Transport project stoppages occur in North Africa

07 March 2011

While the risk to the majority of transport projects in the Gulf states is low, schemes under way in Egypt, Libya and Tunisia to improve road, rail and airport infrastructure are experiencing delays

The political protests sweeping across the region have derailed several major transport schemes. With North Africa the centre of the unrest, it is no surprise that most of the disruption to project activity has occurred in this area.

According to regional projects tracker MEED Projects, more than $10bn-worth of transport schemes were under way during February in Libya, the scene of the most violent uprising. Major projects include the expansion of three airports and construction of a high-speed railway along Libya’s coast. Companies involved with these schemes include Russian Railways, Germany’s Dorsch Afrique, France’s Aeroports de Paris, Turkey’s TAV Construction and Austria’s Strabag.

Given the instability in Libya at present …, it is impossible to say when these schemes might resume

Staff from Dorsch Afrique, which was working on the third phase of the railway, have left the country claiming a force majeure. Workers employed by TAV have been evacuated from the projects at Tripoli and Sebha International airports and construction activity at Benghazi International airport is also likely to have stalled. Given the instability in Libya at present and the uncertainty over its future, it is impossible to say when these schemes might resume.

Transport set-backs expected

In Tunisia, there are more than $4bn-worth of transport projects planned or under way, according to MEED Projects. The major schemes include a $2bn rapid rail network and a tramway in Tunis. Both are likely to face set-backs because of the recent political upheaval. Construction began on two new lines of the tram project in 2010 and the expected completion date of 2013 could well be delayed by disruptions.

In light of the current events, things have slowed down [in the Gulf], but this is a temporary glitch

Ala Ghanem, Invensys Rail Group

The rapid rail network is planned to link Tunis to the town of Borj Cedria and forms the first phase of a five-line high-speed railway network that will connect Tunis to its suburbs. France’s Alstom submitted a technical offer to Tunisian Railways in January 2010 for the construction of two new lines running 18 kilometres on Tunis’ high-speed railway. Alstom leads a consortium that also comprises two local companies, Bonna-Tunisia and EGMS, and UK-based Thales. The first phase was due to be finished by 2014.

Tunisia is also working on upgrading $370m-worth of roads. The Washington-based World Bank has provided a $60m loan to fund upgrades in the northwest of the country and the African Development Bank has lent $310m for road upgrades across the country.

Further east in Egypt, where protests reached a climax in mid-February resulting in the resignation of President Hosni Mubarak, delays are also occurring. The country has about $4bn-worth of transport projects under way, including the expansion of Cairo’s metro and the renovation of terminal two at Cairo International airport. Work on the first two phases of line three of the metro halted while protests were ongoing, setting the project back slightly. Phase three is already delayed, although this is attributed to financial reasons rather than the revolution.

Public-private-partnership (PPP) schemes in the country have also been thrown into doubt. Five prequalified bidders were expected to submit bids by August for the $1bn Rod el-Farag highway, but this could now be postponed as the PPP Central Unit is seeking to delay tender processes. Egypt had only recently turned to PPP models of financing and legislation was still being finalised. Despite reassurance from the PPP Central Unit, it is not yet clear whether the new administration will continue with such procurement models, although many say there is no reason to believe they would not. Bids for the deal to renovate terminal two at Cairo airport were delayed due to the protests and are now expected to be submitted on 22 March.

Transport projects proceed

Work on key schemes is ongoing in Algeria and Morocco as these countries have seen only limited protests. For Algeria, in particular, this is good news as the country has pledged to spend $30bn on transport projects up until 2013. Morocco has $5.5bn-worth of transport projects under way or planned, none of which has been affected by protests. Workers being pulled out of countries, such as Libya and Tunisia, are likely to be transferred to projects in other countries, which could help speed up development in those markets.

Tensions have also been rising in Iran, where thousands of protesters gathered on 1 March to hold a third demonstration against the regime. Iran has an enormous $63bn-worth of transport projects planned or under way, including the expansion of Tehran’s metro, the construction of eight other metro networks around the country, upgrades to the railway system and modernisation of several domestic airports.

