The Bahrain Infrastructure & Finance Forum 2015
Report on proceedings.
The MEED Bahrain Infrastructure & Finance Forum 2015 was organised by MEED under the patronage of Bahrain’s Ministry of Finance. The event opened with a keynote address by Bahrain’s Minister of Finance HE Shaikh Ahmed Bin Mohammed al-Khalifa.
The forum was organised to investigate the opportunities emerging for local and international business in Bahrain’s plans to accelerate investment in essential infrastructure, housing and commercial real estate.
MEED estimates that about $25bn worth of major projects are under way or planned in Bahrain. This constitutes the largest potential programme of capital investment in the kingdom’s history.
It encompasses some of the most exciting projects in the region including the proposed railway network; the new Saudi-Bahrain causeway; an unprecedented plan to invest in healthcare facilities; plans to expand Bahrain Airport; a challenging road investment programme; Bahrain’s treated sewage effluent reuse initiative and a real estate and hospitality asset development plan.
The conference also investigated how Bahrain will finance this investment programme, a challenge that has been made more testing by the sharp fall in oil prices since the summer.
The conference’s sponsor was Sulb Company.
Opening keynote address
HE Shaikh Ahmed Bin Mohammed al-Khalifa, Minister of Finance
HE Shaikh Ahmed Bin Mohammed al-Khalifa said that more collaboration is needed to ensure the delivery of major infrastructure projects in Bahrain.
“In order to ensure these projects are completed we need collaboration,” Shaikh Ahmed said. “The teams must be ready and able to face and overcome the obstacles. They must be individually and collectively strong.”
MEED’s forecast of project trends
Sari al-Abdulrazzak, Head, MEED Insight
Sari al-Abdulrazzak said that there is evidence of a quickening of investment in projects in Bahrain. He forecast that the value of projects awarded in the kingdom rose to $2.4bn in 2014 and this will rise to $2.5bn in 2015. A total of more than $24bn worth of projects are scheduled in 2015-21.
Transport Infrastructure: Bahrain’s latest land transport initiatives
HE Maryam Jam’an, Undersecretary for Land Transport, Ministry of Transport
Undersecretary for land transport at the Ministry of Transport Maryam Jam’an said that the Bahrain government plans to start a feasibility study into the possibility of developing a light rail network for the kingdom this year.
She also said that the feasibility study into the second Bahrain-Saudi Arabia causeway should be completed by the middle of 2015 and that the kingdom’s new bus system will be fully operational in August 2015.
“Detailed feasibility preliminary design is to commence later this year,” Jam’an said about the light rail plan.
She said that tentative plans call for 22 kilometres of elevated double track with 19 stations and initial capacity to handle 8,000 passengers. There will be built-in flexibility to allow expansion. The plans call for the light rail system to be completed in 2022.
Jam’an said Bahrain is now prioritising efforts to improve and expand the public transport system, increase the efficiency of the road network and build regional and international connectivity.
Jam’an said the new traffic law came into force in February. This introduces stiff penalties, including imprisonment, for jumping a red light and driving without a seatbelt.
The new bus network operator took over the bus system in February and operations started on 1 April. A system comprising 141 buses that will provide services to 77 per cent of the population should be fully operational in August, Jam’an said. Work has started to increase the number of bus stops 900 from 400 at present.
“We have a vision to develop park-and-ride services, new bus terminals plus bus rapid transit routes,” Jam’an said.
Jam’an said the plan to build a new causeway between Bahrain and Saudi Arabia calls for the project to be developed in phases.
“Phase one will comprise a 20km causeway between Saudi Arabia and Bahrain including a station and a freight yard on reclaimed land to the north-west of Muharraq,” Jam’an said. The feasibility study will examine two possible alignments and whether the new causeway will be for railway only or will also have a road. It is to be called the King Hamad Causeway.
Jam’an said the landing point for the GCC railway is planned to have a multimodal freight handling area that will be integrated with the bus network and the urban transport system. She said that whether there will be an extension of the railway into Bahrain is yet to be decided. No final decision has been made about whether the second causeway will be procured by the King Fahd Causeway Authority or a new body.
“We are looking at going forward to funding and to engaging infrastructure service providers,” Jam’an said. “We are looking for rolling stock and system providers. And we are looking for train operating companies to come and operate the network once the infrastructure is there. There will also be development opportunities at stations.”
