Abu Dhabi: Forging new links

Large-scale infrastructure projects under way in Abu Dhabi are expected to give the economy a welcome fillip and open up future investment opportunities.

Union Railway, the government-backed nationwide rail project, announced in early September that it is opening the bidding on lucrative packages related to the planned UAE-wide link.

The railway is expected to significantly change transport and industry in the emirate and the wider region. With plans for a 1500-km line that will connect the UAE with Saudi Arabia in Ghweifat and Oman at Al Ain, it is a major plank in federal policymakers’ transport strategy. The project is also seen as testimony to the government’s commitment to large infrastructure development and expected to be a major boost to the local economy.

The Union Railway Company initiated the bidding process for diesel locomotives and freight wagons to service the first phase of the project in September, with offers to be submitted by October 3. Advance Rail Group, a joint venture announced last week between Al Habtoor Leighton Group and Australia’s John Holland, last week declared its interest.

Over the medium to long term having the project is expected to create a thriving small and medium-sized enterprise (SME) sector in Abu Dhabi and the wider UAE for businesses specialising in locomotive supplies, maintenance and manufacturing.

In addition, the railway is also going to play an important role connecting business and industry with the country’s sea and aviation infrastructure. It is all part of a strategy to boost the efficiency of manufacturing and future heavy industrial exports.

Within the first phase, which is expected to be completed in 2013, there will be 265 km of track connecting the Shah natural gas field south-west of Abu Dhabi city with the oil and gas facilities at Habshan and with Ruwais port.

The route will initially cater to freight transport, though passenger services will be added in the near term. Abu Dhabi National Oil Company, the state energy producer, plans to use the Shah gasfield to Habshan route to transport sulphur.

When fully built, all phases of the project will operate a network connecting the seven emirates, with final completion expected in 2017. There is talk of a passenger line between the capital and Dubai.

Another important government-backed project also grabbing headlines is Abu Dhabi Port Company’s (ADPC) Khalifa Port and Industrial Zone (KPIZ) award of a $131m infrastructure package in early October to Greek contractor, Consolidated Contracting Engineering & Procurement. Dual carriageways connecting the onshore port to the industrial zone make up an important part of the contract. Other work includes infrastructure such as a modular path for transporting oversize cargo, utilities and waste water, as well as telecommunications and a range of other important infrastructure.

Just a couple of days later, ADPC also awarded a $285m infrastructure works contract to Al Habtoor Leighton Group. The agreement is for the construction, fit-out, testing and commissioning of the civil and structural works for Industrial Zone Area A primary infrastructure (central and south). The second and third of the three construction packages will provide the facilities for an industrial centre catering for a wide range of heavy, medium and light industries. Construction of the works will begin immediately and is scheduled to end in July 2012.

This was the sixth major package awarded over the last year for KPIZ and illustrates the importance the government places in the project. As outlined in the Economic Vision 2030 the industrial zone at KPIZ is a key pillar to industrial diversification and set to be a significant GDP contributor to Abu Dhabi’s economy.

The strategy is based around the idea of industrial clusters and attracting tenants from a wide range of industries. The plan is to cater to base-metal specialists, heavy machinery, transport vehicle assembly, chemicals, shipyards, building materials, processed foods and beverages, light manufacturing and assembly, SMEs, trade and logistics, information and communication technology and alternative energy, as well as others.

Besides the notable impact projects such as KPIZ and Union Railway will have on economic growth, they will also play a major role in the emirate’s long-term ambitions for industrial and economic diversification. Over the short term, however, the government’s policy of investing billions of dollars in infrastructure is expected to bolster growth in the non-oil economy, owing to the multiplier effect of so much construction work being carried out within the local economy.

 

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