[Changing the Overseas Construction Landscape⑨] Spotting Untapped Markets... The Success Formula of Spanish and Japanese Investment Development Revealed

Ferrovial, which began in mid-20th century Spain as a small subcontractor specializing in track maintenance and railway sleeper projects, has since established itself as a leading infrastructure construction and management company, primarily in North America. The case where Ferrovial led the construction of Ontario's Highway 407 in Canada and secured a 99-year operating right through negotiations with the provincial government is regarded as an iconic moment in the global infrastructure market. This is because it demonstrated that traditional infrastructure can serve as an investment with substantial added value.

This toll road was built to alleviate the heavy traffic of nearby Highway 401, the busiest in North America. When Ferrovial acquired the operating rights from the provincial government, the company developed and implemented the world’s first system that collects tolls using only cameras and electronic devices, without any toll booths.

Ontario Highway 407, completed and operated under a 99-year concession led by the Spanish construction company Ferrovial. It was the world's first to apply a non-stop toll collection system. Ferrovial website

Former Honorary Chairman Rafael del Pino Moreno, the founder of the company, recognized early on that operating a completed road and collecting toll revenues over the long term was much more profitable than taking on one-time payments from construction projects. The company had already been operating toll roads in Spain since the 1970s, accumulating valuable expertise.

The North Field liquefied natural gas (LNG) development project in Qatar, undertaken by Japanese companies and investors in the 1990s, was also a bold initiative that began from scratch. Although a large gas field was discovered in Ras Laffan, a northern desert region about an hour’s drive from Doha, Qatar, very few companies were willing to take the risk, considering the project's low profitability. Extracting and transporting gas from a barren desert with no infrastructure was regarded as an unprofitable venture. At the time, BP, a global oil major reviewing the initial project, withdrew, citing high geopolitical risks and low returns. The Qatari government was also struggling with national debt at the time.

However, major Japanese trading companies Mitsui and Marubeni took a different view. Having recently experienced the oil crisis and facing a need for clean, stable energy sources, they saw opportunity in the challenging environment. They determined it would be possible to construct a liquefaction plant in the middle of the desert and build a vast LNG value chain, connecting it with a fleet of LNG carriers and port infrastructure.

Aerial view of North Field, Qatar. It is considered the world's largest natural gas field by single scale. Qatar Energy website

They overcame the major hurdles of securing funding and buyers through the planning capabilities unique to Japanese general trading companies. They persuaded Japan’s leading electric power and gas companies to sign 25-year long-term purchase agreements. Once buyers were secured, Japanese financial institutions followed suit. During construction, prominent Japanese engineering companies such as Chiyoda participated. Today, the North Field is recognized as the world's largest single gas field, capable of producing in just one day more LNG than all Korean factories, power plants, and homes use in two days.

Dragados, the overseas private investment business arm of Spain’s leading construction company ACS Group, also excels at creating new markets by employing innovative methods and financial structures. In the late 2000s, the company was the first to introduce the "availability payment" model on a road project in southern Florida, United States—a structure in which the private sector finances, constructs, and maintains the road, and the government makes regular payments based on maintenance quality and other benchmarks.

Despite chronic congestion, the state government at the time lacked sufficient funds and expected it would take about 20 years to build the road. However, thanks to Dragados’s proposal, the project was completed in just five years. The company is highly regarded for its know-how in reviving stalled public projects due to budget constraints, and in designing structures that appropriately distribute risks between the public and private sectors.

This content was produced with the assistance of AI translation services.