Abu Dhabi prepares to award Mafraq road project

19 December 2010

Strabag consortium first-ranked bidder for Mafraq-Ghweifat road scheme

Abu Dhabi’s Department of Transport (DoT) is close to naming a preferred bidder on the development of the AED10bn-11bn ($2.72bn-$2.99bn) Mafraq-Ghweifat highway public-private partnership.

Sources close to the project say that the Mafraq Motorway Group, led by Austria’s Strabag, is the first-ranked bidder, with the Irtibaat group, led by Australia’s Macquarie with the local Al-Jaber Group, second ranked.

Mafraq-Ghweifat bidders
Second rankedFirst ranked
Irtibaat ConsortiumMafraq Motorway Group
Macquarie (Australia)Strabag (Austria)
Al Jaber Transport & General Contracting (UAE)Joannou & Paraskevaides (UK)
Transfield Services International (Australia) J&P Avax (Greece)
Odebrecht (Brazil)Saif Bin Darwish (UAE)
Abu Dhabi Commercial BankEgis Projects (France)
Besix (Belgium) 
Source: MEED

The DoT and its advisers have now submitted their recommendations of how to proceed with the project to Abu Dhabi’s Executive Council, which will make the final decision on naming a preferred bidder for the project.

“A recommendation on who should be preferred bidder has been made to the Executive Council and hopefully a decision will be made before the end of the year,” says a source close to the project.

This recommendation is understood to have been made in early December, with the Executive Council then asking for the Department of Finance to review the affordability of the project. The project is now expected to cost AED10-11bn, slightly higher than initial estimates and despite efforts to reduce the cost of the project. About AED1bn of this is attributed to the addition of an Intelligent Transportation System to the project, which will provide real-time information to help improve safety and manage traffic.

A Dubai-based source confirms that the executive council has asked the Department of Finance “for a final check of the economics of the project and its affordability”. How much progress has been made on the project since it was referred back to the Department of Finance is unclear. The source close to the project adds, “We are now just waiting on a decision to come out of the Executive Council.”

Mafraq will really launch PPP infrastructure in the Gulf. It is a groundbreaking transaction

Source at an international bank

If a preferred bidder is not made by the end of 2010, it will mark a year of slow progress on the scheme. Three consortium’s submitted bids to develop the project on 24 December 2009. In September the third bidder on the project, the CCCC-MTD consortium, led by China Communications Construction Company, was left out of clarification meetings with the DoT, although not formally disqualified from the process.

The DoT did not respond to requests to comment on the project.

The project is the first road in the region to be developed on a PPP basis, and is one of several new social infrastructure PPPs planned by various Middle Eastern governments.

The Mafraq scheme and a social housing PPP project in Bahrain, are expected to be pathfinder projects in the Middle East in 2011. If successful, many in the project community expect it to open up a new market for developing schemes, away from the hydrocarbon and power sector projects that tend to dominate the region.

“Mafraq will really launch PPP infrastructure in the Gulf,” says one project financier at an international bank. “It is a groundbreaking transaction, so will take time, but it will make every government in the region look at its own infrastructure plans and how it should procure them.”

The Bahrain housing scheme has the potential to offer governments a private-sector answer to a shortage of low-income housing for nationals.

The social housing scheme is currently at a similar stage to the Mafraq project. Sources close to the project say that a recommendation on a preferred bidder has been made to the government of Bahrain, with presentations made to the Housing Ministry, Economic Development Board and the Finance Ministry. Consultants are now awaiting a government decision on how to proceed.

Two local bidders are in the running for the contract, Al-Moayyed International Group with a price of BD217m ($575m), and Naseej, which bid BD260m, although the two are understood to have lowered their prices in subsequent negotiations with the government.

Dubai’s Roads & Transport Authority (RTA) is also expected to award the first PPP in Dubai in 2011. The RTA is looking to develop a water transport scheme along the coastline of Dubai on a PPP basis (MEED 02:12:10). That project may also prove to be a pathfinder scheme for PPP in Dubai as it will be the first project in the emirate not directly procured by the government.

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