Healthcare: Bahrain’s long-term healthcare development plans
Dr Waleed Khalifa al-Manea
Assistant Undersecretary for Hospitals, Ministry of Health
Dr Waleed Khalifa al-Manea said the major healthcare challenges are increasing life expectancy, the growing population and the increase in the number of young people.
Bahrain’s population is now 1.2 million. About 27 per cent have dependent children. Life expectancy is 75.3 years. Almost 94 per cent of the population is literate. About half the kingdom’s population are foreigners.
Al Manea said Bahrain now has a total of 2,500 hospital beds in seven government hospitals and 15 private hospitals. There are 28 A-class health centres. Almost 700 beds are to be opened in 2015.
Non-communicable diseases are a major challenger. “About 40 per cent of people over 45 have diabetes,” Al-Manea said.
Al-Manea said Bahrain is working to maintain the financial sustainability of health services. “The share coming from patients and the private sector will be more,” he said. Bahrain is working on a plan for comprehensive health insurance.
Al-Manea said Bahrain needs more technological developments, partnerships between the public and private sector and more healthcare professionals. Plans call for the construction of a national centre for diabetes in Muharraq; two new health centres and a long-stay hospital in Muharraq; a health centre and a maternity hospital in the northern area, a dialysis and a health centre in the southern area and a rehabilitation centre in the south.
Structural steel installation in infrastructure projects
Hiroyasu (Gabe) Kobayashi, GM Sales and Marketing, SULB Company
Hiroyasu (Gabe) Kobayashi said SULB is a joint venture between Foulath (51 per cent) and Yamato Kogyo of Japan (49 per cent). It acquired the light-to-medium structural mill in Saudi Arabia, previously known as UGS, now called Saudi SULB. The plant has a capacity of 400,000 tons a year.
SULB has an integrated steel complex located in Bahrain and has invested $1.4bn in a facility to produce medium and heavy steel sections. The complex comprises three units:
- A 1.5 million tonne a year direct reduced iron (DRI) plant
- A 1 million tonne a year melt shop
- A 600,000 tonne a year medium to heavy section rolling mill.
Financing panel session
Rashed Shaheen, GCC & Middle East Project Co-ordinator, CREAM PPP Europe Alliance and the Public Private Partnership Association, Middle East-GCC
Rashed Shaheen outlined the options for developers including project finance and a development of PPP frameworks. He said that PPP projects could be procured without a comprehensive PPP framework but a coherent legislative structure would be beneficial.
Construction leaders’ panel
Edmund O’Sullivan, Chairman, MEED Events
- Masoud al-Hermi, President of the Bahrain Society of Engineers
- Mohammed al-Rais, President, Middle East at Hill International
- Mark Jamieson, Infrastructure Director at SSH.
The panel agreed that the opportunity is the largest programme of major projects in Bahrain’s history. The challenges included finance, the capacity of major clients to procure major projects effectively and the limited capacity of the local construction industry.
The Bahrain airport expansion programme
Mohamed Yousif al-Binfalah, CEO, Bahrain Airport Company
CEO of the Bahrain Airport Company Mohamed Yousif Al-Binfalah said the existing airport has a single runway.
“We have one of the smallest airport platforms in the region,” Al-Binfalah said. “The last expansion was in 1994.
Al-Binfalah said the airport’s design capacity is 4 million but more than 9 million passed through the facility in 2014. Plans call for the airport to handle 14 million people in 2019. The $1.1bn expansion project that is now under way involves increasing the capacity of the passenger terminal to 14-16 million, the construction of a multi-storey car park and additional utilities (see table below for full details of the procurement programme).
Plans for 2015 call for the relocation of service operators including aviation fuelling to new locations and work to start on ground-handling facilities, the new fire station, the new maintenance, repair and overhaul (MRO) centre and the airport’s supergate. Projects to be initiated in 2016 include an overflow car park, underground services and the relocation of aviation fuelling units
“By 2019, we should have completed the MRO hangar, the fuel farm project and the general aviation facilities,” Binfalah said. “By end of 2018, we should have finished passenger terminal building phase one.”
Long-term plans call for the construction of a new airport on reclaimed land to the north-west of Muharraq Island.
