Jeddah plans $31bn airport expansion
29 May 2023
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Jeddah Airports Company (Jedco) plans to transform King Abdulaziz International airport (KAIA) into one of the world’s largest airports with a SR115bn ($31bn) expansion plan that will increase its capacity to 114 million passengers a year.
The largest components of the plan cover the design and expansion of Terminal 1 and the construction of a new passenger terminal to be called Terminal 2.
The expected completion date for the expansion project is 2031.
Terminal plans
The Terminal 1 project comprises basic infrastructure and enabling works, the installation of new gates, air bridges and parking aprons, the extension of the automatic people mover, new baggage conveyor systems and lounges, with the goal of increasing annual passenger capacity by 15 million.
Work on the multibillion-dollar scheme is scheduled to start this year, with completion targeted for 2026.
The Terminal 2 project aims to increase the airport’s total capacity to 114 million passengers a year, almost tripling the airport’s 40 million limit today.
Due to start in 2026 and end by 2031, the project will involve constructing a completely new terminal building with dozens of gates, new taxiways, aprons, roads, utilities, and baggage handling and other software systems. It is likely to be worth in excess of $10bn to build.
Jedco is also planning to construct a fourth runway starting in 2025 and completing by 2029 to cope with the increased traffic. Due to space limitations, the new runway will require substantive infrastructure relocation work to accommodate it.
Passenger traffic-focused developments are not the only element of the plan. As part of growing the airport’s commercial proposition, the client is also due to start developing a new logistics area later this year.
Covering more than 3 square kilometres, the facility will house new customs and service buildings as well as several leasable warehouses for the private sector. Construction of the facilities will be implemented in phases with an ultimate scheduled completion date of 2029.
Concurrently, Jedco is building a new Hajj and Umrah terminal. Pilgrims comprise a large portion of passenger traffic, and the new arrivals and departures hall for budget airlines will be able to handle 15 million passengers a year. The project is expected to be completed by 2025.
Another project starting this year is the construction of a new baggage handling facility to expand the airport’s existing capacity. The building will be located next to Terminal 1 and will be integrated with the existing conveyor belt systems.
Passenger demand
The project investment programme is a result of Jedco’s forecast that annual demand will reach 114 million passengers by 2030. Of this figure, the authority estimates 51 million will come from Saudi Arabian Airlines, 21 million from international airlines, and 13 million and 12 million from budget airlines Flynas and Flyadeal, respectively.
The forecast and plans were created in conjunction with key drivers of future passenger demand in the Mecca and Jeddah region, including gigaproject real estate developers Roshn and Uptown Jeddah, air cargo handler Saudi Logistics Services (SAL), and the General Civil Aviation Authority (Gaca) with its subsidiary Matarat Holding. Engineering firms Atkins, Mace and DGJ also inputted into the process. The three companies are the consultants on the capital projects investment plan.
KAIA has three operational terminals. Opened in 2018, Terminal 1 is one of the world’s largest passenger terminals, and caters primarily for the state carrier and domestic flights. The North Terminal handles international airlines, while the Hajj Terminal is dedicated to pilgrim traffic.
Construction work on KAIA has been a key driver of airport-building activity in Saudi Arabia in the past. In 2010, there were over $7bn of contract awards for work at the airport, marking the most active year for airport construction activity on record, according to regional projects tracker MEED Projects.
There are other major airport projects planned in Saudi Arabia. In November, Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz al-Saud announced the masterplan for King Salman International airport in Riyadh. If completed on time in 2030, it will become the largest airport in the world in terms of passenger capacity.
The airport aims to accommodate up to 120 million passengers by 2030 and 185 million by 2050. For cargo, the goal is to process 3.5 million tonnes a year by 2050.
Neom airport
Another major airport is planned for Neom. US firm Aecom confirmed on 22 March that it had been awarded a contract to provide project management consultancy (PMC) services for the new airport project.
The airport will be inland, close to the Tabuk end of the 170-kilometre-long Line development. Neom International airport is separate from the Neom Bay airport, which started receiving commercial flights in 2019.
Although not confirmed, it is understood that the first phase of the airport will have the capacity to handle 25 million passengers a year. A second phase could take the capacity up to 50 million passengers a year. There is an aspiration for the airport to become the largest in the world, with a capacity of 100 million passengers a year.
Regional airports
Smaller domestic airports are also being developed. In March, Matarat signed a three-year contract with France’s Egis Group to provide technical support and project management services for 26 regional airports.
The contract aims to establish phased project management portals, update airport project management policies and procedures, and provide technical support for planning and designing.
The contract also involves following up on the implementation of capital projects with Matarat subsidiaries, including Riyadh Airports Company, Jeddah Airports, Dammam Airports and Cluster2.