It is difficult to judge accurately what impact the protests have had on transport and infrastructure. Key projects, such as the expansion of Imam Khomeini International airport and the Tehran metro, were delayed in any case due to a lack of financing.

“The unrest in Iran has been very much limited to isolated street protests and the only real disruption has been to the public transport services within Tehran, including buses and the metro network,” says a Tehran-based source. “Development has not been affected by the unrest, mainly because sanctions have had a far bigger impact on the Iranian transport sector than any protests have had.”

Dissuading investors

But the protests could serve to further distance potential investors from entering the Iranian transport market. The Tehran Urban & Suburban Railway Company (TUSRC) is trying to expand the metro system in the capital, but has been hindered by the government’s refusal to offer the financing needed. As a result, the TUSRC now hopes to implement the construction of three new lines on a PPP basis. With the political uncertainty in Iran and the increasingly violent nature of the protests, the TUSRC will find it even more difficult to secure funding.

Elsewhere in the region, Lebanon has no major transport projects ongoing and the $1bn rail upgrade programme in Syria, along with the development of a metro in Damascus, are moving ahead as scheduled. Jordan, too, is relatively calm at present, although its high unemployment figures and rising food prices mean further anti-government protests are possible. Jordan’s key transport projects, namely its $4.3bn freight railway project and the $350m construction of the New Aqaba port, are both still moving ahead, albeit slowly.

Iraq’s new coalition government has ambitious plans to upgrade the country’s transport links. Projects include the $5-7bn expansion of Baghdad International airport, the long-planned $3bn Baghdad metro and the $60bn upgrade of the country’s railway network. These projects have yet to progress far from the drawing board due to a lack of decision-making during the political stalemate in the country that followed inconclusive elections last year. However, some international firms are already working on these schemes, including US-based Leedco Engineers, France’s Alstom and Canada’s Transglobim International.

Compared with North Africa, the risk to projects in the GCC is low, despite the protests that have taken place in Oman and Bahrain.

“North Africa, from Egypt to Morocco, is an uncertain area at the moment,” says Ala Ghanem, regional director for the Middle East, North Africa and Turkey at the UK’s Invensys Rail Group. “But for Gulf projects, the risk is low. In light of the current events, things have slowed down, but this is a temporary glitch.”

Oman has several transport and infrastructure projects under way. Key schemes include the expansion of Muscat and Salalah International airports, the construction of a national railway, and developments at Salalah and Sohar ports. Progress on the railway project has been slow in any case and so is unlikely to be directly affected by the political unrest. Although protests have taken place outside the port of Sohar, most employees returned to work on 1 March.

Bahrain is undertaking a number of transport projects, including the expansion of its airport, which is already behind schedule, and the planned construction of a light railway. Companies were expecting the light rail transit project to move forward imminently, however, this is now unlikely.

Progress in Abu Dhabi

Coincidentally, key projects in Abu Dhabi have surged ahead in recent weeks, with tenders being issued for both the midfield terminal at Abu Dhabi International airport and for the civil engineering contract on the first phase of the $11bn federal railway.

Feasibility studies are also moving ahead for the $7bn Kuwait metro project and the adviser for the $10bn national railway project is expected to be appointed before the end of March. Kuwait is also due to prequalify companies to build a new runway at Kuwait International airport by the end of the month.

The domino effect the protests have had serves to illustrate how important cohesiveness is to the region. While the protesters aim to bring about a better future with improved economic conditions, the disruption to key projects will only hinder development.

Many of the transport projects are intended to improve cross-border links and the movement of freight regionally. Others involve upgrading existing infrastructure that will cement the region’s cities as transport hubs. This will bring job opportunities and economic growth.

It is difficult to judge the eventual outcome of the protests and harder to visualise just how they will affect governments’ plans to develop infrastructure. For now, the priority lies in restoring calm and ushering in a new era of economic growth and political freedom.

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