Saudi plans to launch $4.5bn airport tenders

Top OPEC oil exporter Saudi Arabia is planning to launch tenders worth more than SR17 billion ($4.5 billion) this year to modernise two airports in the Gulf Arab state, an official said.

Traffic at Saudi airports has reached 30 million passengers annually and is expected to double to 60 million over the next 10 years, said Alaa Samman, director of business development at the General Authority of Civil Aviation (GACA).

In order to cater for this growth, the government wants to launch projects costing at least SR55 billion to overhaul airports to be completed over the next 20 years, he added.

For this year alone, GACA wants to launch tenders to build a new airport in the holy Muslim city of Medina and a commercial center near Jeddah airport.

The new Medina airport, estimated to cost between SR7 billion and SR8 billion, will increase traffic capacity to eight million passengers a year from three million.

"We plan to offer a 25-year build, operate and transfer (BOT) contract for the development of a new airport in Medina," Samman told Reuters. The tender will be launched in May with bids accepted until October and contracts to be awarded by December.

In the Red Sea port Jeddah, Saudi Arabia's commercial hub, authorities want to build an "airport city" that will include hotels, office buildings, housing units, malls and even a flight academy, Samman said.

Jeddah airport, which is a gateway for millions of Muslim pilgrims to the holy cities of Mecca and Medina, receives 18 million passengers a year and expects to see an increase of up to 30 million by 2013, Samman said.

"We have offered two large pieces of land, one is one square kilometre and the other is 1.4 square kilometres, to Saudi and foreign investors for the development of the airport city," Samman said. Development would cost around SR10 billion.

Four prequalified consortia including Australia's Land Lease Corp, Saudi's Saudi Oger and Saudi Real Estate Co (Akaria), as well as US developer Hines, are expected to submit bids before the end of May.

The contract is scheduled to be awarded by August.

"We have presented the projects to consortias to bid on a build, operate, transfer deal that will last 99 years," he said.

Developing lands around Saudi Arabia's busiest airports in Jeddah, Riyadh and Dammam are part of GACA's strategy of increasing revenues in preparation for full privatisation.

Another "airport city" is planned in the capital Riyadh, to be launched on a smaller scale next year. Dammam in the eastern province, the source of most of Saudi oil wealth, will follow later. Saudi Arabia has 27 airports.

"We are moving toward commercial based operations... we aim to be fully independent from the government so we have no choice but to increase our revenues to the highest possible level," Samman said.

The following consortiums have been prequalified for the Jeddah tender:

- Saudi firms Saudi Binladin Group (SBG) and Dallah Albarakah and Al-Khozama Management Co (AKMC).

- Saudi Oger Ltd. + Saudi Real Estate Co (Akariya) and Australia's Land Lease Corp.

- Saudi's Saaf Co and US-based real estate developer, Hines.

- Saudi's Zuhair Fayez Partnership (ZFP) and Saudi's Nesma Holding Company. (Reuters)