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According to the company, the plant will have a capacity of 500 million litres a day, equivalent to supplying 2 million people with drinkable water, and has a budget of around $500m (€475m).
MEED previously reported that the integrated facility’s water desalination package will have a capacity of 110 million imperial gallons a day (MIGD), while the power generation plant will have the capacity to generate 2,415MW of electricity.
The contract Acciona won is part of the $2.8bn overall engineering, procurement and construction (EPC) package of the Facility E IWPP, which South Korea’s Samsung C&T will implement.
Japan's Sumitomo Corporation leads a consortium that will develop and operate the Facility E IWPP. The team includes fellow Japanese utility developer Shikoku Electric, Seoul-headquartered Korea Overseas Infrastructure & Urban Development Corporation (KIND) and Korea Southern Power Company (Kospo).
The total project cost is roughly $3.7bn.
Japan’s Mitsubishi Power will supply the gas turbines for the power plant.
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According to Sumitomo, the equity distribution between the project company shareholders is:
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MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2029.
According to Acciona, Qatar achieved its first milestone in reverse osmosis technology at its Ras Abu Fontas 3 plant, with a capacity of 165,000 cubic metres a day (cm/d).
It is understood that Acciona also built the Umm Al-Houl 1 and 2 desalination plants in Doha, which each have a production capacity of 284,000 cm/d.
The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.
Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.
Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea’s Samsung C&T was the EPC contractor.
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GCC grows stronger together
5 December 2024
Commentary
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EditorRead the December 2024 edition of MEED Business Review
The 2020s have so far been a tumultuous decade, with ongoing conflicts in the Levant and Ukraine still dominating the global news cycle. The decade began with the Covid-19 pandemic battering economies, and with many nations struggling to recover, populist governments with protectionist policies have shunned globalisation.
The decline of US-led globalisation has coincided with the rise of China as the world’s largest economy, and over the past decade Beijing has begun to assert itself more actively on the international stage with its Belt and Road Initiative.
At the same time, climate change has become increasingly difficult to deny.
As the new world order establishes itself, it poses challenges and opportunities for the GCC. Complex issues will not be resolved quickly, and the GCC has chosen to confront them together. After signing the Al-Ula Accords in January 2021, there has been a renewed sense of togetherness across the GCC that has manifested itself in several important ways.
Simply exporting oil from a port to international markets no longer works
Politically, the GCC has more weight on the international stage if it acts together. Economically, as the GCC diversifies away from exporting hydrocarbons with the development of new industries and services, it will need to be better integrated. Simply exporting oil from a port to international markets no longer works. The GCC economies of the future need to be intertwined with their neighbours and global supply chains.
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Must-read sections in the December 2024 issue of MEED Business Review include:
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Mubadala acquires stake in $17bn US healthcare platform
5 December 2024
Abu Dhabi-based Mubadala Investment Company has agreed to purchase a minority stake in Zelis, a US-based healthcare technology solutions provider.
Mubadala Investment Company is the lead investor, alongside a group of investors including Norwest and HarbourVest, both US-headquartered private equity firms.
Parthenon and Bain Capital remain the majority owners of Zelis.
Mina Hamoodi, head of Healthcare Investments at Mubadala, said the deal is “the largest investment that we have made in the healthcare space”.
In October, Bloomberg reported that Mubadala was nearing a deal to buy a minority stake in the private equity-backed company, reportedly valued at $17bn at the time.
“Zelis is helping to streamline the US healthcare financial experience, which is complex and in need of technology-driven solutions that can unlock efficiencies and create better outcomes for everyone engaged in the care journey,” said Hamoodi.
Zelis is “modernising the healthcare financial experience” by providing a connected platform that bridges the gaps and aligns interests across payers, providers and healthcare consumers.
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Evercore served as financial adviser and Akin Gump Strauss Hauer & Feld acted as legal counsel to Mubadala.
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Photo credit: PIxabay (for illustrative purposes only)
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Saudi Arabia seeks Taif airport PPP interest
5 December 2024
Saudi Arabia’s Matarat Holding, through the National Centre for Privatisation & PPP (NCP), has invited firms to express interest in bidding for a contract to develop and operate a new international airport in Taif in the country’s Mecca province.
The new Taif International airport will be located 21 kilometres southeast of the existing Taif airport, with a capacity to accommodate 2.5 million passengers by 2030.
Matarat and NCP expect to receive expressions of interest from companies by 10 January 2025.
The invitation is open to interested private sector entities via a public-private partnership (PPP) model under a 30-year build-transfer-operate (BTO) contract, including the construction period.
The BTO project scope includes the new airport. The proposed design features a runway with a full-length parallel taxiway connecting to a single commercial apron.
