JORDAN is preparing a wish-list of construction projects for the October economic summit in Amman which could lead to spending of $10,000 million over a 10-year period. The list that finally emerges will be a modified version of the document presented to the Casablanca conference in October 1994 and will focus on priority projects and enhanced private sector participation (MEED 11:11:94). But, as the planners dream up ambitious ideas for the future, local contractors expect this year to be one of the quietest in recent memory.
That prospect is not as bleak as it sounds. ‘1995 is a year for consultants,’ says Gabi Gildeh of consultants Arabtech Jardaneh. Gildeh points out that a number of major projects are already under way and many more are on the drawing board or awaiting finance.
Two major public sector entities – the Jordan Electricity Authority (JEA) and the Telecommunications Corporation (TCC) – have key expansions which are already making progress. The JEA is close to awarding contracts for the second phase of the Aqaba thermal power station and is evaluating bids for the upgrading of the Aqaba substation. Invitations to bid should be out by the end of March for an upgrade of the Amman south substation; invitations to bid for the interconnection to Syria are due by the end of the year.
The two power distribution companies, Jordan Electric Power Company (Jepco) and Irbid District Electricity Company (Ideco), have expansion plans but need funds, which may be provided by the European Investment Bank (EIB).
The TCC is reviewing bids for the three major elements of its 220,000- line expansion. The privately run mobile telephone network is also due to come into operation by mid-1995. ‘The basic network expansion will satisfy 85 per cent of demand up to 1997/98,’ says TCC assistant director for general development Afram Jamil. TCC’s other priorities are maintenance and minor projects to improve customer service and the efficiency of the existing network. TCC will be concentrating on a review of its masterplan and will not launch any major new activity for 1995/96, according to Jamil.
This year’s capital spending by Jordan’s public sector will be about JD 157 million ($228.2 million), which is little changed from 1994. The government has allocated JD 42 million ($61 million) in the 1995 budget; a further JD 115 million ($167.2 million) is available in foreign loans and grants. Supplementary capital expenditure of JD 390 million ($566.9 million), included in the 1995 budget, will depend entirely on new foreign aid which seems unlikely to materialise.
The public money that is available will be spread around a busy programme of school construction, road building and upgrading and expansion of the water and sewage networks. The Education Ministry’s 10-year school building programme soaks up about JD 40 million ($58.1 million) a year and construction contracts are sized to ensure the maximum possible participation by small local builders.
Road building and maintenance will take a further JD 49 million ($71.2 million). There are 56 projects to execute and contractors have already been prequalified for the largest scheme, the Ras al-Naqb highway in southern Jordan. The Public Works Department has completed preliminary designs for the Sheikh Hussein Bridge in northern Jordan, which will be a second link with Israel, but is still looking for JD 6 million ($8.7 million) to finance the project.
Several other transport projects have been identified. The Shidiyeh and Aqaba Wadi 2 rail links have reached the study stage and a consultancy appointment is expected soon for the Amman to Zerqa light rail link. The Civil Aviation Authority also has plans for a substantial upgrading of airports at Amman, Marqa and Aqaba. All these projects need funding which has yet to be secured.
The Water & Irrigation Ministry will spend about JD 65 million ($94.5 million) for capital projects, mainly for the rehabilitation and expansion of water and sewage systems and treatment plants throughout Jordan. Major new projects coming up in 1995 include the upgrading and expansion of the Greater Amman, Greater Zerqa, Irbid and Souf wastewater networks; expansion and upgrading of the Balqa and Abu Nuseir wastewater treatment plants; and the ECU 12 million ($15.7 million), EU-funded water intervention project which includes water supply schemes in Kerak, Tafileh, and Shobak, and wastewater reuse schemes in Aqaba, Kufranjeh, Ramtha and Madaba.
The chemicals industry will offer some prospects. The Arab Potash Company (APC) is hoping to invite bids for the construction of dikes as part of plans to expand potash production. The company also expects to invite bids for a 50,000-tonne magnesium oxide plant this year. In addition, APC will build a new line to produce technical grade potassium chloride using its own in-house construction crews.
Jordan’s other industrial major, Jordan Phosphate Mines Company, has already reached an advanced stage of construction of two new downstream plants – one for phosphoric acid, the second for compound fertilisers and ammonium phosphates.
Private sector industrial expansion is expected to slow in 1995 as exports to neighbouring markets in Iraq, the West Bank and Israel have yet to develop. Amman-based contractor Ali Krayem says he was working on five factory projects at the same time in 1993, but he does not expect a single factory project to come up this year. Krayem sees the best prospects in quality construction projects including company and bank headquarters, school extensions and hotels. Several new hotels are proposed for Amman and the Dead Sea although the projects are still at an early planning stage.
National Engineering Contracting Company (NECC) managing director Awni Saket expects private building to drop to 1.5 million square metres in 1995, from a record 6 million square metres in 1992. Saket, who is the current president of the Arab Contractors Association, says local contracting companies face the continuing problem of competition from foreign companies. Little has changed over the past 15 years and Saket estimates that about 85 per cent of all large projects are still going to outside companies. There is very little local involvement in the major chemicals, power and irrigation schemes. NECC is active on the installation of oil tanks in Aqaba, the APC salt plant and a major fertiliser plant but only as a subcontractor to a foreign firm.
Tourism could be a boost to the building trade if the current growth continues. The Aqaba Region Authority has ambitious plans for tourism investments of about $500 million and has invited private investors to participate. However, Saket believes that inflated land prices and the absence of basic services will discourage potential investors.
Other hopes that Jordan’s contractors might benefit from reconstruction in the West Bank and Gaza have not been realised either. And, contractors find few grounds for optimism in the current state of relations between the Palestinians, Jordan and Israel. As ever, more money and more progress in the peace process seem essential if Jordan’s contractors are to thrive rather than just survive.