Momentum builds from Aden

22 March 1996

The return of political stability and the beginning of an economic reform programme have prompted a revival of Yemen's construction sector. International assistance has resumed following the hiatus caused by the 1994 civil war, and the beginning of an economic reform programme has boosted confidence in the local economy Plans for the Aden container port and free zone has made rapid progress since the Yemen Free Trade Zone Public Authority appointed a consortium to develop the scheme at the end of November. 'The people of Aden, who have wondered whether the programme is real or not, will see the first physical signs of construction in the coming weeks,' says William Tolbert, president of the US' Meneren Corporation.

which is managing implementation of the overall scheme. 'They will feel the momentum build up very quickly.' Some changes have been made to the membership of the consortium since November. P&O Steamship Lines, one of the original participants, has pulled out. It has been replaced by European Container Terminals, which operates Rotterdam port, and ICTSI, operator of Manila port. 'Together they represent both the low-cost, labour-intensive and highend, state-of-the-art ends of the spectrum' says Tolbert.

A major regional shipping company has agreed to participate as the anchor shipping company at the port The identity of the company has yet to be revealed. The Dubaibased GID Gulf Group helped put together the new members of the consortium. All four will take an equity stake in the project.

The entire free port development will be operated under the umbrella of a new offshore company to be called Yemen Investment & Development International, which will be the concession holder. Programme offices were due to be set up in Dubai by mid-March. A new local company is under formation which will contribute $10 million, or 20 per cent of the initial equity of the scheme. The company will be open to public subscription.

Detailed discussions about finance for the scheme are under way. A financial adviser was expected to be appointed before the end of March. Finance is also expected to come from the international Finance Corporation.

The new port operators have also completed a study covering privatisation of the existing port at Maalla. Formal proposals to operate the old port were submitted in early March 'The port will he used initially as a training area and to build traffic through Aden,' says Tolbert. 'It will also build confidence in our ability to handle traffic.' The consortium is focusing on development of the container terminal to ensure that revenue generation will begin as soon as possible. The facilities will have a handling capacity of 300,000 20 foot equivalent units a year. A 610-metre-long quay with two container births will be built on Caltex island.

One of the scheme's major hurdles has already been passed. The government has started the relocation of people living on the northern part of Caltex island, where the port will be built. Landowners are being compensated and squatters moved on. The consortium has appointed the US' Fluor Daniel as technical project n'tanager for the construction of the new container terminal on Caltex island. Floor has completed site assessments and a technical review of the designs. The tender has been issued for geotechnical studies, which will clear the way for the necessary dredging work The tenders for dredging the channel to a depth of 14 metres are under preperation They are due to be issued in the third quarter of 1996, with construction of the terminal scheduled to begin by the end of the year. The UK's Haicrow International Partnership is negotiating with the consortium to participate in the design work. A total of $113 million will be invested in the port.

The other construction projects in the scheme are:

Industrial area - work is under way to clear the 1,350 hectares of land allocated for the development of export-oriented industries. US consortium member Alliance Development Corporation will participate, either as the main investor or as a consultant. The total investment is $57 million

Aden International Airport - upgrading the airport at Khormaksar is part of a second phase of development. It is expected to be worth $80 million. The work will include the modernisation of operation and technical equipment, repair and improvement of runways and buildings and expansion of cargo facilities.

Aden power plant - the second phase also includes the construction of a new oilfired power station. It will be spearheaded by the UK's AES Services. The 150-MW plant will be built either alongside the existing AlHiswa plant or at Little Aden. It will be convertible to natural gas.

World Trade Centre - the final stage of the development will include a $65 million centre comprising 100,000 square metres of office space, 9,300 square metres of exhibition space and upscale housing for local and expatriate businessmen.

Development projects

Outside of the Aden free trade zone, most construction work is related either to the oil industry or to infrastructure development.

Most of the latter is funded by assistance from individual donor countries, or international and regional agencies.