The scope includes facility buildings, utility networks, car parks and access roads, as well as provisions for additional expansions to meet future subsystem requirements.
The new Taif International airport is expected to meet the projected increase in demand by 2055 and contribute to the economic development of Taif city and its surrounding areas, in line with the kingdom’s National Aviation Strategy.
It is also expected to meet the needs of Umrah pilgrims as a viable alternative within the region’s multi-airport system, which includes King Abdulaziz Airport in Jeddah, Prince Mohammed Bin Abdulaziz Airport in Medina and Prince Abdulmohsen Bin Abdulaziz Airport in Yanbu.
Other airport PPPs
Three other airports, in addition to the Taif International project, comprise the first stage of Saudi Arabia’s latest plan to modernise and privatise its international and domestic airports.
The other planned airport PPP schemes are in Abha, Hail and Qassim.
Matarat and NCP recently prequalified three consortiums and one company that can bid for a contract to develop and operate a new passenger terminal building and related facilities at Abha International airport.
The companies that have been prequalified to bid for the Abha airport PPP contract are:
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- VI Asyad DAA: Vision International Investment Company (local) / Asyad Holding (local) / DAA International (Ireland)
Located in Asir province, the first phase of the Abha International airport PPP project is set for completion in 2028. It will increase the airport terminal area from 10,500 square metres (sq m) to 65,000 sq m.
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The scope also includes support facilities such as an electrical substation expansion and a new sewage treatment plant.
The transaction advisory team for the client on the Abha airport PPP scheme comprises UK-headquartered Deloitte and Ashurst as financial and legal advisers, respectively, and ALG as technical adviser.
Previous tenders
The Taif, Hail and Qassim airport schemes were previously tendered and awarded as PPP projects using a BTO model.
Saudi Arabia’s General Authority of Civil Aviation (Gaca) awarded the contracts to develop four airport PPP projects to two separate consortiums in 2017.
A team of Tukey’s TAV Airports and the local Al-Rajhi Holding Group won the 30-year concession agreement to build, transfer and operate airport passenger terminals in Yanbu, Qassim and Hail.
A second team, comprising Lebanon’s Consolidated Contractors Company, Germany’s Munich Airport International and local firm Asyad Group, won the BTO contract to develop Taif International airport.
However, these projects stalled following the restructuring of the kingdom’s aviation sector.
The latest plan entails transferring the ownership of 35 airports from Gaca to the Public Investment Fund (PIF).
This is in line with transforming Gaca, which previously managed and operated the airports, into a legislator and regulator.
The construction, operation and management work for the airports is being referred to Matarat, prior to being transferred to PIF.
Matarat Holding Company is a subsidiary of Gaca.
Saudi Arabia has already privatised airports, including the $1.2bn Prince Mohammed Bin Abdulaziz International airport in Medina, which was developed as a PPP and opened in 2015.
Related read: Saudi Arabia to issue third national carrier licence
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Oman and Belgium expand hydrogen collaboration
5 December 2024
Hydrogen Oman (Hydrom) and the Belgian Hydrogen Council (BHC) have signed a memorandum of understanding (MoU) to further strengthen their collaboration in green hydrogen.
According to an official statement, the MoU sets the stage for enhanced cooperation across the hydrogen value chain, reflecting the “shared commitment of both nations to advance the global hydrogen economy”.
Signed in the presence of Sultan Haitham bin Tarik, the MOU seeks to align policies, promote knowledge exchange and technological advancements, as well as explore opportunities across hydrogen production, infrastructure, transportation and utilisation.
In 2023, Hyport Duqm, an alliance between Oman’s OQ Alternative Energy and Belgium’s DEME, signed a 47-year project development agreement with Hydrom for a project to produce and export green hydrogen.
This was further supported by the 2023 declaration of intent between Oman’s Ministry of Energy and Minerals and Belgium’s Ministry of Energy to advance hydrogen certification and trade frameworks.
The first joint milestone under the MoU will focus on key areas of collaboration including knowledge sharing, technology development, and infrastructure planning for hydrogen production, shipping, and terminal facilities.
It will also expand on pathways to broader cooperation with other European countries as a part of the MoU promise to address legislative challenges and explore new opportunities for research and development.
Salim bin Nasser Al-Aufi, Oman’s Minister of Energy and Minerals and Chairman of Hydrom, said, “Oman’s potential capacity as a hub for green hydrogen production, combined with Belgium’s role as a promising hydrogen-based industrial hub and strategic connection point to European markets, will strengthen energy security and create a seamless hydrogen supply chain.”
Tom Hautekiet, Belgian Hydrogen Council chairman, noted that Oman’s competitive renewable energy resources and Belgium’s strategic position as a hydrogen hub for Europe will enable “a powerful platform for innovation, investment and growth in the hydrogen economy”.
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