30 July 1999

THE 1998 oil price crash is casting a long shadow over the Bahraini construction sector. Government-funded projects remain at a premium, although the willingness of regional aid agencies such as the Kuwait-based Arab Fund for Economic & Social Development and the Abu Dhabi Development Fund to extend finance has ensured that some priority projects are moving ahead. The hope among contractors is that a sustained period of higher oil prices will enable the government to loosen the purse strings next year, a move that would also help stimulate depressed private sector investment.

Despite its substantial industrial base and growing private sector, public- funded projects in Bahrain are still the most important source of work for contractors, with the Works & Agriculture Ministry and the Ministry of Electricity & Water (MEW) being the largest clients. The biggest project on the drawing board is the estimated BD 50 million ($131.6 million) infrastructure package for the new port and industrial area at Hidd. The infrastructure works, expected to be issued for bid in late 1999, will be the second phase of the BD 270 million ($710.5 million) Hidd programme planned by the Finance & National Economy Ministry and being handled by the Works & Agriculture Ministry. The first phase of the reclamation work involves the dredging of 68 million cubic metres of land and is being carried out by Royal Boskalis Westminster of the Netherlands.

The Works & Agriculture Ministry is also finalising the prequalification list for the construction of the 404-metre Sheikh Khalifa Bin Sulman causeway, for which the UK's Hyder Consulting is consultant. The new bridge, estimated to cost BD 10 million ($26 million), will link Hidd, on Muharraq island, to Manama.

In the wastewater sector, bids are due to be returned in mid-August for package three, the upgrade of the tertiary treatment plant, on the Tubli sewerage project. A further 12 packages will be tendered on Tubli, for which the local/Lebanese ACE Almoayed Consulting Engineers is consultant.

MEW's programme to upgrade its power and desalination infrastructure will also provide opportunities for civil contractors. It is due to issue tender documents by the end of the year for the civils package on the estimated $80 million project to install six new 66-kV substations. Additional work will come from the $50 million rehabilitation of the Sitra power and desalination plant, which is out to tender to international contractors.

In the industrial sector, all eyes will be on Aluminium Bahrain (Alba) and Bahrain Petroleum Company (Bapco). At least four more subcontract packages are still to be awarded by Germany's KTI Mannesmann on Alba's $400 million coke calcinating project. Alba has also started preparatory work for a $1,000 million expansion of its smelter, although it will be at least 12 months before the project's engineering, procurement and construction (EPC) contract is tendered. Bapco is working to a similar timetable for its $400 million low-sulphur diesel project at the 250,000-barrel-a-day Sitra refinery. In early May, Bechtel was appointed the front end engineering and design contractor.

Elsewhere, Bahrain International Airport Development Company is looking to tender an estimated $80 million contract in late September for the construction of a new hangar, workshops and a VIP terminal. The new hangar will be leased to Gamco Bahrain, a 51:49 joint venture between Abu Dhabi- based Gulf Air Maintenance Company (Gamco) and Bahrain Airport Services.

In the private sector, tender documents are expected to be issued by late 1999 for the construction of an estimated BD 6 million ($15.8 million), 10-storey building for Citibank and a four-storey building for Investcorp. Designs for both projects are being prepared by the local Mohammed Salahuddin Consulting Engineering Bureau. On a grander scale, plans have resurfaced for a $70 million, 200-room hotel development. To be built on a 120,000- square-metre plot of land on the manmade Lulu Island, the five-star beach resort hotel is being developed by a joint venture of the local EBH Holdings and India's Oberoi Group.

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