Bahrain Airport: status of projects
Enabling works 1A Contractor mobilised
Enabling works 1B Contract award in May 2015
Piling works Contract award in May 2015
Baggage handling Bids due in May
PLB package Bids due in May
Main works package Tender documents issued
ICT package Tender documents issued
HVTAS package Tender documents issued in May
Screening package Tender documents issued in May
Power substations Construction starts in second quarter of 2015
Roads network Construction starts in first quarter of 2017
Fuel tank farm Contractor appointed in May 2015
Latest developments and contractor opportunities in the Muharraq Ring Road scheme
Bader Alawi, Chief Roads Special Projects, Ministry of Works
Bader Alawi said an average of around BD 50 million ($135 million) a year could be invested in key strategic road and highway projects in Bahrain that are being financed by GCC states. Alawi said three strategic road projects financed by the GCC are already under way. Five further strategic projects enjoying GCC support are now being developed:
- The Al-Fateh Highway upgrade, which is being financed by Kuwait
- The North Manama Causeway, financed by Saudi Arabia
- The Busaiteen link has many components which includes land reclamation, major roads construction, a signature marine bridge construction for the fourth Manama-Muharraq crossing, grade separated interchanges and installation of various services. This is being financed by Saudi Arabia.
- The Shaikh Zayed highway, being financed by Abu Dhabi, and
- The Shaikh Jaber highway, being financed by Kuwait.
Alawi said that the three existing Manama-Muharraq causeways cater have an average daily traffic flow of 240,000 vehicles a day. He said that new figures show that traffic volumes in Bahrain grew by 11 per cent in 2015.
Wastewater and sewerage projects
Salah al-Mutawa, chief of treated sewage effluent, SEOMD Department, Ministry of Works
Salah Al-Mutawa said that the Bahrain sewage system will need to have capacity to process more than 400,000 cubic metres a day in 2015. This will rise to 540,000 cubic metres a day in 2030 (see table). Bahrain is aiming to capture and reuse 95 per cent of the these flows in irrigation and other sectors.
Bahrain’s treated sewage effluent (TSE) strategy calls for investment in key projects:
- Developing the main transmission network as a ring
- Connecting multiple TSE sources to avoid production outages
- Connecting TSE recharge sites and recovery wells
- Construction of on-farm storage tanks.
The kingdom’s possible short-term TSE projects include:
- Start investigating artificial storage and recovery options
- Building the Muharraq extension and conversion of the present line to carry TSE
- Construction of the Manama extension/new transmission line along Sheikh Khalifa bin Salman Highway
- Construction of a new TSE line from Tubli sewage treatment plant to the intersection of Sheikh Isa bin Salman Highway and Sheikh Khalifa bin Salman Highway.
The kingdom’s possible medium-term TSE projects include:
- Construction of artificial storage and recovery facilities
- Construction of the Muharraq connection
- Construction of the Budaiya extension new reservoir to cover demand rising from 20,000 cubic metres a day to 45,000 cubic metres a day
- Construction of the eastern extension to connect the new green park areas, the National Stadium central park and Ra’s Sanad at Tubli Bay plus the extension of the Buhair pipeline 3 if required
- Construction of the loop closures and mid-west expansion/network extension and new reservoir in Hamala and the second supply route to Hamala and Buri.
The kingdom’s possible long-term TSE projects include:
- The southern TSE extension from Zallaq with new storage and control reservoirs
- Extension of the distribution network for Bahraini farms.
Al-Mutawa said these projects in total call for the construction of 366 kilometres of TSE transmission and distribution pipelines; 54 TSE injection wells; 3 kilometres of pipeline to discharge TSE to the sea and 10 new TS reservoirs with capacity of 120,000 cubic metres.
Trends shaping Bahrain’s real estate
Edmund O’Sullivan, chairman of MEED Events
- Aaref Hejres, board member and president of the Bahrain Property Development Association and managing director of Diyar al-Muharraq
- Amine E Moukarzel, president of Louvre Hotels & Golden Tulip MENA
- Angus Campbell, CEO of Bahrain Financial Harbour Holding Company
The session investigated:
- The outlook and opportunities for Bahrain’s mixed used, residential, commercial and hospitality developments including the anticipated tourism boom
- The office leasing market outlook
- Government initiatives to support Bahrain’s real estate sector.
Other speakers were Philip Wooller, area director for the Middle East & Africa at STR Global and David Vely, senior vice president for development in the Middle East, Africa and India at Premier Inn International.
The Bahrain project challenge to 2025
The Bahrain large projects pipeline is part of a large and growing programme of capital investment in the GCC.
