Saudi airport PPP postponed

02 May 2016

Project reached prequalification stage in February 

Saudi Arabia’s General Authority of Civil Aviation (Gaca) has postponed the tender for the design, finance, construction and maintenance of the planned international airport in Taif.

“The project has been postponed for the time being,” a source familiar with the project tells MEED.

The project, which was aiming to become the second full scale airport public-private partnership (PPP), has reached the prequalification stage, with the list of companies qualified to bid expected to be announced in February or March.

The lack of any official announcement from either the Gaca or the International Finance Corporation (IFC), lead transaction adviser for the project, on the prequalified companies between March and April has fuelled speculations that the project has been cancelled.

Taif airport was planned to become the kingdom’s fifth international airport and the second to be developed using a build-transfer-operate (BTO) model, following in the footsteps of Medina’s Prince Mohammed bin Abdulaziz International airport, which entered full operations in June 2015. It was also to become the third airport catering to the hajj and umrah pilgrims in addition to Jeddah’s King Abdulaziz International (KAIA) and Medina airport.

However, some potential bidders have voiced strong reservations on the feasibility of Taif unless Gaca would commit to diverting a certain percentage of passengers from the Jeddah airport to be diverted into the planned new airport.

The scheme can only be successful under the assumption that annual passenger traffic reaches 20 million, where each passenger is charged $3-$4 as airport fee, and each luggage is charged at least 35 cents, according to one contractor. “Without these assumptions, it will be difficult for the investors to achieve profitability even on a 25-30-year period.”

It is unclear if the postponement is directly related to this issue or to the large-scale shift in the kingdom’s project spending strategy due to lower oil revenues, or both.

It is worth noting that the Gaca has said in February that all ongoing modernisation programme across the kingdom’s 27 airports will proceed to schedule, with targeted completion for most of these projects set for 2020.




A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications