Boosting Port Ability

Qatar

Economic News

22 Jul 2010
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Qatar has taken a major step in expanding its maritime services industry, inking two key contracts as part of a multi-billion dollar port development whilst dismissing concerns that the crisis in the global economy could affect the project or its long-term viability.



On November 10, the steering committee chairman of the New Doha Port Project, Abdul Aziz Al Noaimi, signed contracts with Cansult Maunsell and WorleyParsons Qatar to provide project management services and engineering design for the development and construction of the New Doha Port (NDP).



Speaking at the contract signing ceremony, Al Noaimi rejected suggestions that it might not be the right time to launch an estimated $3.8bn project, arguing that the construction of the port was a sign of Qatar's economic stability.



"The signing of the two contracts gives a good impression about the strength of the stability of our financial situation. To go ahead with the new port is evidence that we are not affected by the financial turmoil going on in the world," he said.



However, there have been concerns that the impending global recession could put a dent on Qatar's ambitious plans. A report issued at the end of October by the Abu Dhabi-based Arab Monetary Fund (AMF) warned Qatar could see a steep fall in in its gross domestic product (GDP) in the last quarter due to falling oil prices,which could in turn slow economic growth.



The AMF report reckons year-end GDP growth could fall to around 11.6%, down from the 60% recorded in the second quarter of this year, though still up from 2007 annualised rate of 8%. Although a drop, the figure is still hugely positive in comparison with many developed economies.



Though GDP may tumble as oil and gas prices retreat, Qatar's Finance Minister, Yousef Hussein Kamal, has said the country must increase the pace of infrastructure investments to give the corporate sector the chance to develop. Speaking at a conference in Doha on November 12, the minister said the 2009-10 budget, due to be handed down in March, will see a rise in infrastructure spending.



While Qatar has built up impressive cash reserves in recent years, it may be forced to dip into its savings to meet this commitment. The 2008-09 budget set aside $8.5bn for infrastructure projects, out of a total expenditure of $26.6bn. But with oil prices slipping close to $50 a barrel, the base rate used for calculating earnings in this year's budget, Qatar may have to take a hard look at some of its big ticket projects, as has been the case in other states in the region.



Initial work on the new port, to be located offshore, approximately 5km east of the new international airport site, is scheduled to start early 2009, with dredging a sea channel that will link to the existing sea channel for the nearby Messaeid Industrial City (MIC). The port will be built in three phases, with the first stage expected to be operational in 2014, and completed by 2025.



When finished, the port will have five cargo terminals and berths, four container terminals and berths, one berth for roll-on/roll-off vessels, a livestock berth along with storage, administrative and Customs facilities. The 20 sq km site will be linked to the mainland by a 8.5 km bridge.



A number of other Gulf sates, such as Dubai and Oman, are also engaging on major port construction and expansion projects. Part of the rationale behind these schemes is to develop regional shipping centres. By contrast, Qatar's new port is being designed to support the country's programme of economic diversification and transform Qatar into a major regional business and financial centre.



While a number of other Gulf sates, such as Dubai and Oman, are also engaging on major port construction and expansion projects, part of the rationale for these schemes is to have these facilities serve as regional shipping centres. By contrast, Qatar's new port is being designed to serve the country itself and the programme of economic diversification being promoted by the government.



The new facility will take over the cargo handling role currently played by the existing port of Doha, which officials say may be decommissioned as the site does not offer ample room for the necessary expansion and the longer-term development planned for Doha.



In an interview with the business journal The Leader's Magazine in early October Al Noaimi said the old port was reaching its maximum throughput capacity. It is currently able to move around 1m TEU (20 Feet Equivalent Unit) per year. By comparison, the New Doha Port will have a far greater cargo handling capacity, with each of the new container terminals able to handle 2m TEU's annually as well as being able to berth larger vessels due to the extensive dredging planned.



The decommissioning of the existing port in Doha will also free up valuable land close to the centre of the capital for redevelopment, another justification for shipping maritime operations out of the city and closer to the country's expanding industrial base.



The construction of the new port will "provide additional capacity and room for future growth and is one of a number of measures being taken to help alleviate the traffic congestion on the roads of Doha," Al Noaimi said.



While improving driving conditions in Doha and opening up valuable real estate are both positives from the new port project, it will be the facility's role as the country's main import gate that will be of greatest importance.

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