The main focus of international assistance is macroeconomic, dealing with fiscal reform and liberalisation of the economy. In January, donor countries and agencies met in the Hague to approve aid for 1996 worth $500 million. Of this, $350 million was pledged as 'exceptional financing' to support economic and institutional reforms.

However, a total of $150 million was allocated to project work.

The majority of the development projects focus on improving Yemen's water and sewerage infrastructure. In major towns such as Taizz and Sanaa, population growth is putting an impossible strain on water supply and sewerage systems.

The Kuwait-based Arab Fund for Economic & Social Development and the OPEC fund have agreed co-finance of $40 million to upgrade the sewerage system of the capital.

The World Bank is considering finance of $30 million for a scheme in Taizz, which will rehabilitate the water production and distribution network and provide new wastewater collection and disposal facilities Development assistance is also being provided from Germany's Kreditanstaldt fuer Wiederaufbau (KFW). Germany's GITEC Consult is in negotiation with client the National Water & Sanitation Authority about the final designs for a scheme to expand the wastewater system in tour areas of Adlen. GITEC has been working on proposals to build a plant to treat sewage which currently enters the Gulf of Aden unprocessed. The company has been working on proposals to collect the untreated effluent from 24 outfalls and pump it six kilometres to a new 60-hectare treatment plant located to the north of the Aden peninsula and south of Khormaksar airport. Proposals for re-use of the treated effluent include supplying irrigation for nearby agricultural areas and Aden's municipal parks. The scheme also includes upgrading the existing wastewater system and providing 35 new pumping stations. KfW signed a minute of co-operation with the government in December 1994 to provide a DM 30 million ($21 million) loan to finance the scheme. GITEC is in the process of preparing the tender documents. Construction work is expected to begin by the end of the year.

GITEC also prepared the designs and is providing construction supervision on a scheme to improve the water supply system in Hajja and five towns in the Tihama coastal region. Kfw has agreed to provide DM 50 million ($34.5 million), or 85 per cent of project costs. A joint venture of China Road & Bridge Corporation and Germany's J Riepl was awarded the construction contract in December. Known as the provincial towns project. the two-year scheme involves upgrading the water supply systems of Mukha, Zabid, Bait al-Faqih, AlMansuriyya and Bajil. The work includes the insallation of an integrated water network, providing water wells with mechanical and electrical equipment, construction of concrete water tanks and pumping stations. The towns have populations of between 30,000-70,000. In Hajja, the work also involves upgrading the sewerage system and construction of a biological treatment plant. Further towns may be brought into the scheme in future.

The German government is also providing finance for a DM 15 million ($10 million) scheme to reduce water loss in Taizz and Mukalla through improvements to the water distribution network. A further DM 54 million has been allocated to a scheme to modernise the water and sewerage system of Ibb. In Aden, DM 20 million ($13.8 million) has been allocated for a technical training institute which will be the largest in Yemen.

Road infrastructure is receiving less urgent attention. The long-standing scheme to build a road linking Sanaa with the Hadhramaut valley has been shelved. The World Bank, which had been considering finance for the $90 million scheme, has removed the project from its lending programme. However, it has approved a $37 million loan to fund rehabilitation of about 150 kilometres of existing roads.

Yemen is by far the poorest of the states in the Arabian peninsula. Its population of more than 16 million is growing at a rate of 3.7 per cent a year. one of the highest growth rates in the world. While its neighbours on the peninsula have enjoyed the benefits of oil-funded development, it has been left behind. Infant mortality stands at 83 per thousand births, life expectancy at 48.8 years. The situation has been compounded by a series of civil wars. Now, with economic reforms under way and President Saleh appearing increasingly in control, Yemenis are looking forward to a period of political calm and a return to economic growth. The country's modest oil industry is set to be complemented by a new gas scheme being led by Total of France. The hope is that these, and schemes such as the Aden port development, will enable Yemen to close the development gap between it and its neighbours.

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