Huge infrastructure development is required in Jordan to meet the demands of a population that is growing at 2.7 per cent a year - growth that has been inflated by the influx of over 1 million refugees from Syria over the past two years - and to remain competitive as a logistics and trade hub.

With no significant oil production, the challenge facing the kingdom’s infrastructure sector is finance. Economists are forecasting healthy economic growth of about 3.5 per cent in 2014, but without a resolution of the unrest in the wider region, Jordan’s economic strength is vulnerable.

Project finance

The economy is being supported by external funding from the GCC and the West, while Amman is pushing ahead with subsidy reforms to shrink its deficit. The government is also keen to use private sector investment to support infrastructure development and is a keen proponent of public-private partnership (PPP) and build-operate-transfer (BOT) contract models.

Amman is pursuing several ambitious transport projects that it hopes will boost trade and stimulate growth. Three flagship projects are: the expansion of Amman airport; the construction of a multibillion-dollar rail network connecting with Iraq and Saudi Arabia; and the redevelopment of Aqaba port.

Airport expansion

The local Airport International Group (AIG) signed a build-operate-transfer (BOT) deal with the government in 2007 to redevelop Queen Alia airport, 35 kilometres south of Amman. Under the agreement, the airport will revert to public ownership after 25 years. The government will receive 54.4 per cent of the revenues in the first six years of operation and 54.6 per cent for the remainder of the concession.

The first phase of the redevelopment of the airport, costing $750m, was designed to grow capacity to 9 million passengers a year. Phase one was divided into two parts, the first of which was delivered in March 2013, when King Abdullah II inaugurated a new passenger terminal described by Planning Minister Jafar Hassan as “a milestone for Jordan”. The new 103,000-square-metre terminal increased the airport’s capacity to 7 million passengers a year.

The second part involved the demolition of the old terminal and an extension of the concourse. AIG spent a further $100m to redevelop existing facilities during the construction of the new terminal.

Demand grows

Despite doubts that the need for expansion has been compromised by regional instability and a decline in tourist numbers, work is already under way on the second phase of the airport’s development, which will take capacity to about 12 million passengers a year.

Costing more than $100m, the second phase was launched by AIG in January, with delivery set for 2017. When work is completed, daily flight capacity at the airport is expected to increase to 180, from 110 in 2006. The number of destinations connecting to the airport has already risen from 40 in 2006 to 61 in 2012.

Meanwhile, passenger numbers are continuing to grow, partly due to the diversion of travellers from Syria and Lebanon. Passenger throughput rose 14.3 per cent in 2012 to 6.3 million, and steady growth continued in 2013. In the first half of 2014, passenger traffic was up 13 per cent and aircraft movements grew 8.6 per cent, according to AIG. Passenger numbers in June were up 10.5 per cent year-on-year.

Funding difficulties

In contrast, Jordan’s rail ambitions have struggled to come to fruition. Plans for a metro network in Amman are in abeyance, and plans for a light railway between Amman and Zarqa were dropped after the government was unable to secure funding for the project.

The largest proposed rail scheme is a $4.3bn, 897km national freight network with links to neighbouring countries. This involves a 509km north-south line connecting Aqaba port in the south to Amman and Zarqa, a 290km line between Zarqa and Iraq and a 91km connection to Saudi Arabia.

The only part of the project to make progress is in the south. A tender has been launched covering the construction of a 28.5km single-track line between Eshidiya and Maan, and the conversion of the existing Maan-Aqaba line to dual-gauge, including an extension to a new phosphate trans-shipment terminal south of the port city. Tenders are also being drawn up for a new loading station at Eshidiya, an unloading station at Wadi al-Yutm to the northeast of Aqaba, and a linking rail line.

Port projects

The new phosphate terminal was developed by Jordan Phosphate Mines Company (JPMC) under a BOT signed with Aqaba Development Corporation (ADC) and Aqaba Special Economic Zone Authority.

JPMC is also reviewing bids for the rehabilitation and expansion of the industrial port run by Jordan Industrial Port Company (JIPC), a joint venture of JPMC and the local Arab Potash Company. The consortium signed a deal with ADC in 2013 to develop, operate and manage the port.

The work includes the design, financing, construction, operation and management of the port on a BOT basis for 30 years. Construction is due for completion in 2016, enabling JIPC to export diammonium phosphate fertiliser, potash, compound fertilisers and phosphoric acid, and to import raw materials for the manufacturing of fertilisers and derivatives.

Aqaba development

The phosphate terminal and industrial port are part of a broader masterplan for Aqaba that covers the development of an entirely new port. The scheme, which is being developed in three phases spanning several decades, is designed to facilitate increased traffic, including greater trans-shipment volumes. The port will meet local demand, but will also provide a route for shipments to Iraq and Saudi Arabia.

The first phase comprises the construction of a general cargo and roll-on roll-off terminal with capacity of 2 million t/y, a 3 million-t/y grain terminal and a cruise ship terminal. The second phase will add two new 250-metre berths and extend the quay to 1,000 metres. The expanded port will have container capacity of 1.5 million twenty-foot equivalent units a year (TEUs/y).

The port redevelopment also includes building receiving terminals for liquefied natural gas (LNG) and liquefied petroleum gas (LPG). Arcadis is the construction manager on the LNG facility. Construction is under way and completion is set for 2015. Royal Haskoning is the consultant on the LPG project, which is also under construction.

The relocation of Aqaba port will enable the $10bn redevelopment of the coastline for tourism projects.