Full Speed Ahead - Developing the Middle East’s Transport Infrastructure
Published on Aug 4th, 2009 by internetcont in Press with
The transport sector is one of the Middle East and North Africa’s biggest investment magnets, as governments and their private partners start to turn the region’s often antiquated and under-developed maritime, rail, road and air infrastructure into world-class assets, writes Ian Lewis…
The ambitious nature of these plans is demonstrated in the ports segment, where more than $30 billion worth of projects are currently under way, aimed at capturing a slice of record freight traffic passing through the area. Among the biggest projects are the New Mesaieed Port and Ras Laffan port, both in Qatar; Saudi Arabia’s King Abdullah Economic City Seaport; Abu Dhabi’s Khalifa Port and Industrial Zone; Sirte Port in Libya; and the Tanger Med Port and Industrial Zone in Morocco.
Oman is ploughing considerable investment into its ports in an effort to attract some of the business that currently goes to places such as Dubai and Jeddah. The Duqm port development on the south-eastern coast is the Sultanate’s flagship new development, complementing a number of existing ports, including those at Sohar, Salalah and Muscat, which are all being upgraded.
The Duqm project consists of a new port, replete with two dry docks and a shipbuilding yard and is the core of a wider development, including a multibillion dollar property development, industrial zones, an oil export terminal and a new airport. Dredging and reclamation work, together with the construction of breakwater and jetties, is already under way - and there are plenty of further opportunities for international consortia on the horizon.
In mid-2008, Oman almost doubled its investment in Duqm to OMR700 million ($1.8 billion) from around OMR370 million in an effort to boost the new facility’s attractiveness to shipping lines. The extra finance will fund an increase in the port’s overall capacity and size, making it suitable for super tankers and other large carriers, as well as making it able to accommodate a larger shipbuilding yard in the future. Oman hopes that the lower premiums paid by shipping companies using Duqm, due to its position outside the Persian Gulf, will contribute to its attractiveness as a destination for repairs.
Meanwhile, at the other end of the Gulf, Kuwait has hopes not only of capturing port traffic from its rivals, but also putting itself in prime position to handle trade from a potentially dynamic hinterland. As the political situation in Iraq becomes more tranquil - and with the possibility of greater interaction with Iran in the future - a major port in Kuwait could play a key role in facilitating trade to and from the region. That is part of the thinking behind the construction of Bubiyan port, a new container terminal and deepwater port on Bubiyan, a 530 sq km island located close to the Iraqi port of Umm Qaser.
Work is already under way on the project, which is due for completion in 2010 or shortly after, at which point it should have a capacity of around 2.5 million containers a year. Kuwait is also upgrading the country’s existing main commercial ports, Shuwaikh and Shuaiba, both of which are slated to be privatised. However, doubts remain over the completion timetable for many of the region’s ports, as the economic downturn curtails global freight traffic and throws into question the rationale for building some of them.
Low-cost airlines seize opportunities
In the air sector, rapid growth in passenger numbers has helped create a number of new airlines and fuelled expansion of scores of airports around the Gulf, with over $45 billion worth of new airport projects under way across the region, including Dubai’s $10 billion Al Maktoum International Airport, due for completion in 2015, the new Doha International Airport in Qatar and the redevelopment of Abu Dhabi International Airport. The Middle East and North Africa region has been gaining an average of around 30 million air passengers a year in recent years, with traffic growth of 18.1 per cent in 2007, according to the International Air Transport Association (IATA). That rate of expansion is unlikely to be sustained during the present economic downturn, but the sector is likely to be buoyant in the longer term - and is one of the industries in the region that benefits from falling oil prices through cheaper aviation fuel.
The region’s fast-expanding low-cost airlines will be hoping that they can prosper at a time when potential customers’ belts are being tightened. Liberalisation of the region’s air sector has led to the creation of several new carriers, such as Kuwait’s Jazeera Airways, Saudi Arabia’s Nas Air and Sama, and Sharjah-based Air Arabia.
Their number has been swelled by the launch of Wataniya Airways, a Kuwait-based independent carrier, operating from early 2009. Wataniya will mainly serve the short-haul leisure and business markets initially, offering both business class and regular class seats. Seventy per cent of the airline’s shares were floated in a public offering in 2006.
Meanwhile, a number of state-owned airlines have been privatised or part-privatised over the last eight years, often with reinvigorating results. In January 2008, struggling Yemeni national carrier Yemenia entered into a joint venture with the Islamic Corporation for the Development of the Private Sector, part of the Islamic Development Bank group, to launch Felix Airways, with initial capital of $80 million. Felix took over the domestic operations of Yemenia as well as some regional routes, with a pledge to offer better services in terms of schedules, flight frequencies, pricing and improved operating efficiency.
Rail spending spree
The Gulf region’s rail potential has been rather neglected over recent decades, but has been getting a lot more attention recently, with tens of billions of dollars worth of projects under construction or in the pipeline.
Saudi Arabia has by far the most sophisticated and heavily used existing rail network in the Gulf region, already covering more than 1,000km. A further 1,800km north-south line is under construction, running from close to the Jordanian border to Ras al-Zour on the Gulf. Due to open in late 2010, the line will link bauxite and phosphate mines in the north with processing plants on the coast. New east-west passenger and freight lines covering around 500km each are also planned. Meanwhile, the Saudi Rail Organisation has also issued tenders for the first construction contract on the $6 billion Haramain high-speed rail link between Mecca and Medina, designed to facilitate travel between the two cities.
A number of cities around the Gulf are developing their own metro systems, of which Dubai’s is one of the best known and one of the most advanced in terms of construction. When it becomes fully operational, the Dubai Metro is expected to carry up to 1.2 million passengers a day, while live testing has started on the Middle East’s first monorail, which serves Palm Jumeirah, one of the city’s new artificial islands.
In August 2008, Abu Dhabi revealed plans to create its own integrated mass transit system, based around trams, underground metro lines and high-speed overground rail. Talks are also in progress to develop a rail network covering the whole of the UAE.
In Oman, feasibility studies are being carried out for a 200km rail link, initially connecting Sohar to Birka in north Muscat, with a later extension to Duqm planned. Qatar also has plans to develop a national rail network, working with Deutsche Bahn to draw up proposals. In North Africa, Algeria has been most active in the sector, with plans nearing fruition for a $1.5 billion, 1,200km east-west line and the new Algiers metro due to open in mid-2009. And in Jordan, bids have been invited for the contract to design and build a 26km light railway between the capital Amman and the country’s second largest city, Zarqa.
Finally, ambitious Gulf Cooperation Council plans to build a $14 billion, 1,500km coastal rail link stretching from Kuwait to Oman, with links to Iraq, Iran and beyond, are still in motion. A feasibility study was submitted by Canada’s Canarail, France’s Systra and Lebanese consultancy Khatib & Alami in September 2008 and was approved by the region’s transport ministers in October. That brings the project considerably closer to getting the green light from regional leaders.
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