THERE was a sense of urgency when the government of Oman and Sea Land of the US signed a memorandum of understanding on 9 May 1996. The two sides agreed to develop jointly a new container terminal near Salalah in a bid to win a significant share of regional transhipment business. Less than a year later, the dredgers are moving in at Port Raysut.

Last year's memorandum was quickly translated into a formal agreement creating Salalah Port Services Company (SPSC) and detailed plans were commissioned from US consultant Han-Padron Associates. Tender documents have been issued and the first contract already awarded.

The aim of all this activity is to take advantage of a predicted rise in demand for transhipment facilities in the region. Larger vessels and growing trade with the economies of the Far East mean that the Middle East will increasingly be a short stop on the way elsewhere.

This is where Salalah, strategically located on the Indian Ocean, hopes to step in and challenge the traditional dominance of Jebel Ali and Jeddah in handling container traffic for the Middle East. Spurring the partners to action was the knowledge that the Yemeni port of Aden, further west at the entrance to the Red Sea, is launching a similar bid to recover its historic role as a major entrepot. SPSC is determined to win the race by becoming operational first.

Tight schedule

Working to a tight schedule, SPSC hopes to have the first two berths ready to receive ships by August 1998. Two more berths will follow in quick succession, bringing total berthing space to 1,200 metres. The masterplan envisages the eventual development of a further six berths, dry dock facilities, a Royal Navy terminal and a possible free trade zone.

Activity has already started and Boskalis Westminster (Oman) has signed the contract for the dredging work. The company will dredge to depths of up to 15.5 metres and will build landfill barriers. A total of about 6.8 million cubic metres of material will be dredged, widening and deepening the approach channel and turning basin.

The dredged material will be used for land reclamation, preparing the site for construction work. Construction bids are due to be submitted on 7 April. Interest has been strong and a total of 16 groups, including local companies, local-foreign joint ventures and international firms have prequalified.

Bidders have been asked to price three alternatives. The first will be for the construction of the 1,200-metre-long quay wall - 20 metres high and made of dense, non-reinforced concrete - and onshore facilities for two berths. Bids will also include prices for the addition of facilities for the third and fourth berths.

The on-shore facilities will be extensive and much of the work is likely to be subcontracted to local firms. The main contractor will be responsible for construction, mechanical and electrical work for maintenance and administration buildings, container repair facilities, storage units for 500 refrigerated containers, a standby power generation facility and sewerage systems. All of this will be built on just 50 hectares of reclaimed land. In addition to construction work, the port will be equipped with post-Panamax cranes, able to make tandem lifts of up to 65 tonnes.

The outcome of all this endeavour will be the transformation of the small harbour of Raysut into a state of the art transhipment port. It will be able to handle the world's largest ships with capacities of 6,500 twenty- foot equivalent units (TEUs). The first four berths will have a total handling capacity of 2 million TEUs a year.

This ambitious project combines substantial state funding with private money. The total cost of dredging and infrastructure for the first four berths is estimated at $128.7 million and is to come directly from the government. SPSC, which unites Sea Land, the government and private investors, is to provide an investment of $140 million for container handling equipment and other ancillary facilities. SPSC will also incorporate Denmark's Maersk and a public stake could be floated on the Muscat Securities Market (see Oman). When all is up and running Sea Land will manage the port under a 30-year concession agreement.