Infrastructure on the Rise


Economic News

22 Jul 2010
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As Qatar seeks to diversify its economy beyond hydrocarbons, there has been a rise in government spending on infrastructure, funded by rising oil prices.

Qatar recorded a GDP of $52.7bn last year, up 7.1% from the previous year. Oil and gas accounted for more than 60% of the GDP, 85% of exports and 70% of government revenues.

James Walsh, general manager for Gulf Warehousing Company, an international logistics company, told OBG, "Continued investments in infrastructure are imperative for continued growth in Qatar. There has been a gap between the economic boom of the past decade and the development of infrastructure necessary to sustain the economy and to encourage further investment well into the future. This is currently the single most important factor to be addressed as the country moves forward."

Among the many developments underway, Qatar's Urban Planning and Development Authority, in a bid to develop a world-class urban transportation network, is presently developing a comprehensive master plan that aims to address the country's transportation needs over the next 20 years. It will also explore the possibilities of developing a rail rapid transit system.

In addition to the multi-billion dollar Qatar-Bahrain Causeway, which will connect the two countries and provide updated road and rail links, there are several other projects in the pipeline, as Qatar seeks to modernise its general infrastructure. All are seen as catalysts for future development.

Last week the ministry of energy and industry awarded Combine Group Company of Kuwait a $181.5m contract to develop the second phase of an industrial area for small- and medium-sized enterprises. This project, to be completed in 30 months, will entail roads and other important infrastructure, such as the preparation of land plots construction, road lighting as well as water, gas and electricity distribution networks.

As Qatar seeks to increase its influence in the region, logistics will remain at the forefront of importance. A significant project seen as taking the country to the next level for international trade and economic efficiency is Logistics Village Qatar. It is meant to bring together all of the advanced international logistics service companies in the country. The development will include the completion of car and container storage areas, an auction area and an open yard, as well as an administration building, staff accommodation, maintenance, dedicated warehouses and multipurpose warehouses in the second stage. Construction on the project is expected to begin soon.

Up to $8.5bn is being allocated for water and electricity projects through Qatar's General Electricity and Water Corporation (Kahramaa), including 55 electricity substations that will be built by 2009. Substation capacity will be increased by 60% as demand has increased and there is no importation of electricity.

The maximum electricity demand has grown from 941 Mega Watt (MW) in 1988 to 3230MW in 2006. It is expected to continue to grow to reach about 8400MW by 2011. The annual average growth of domestic demand over the past eight years was about 8.4%.

With a population growth rate of 2.5%, education and healthcare are areas of growing interest and attention. As the authorised capital of the state-owned Qatar Development Bank (QDB), formerly known as Qatar Industrial Development Bank was increased from $55m to $1.4bn by 2009, it is expected to play a significant role in the country's development.

Sheikh Hamad bin Nasser Al Thani, the bank's general manager, said QDB will providing financing to set up private schools, colleges, hospitals, clinics, laboratories and recreational facilities as well as helping to attract new technologies in agriculture, irrigation and fisheries.

All of this development is not just limited to the ground, as air transportation capacity will be greatly increased by the $7bn New Doha International Airport (NDIA), which is being constructed to accommodate projected international passenger capacity demand in the region. NDIA will handle 12.5m passengers per year upon completion of the first phase in late 2008 to early 2009, with an additional 37.5m passengers per year at final build out, which is projected for completion in 2015. When finished, NDIA will be able to service six A380-800 Super Jumbo airplanes simultaneously.

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