Bahrain and Saudi Arabia are moving closer to starting the tender process for the second causeway connecting the two countries.
The estimated $3.5bn King Hamad Causeway project will be developed as a public-private partnership.
“We have appointed a transaction adviser and we have finished the study,” said Kamal bin Ahmed Mohammed, Bahrain’s transport and telecommunications minister, in an interview with MEED.
“The causeway is being developed with the Ministry of Transport in Saudi Arabia and the King Fahd Causeway Authority. There is a committee and we meet regularly. There will be a meeting shortly and we have now finished almost everything to confirm that this project is a viable technical project that can be financed by the private sector.
“We think that, based on the current financial model, we can develop this project without any government support.”
The plan is for the project to be funded by tolls. Tolls are already used for the existing King Fahd Causeway.
“A toll will be collected over the concession period with some adjustments. It will pay for the new terminal and the new causeway as well as maintaining the old and new [causeways],” said Mohammed.
In October 2019, the King Fahd Causeway Authority appointed a consortium to provide transaction advisory services. The $8.9m consultancy agreement was signed with a consortium of Netherlands-headquartered KPMG, US-based Aecom and UK-based CMS.
Unlike the existing causeway that is just for cars, the new causeway will be for cars and a train.
“It will be a causeway for cars, but also for the train – cargo and passenger – that is part of the GCC railway project,” said Mohammed.
The existing causeway is approaching full capacity.
“We are building a new causeway because we have 11.5 million cars crossing the border on a yearly basis and the growth has been 6 per cent per annum over the past 10 years,” said Mohammed.
“Even if we have very pessimistic growth in the future, the level of service on the existing causeway will go down, and it will not encourage people to use it.”
The capacity of the existing causeway is being expanded in the interim. In March this year, the King Fahd Causeway Authority signed a memorandum of understanding (MoU) with Saudi Arabia’s Tabadul to implement a smart technology process that has been shown in pilot trials to allow trucks to cross the bridge 12 times faster than before.
The causeway has a significant impact on Bahrain’s economy. Earlier this year, Bahrain’s Chamber of Commerce & Industry said its members expected a $2.9bn increase in spending when the King Fahd Causeway reopened in May after being closed to prevent the spread of Covid-19.
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