According to MEED Projects, about $150bn worth of contracts for large-scale construction work was awarded in 2013. This has returned the GCC market to the record level it reached in 2009.
Bahrain has the smallest project market of the six GCC states. The value of contracts awarded in the kingdom rose to a peak of about $5bn in 2008 and declined to under $1bn in 2012. In 2013, the value of contract awards in Bahrain rose to almost $2bn.
MEED Projects forecasts show the value of new contracts is set to continue to rise. The value of new contracts forecast to be awarded in five of the six GCC states will be substantially higher in 2013-17 than it was in 2007-12. In Bahrain, the value of new contract awards in 2013-17 will be greater than $50bn and more than twice its level in the previous five years.
MEED Projects figures show that there are a total of 38 projects with a value of $250m and more planned in the kingdom of Bahrain. Their aggregate value is $69bn. These include two large-scale regional projects: the $5.3bn Bahrain Causeway expansion, which will also provide capacity for the spur of the GCC Railway from Dammam to Manama, and the new Arabia-Bahrain pipeline. Both projects will be wholly or largely financed by Saudi Arabia. More than half of the major projects are at a very early stage of development. And of the $22bn worth of projects under execution, several are at an initial stage. They include the Bahrain Causeway expansion, the Arabia-Bahrain pipeline, the $2.5bn GPIC expansion, the LNG import terminal and the $9bn Bapco refinery expansion, which is the largest single project in the major project pipeline.
The extraordinary demands that will be placed on Bahrain’s capacity to deliver major projects is confirmed in the completion schedule. More than half the major projects identified by MEED Projects is due to be completed by 2020. These include the Bahrain Causeway, the Arabia-Bahrain pipeline, the Bapco refinery expansion, the GPIC expansion and the Alba expansion, which will also include a major power plant. This could have capacity of up to 1,500MW. In addition, Bahrain will need an additional new power plant and further water desalination capacity. The biggest project due to be completed after 2022 is the Industrial City being developed by the Ministry of Commerce & Industry. This will be built in stages until 2040.
Construction of real estate and other buildings forms the largest element of the Bahrain major project programme. More than $20bn worth of major projects has been identified in this sector. A high proportion will take the form of housing for middle-class and low income Bahrainis. Transport projects account for $17bn of the project programme. They include the Bahrain Causeway expansion and the light rail programme.
Energy projects in Bahrain
The MEED Bahrain Energy Forum was told that Bahrain’s energy industry expansion plans include projects worth more than $20bn in total. The conference was told that the projects being developed include:
- Continuing investment in upstream oil and gas expansion projects including drilling.
- A deep drilling project designed to find gas at depths of 12,000 feet. Oxy of the US has the contract to undertake the project which is due to begin by the end of May.
- The third train at the Bahrain National Gas Company (Banagas), the national LPG producer. The project is under study and a final decision about whether to invest will be made this year.
- The expansion and modernisation of the Bapco refinery, the oldest refinery in Arabia which first started producing in 1936. This project will increase the capacity of the plant to up to 460,000 b/d from 270,000 b/d and raise the proportion of liquids that can be used in downstream chemical industries.
- A new pipeline linking Saudi Arabia and Bahrain to replace the existing pipeline and increase the capacity of the link to 350,000 b/d.
- A new 1,500MW power station, which could be developed as an independent power project.
- An LNG import project that could have capacity of 400,000 cubic feet a day. Requests for proposal to develop the project on a built operate transfer (BOT) basis are to be issued soon.
Upstream investment has significantly increased gas production from the Bahrain field. NOGA Holdings chief executive Shaikh Mohamed said the kingdom is producing more gas than it can use and that some is being re-injected. Non-associated gas production from the Bahrain field is now 2.3bn cubic feet a day. This compares with 1.5bn cubic feet a day in 2009.
Deputy chief executive of Bahrain’s Electricity & Water Authority (EWA) Adnan Fakhro told the conference that peak electricity demand in the summer of 2013 was just under 3,000MW. This compares with installed capacity of 4,000MW. He said that on present demand trends, Bahrain will need new capacity from 2017. The proposed Al Dur phase II will have capacity of 1,500MW and cost $1.5bn. It will probably be combined cycle. It has not yet been decided whether it will be procured as an IPP or through EPC bidding. Investment in water desalination capacity is less pressing and could be done at a later date, Fakhro said.