achieve these objectives, we are diversifying some of our investment portfolios. We are also exploring and feasible investment opportunity abroad.
In terms of environment, we try to introduce new innovation technologies. We are trying to introduce CNG—compressed natural gas—which LNG uses as a source of fuel. This will reduce diesel demand and it will help us use what Qatar promotes as a cleaner energy. We are studying the way to implement this with our major shareholder.
We are also using a number of recycling systems in our stations. Instead of disposing of the water, we recycle and use it in the same station. Moreover, we are trying to introduce other ways that will help us improve the environment, such as a lubricant for engines to have a smaller carbon footprint from the use of cars.
Regarding social and cultural contribution, we encourage our employees to participate in cultural activities within the company from time to time. We celebrate national holidays together and we promote Qatar’s culture. We support institutions such as schools, charities with emphasis on the people with special needs. Woqod also supports a number of exhibitions, seminars and sport activities.
You are now in charge of this company, following His Excellency Abdullah Bin Hamad Al-Attiyah—a person that had major impact in the country, as he was the architect of the energy sector in Qatar. What is the new stage for Woqod? How are you planning on building on what he did?
We started from where he ended. When His Excellency Al-Attiyah left Woqod, the company was one of the top companies in Qatar and in an enviable financial position. The main challenge was to keep the growth steady and maintain our customer focus.
In the next five years, we will continue with our strategy by building more gas stations locally and providing the right services to our customers. We are also exploring other areas to expand our business by leveraging our strong financial position.
How important is it for you as a citizen and for the country to host the 2022 FIFA World Cup?
It has different meanings for us. First of all, we Qataris need to know who Qataris are, what Qatar is, how we built Qatar. We are a small population and a small country. No one expected that such a small nation in terms of size would hold such a big event. We have a challenge to prove ourselves and to the rest of the world and to show the right image of Qatar through our hospitality, friendship and humbleness.
Qatar has stated its political position very well, by helping other countries in political disputes. Economically, we are extending our help to many nations and organizations. Qataris are friendly, always smiling and supportive.
In terms of Arab countries, all of them want Qatar to be hosting a successful World Cup. This will convey the right message that Arabs have the capability to compete with other developed countries, like Germany, the US, and Argentina. Arabs are able to compete with other regions like Europe and America in hosting such a reputable championship.
Last year, the US-Qatar Economic and Investment Dialogue took place, and the diplomatic relationship’s strengthening has also improved the economy. What opportunities do you see in terms of partnerships and working together with US companies?
We are open-minded. We have a very successful history with American companies in and outside Qatar. We have partnerships with American companies outside Qatar. We have many international consultants; some of them are US companies. We are using the latest technology in Woqod, which is produced by US companies. So, there is a good relationship between Woqod and American institutions. This relationship is long lasting and will continue to grow.