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Sat 3 Jul 2010 04:00 AM

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Lost causeway

The Qatar-Bahrain Causeway is for some an illustration of the market's upheaval, with pricing issues and delays.

Lost causeway
Troubled bridge over waters: pricing and redesign issues have affected the progress of the causeway.

The Qatar-Bahrain Causeway is for some an illustration of the market's upheaval, with pricing issues and delays still apparent. Ben Roberts reports.

What had a political beginning can't seem to reach an economic end. The Qatar-Bahrain Causeway, the US $3 billion ‘friendship bridge' that was intended to bring the two countries closer and smooth the last decade's various diplomatic tensions, has experienced one of the longest delays of all the major projects fighting for progress in the market downturn.

But unlike the many elaborate residential and retail projects that quietly folded in the last few years, the causeway refuses to admit defeat. For the last three years in particular, announcements amounted to little more than delays and optimistic new dates for commencement, but somehow its existence has continued.

The project is a two-lane 40 km road bridge, which will include 18 km of artificial dykes and 22 km of viaducts, as well as two cable-stayed spans at a height of 400 metres, in order to allow maritime vessels to pass underneath. It will later incorporate a 13 metre wide railroad bridge.

The concept began during the height of a diplomatic spat between the two countries concerning the ownership of the Hawar Islands off the coast of Qatar. Qatar's claim derived from the proximity of the islands, whereas Bahrain testified that it had been granted ownership by Britain in 1939, the then protectorate.

Appeals by both countries to the British saw a decision in favour of Bahrain, a decision reinforced by the International Court of Justice in 2001. The furore died down, and the gap between the two countries, metaphorically and literally, seemed like it could be bridged.

Documenting the events and changes of the causeway is a project in itself. In June 2006 an agreement was reached between the two nations to create a single entity to spearhead the project. In 2007 the Qatar-Bahrain Causeway Foundation was established, and by September of that year it had signed a memorandum of understanding with a consortium of contractors led by Paris-based Vinci Construction.

A statement at the end of 2008 slated construction to begin in January 2009, despite the fact that in August companies such as Mott Macdonald were reportedly asked to resubmit their bids for the consultancy contract. January 2009 came around, only for the secretary-general of the Qatar-Bahrain Causeway Foundation, Nayef Al Emadi to reveal to CW that pricing issues, as well as details around the train and other elements, had pushed back the deadline by 12 months.

Seven months into 2010, the project is trapped between authorities and the major companies. Objectively, the amount of communication between the two groups could be a cause for concern. Christopher Welton, part of investor relations at Vinci Construction, said the company is close to finalising studies for the project ‘in line with the schedule of the Qatari and Bahraini officials'. He added that these studies encompass the whole aspect of the project: ‘how long the bridge is going to be, what materials, what man power is needed'.

A source at MEDCO, the dredging giant faced with tackling the ocean floor to facilitate the foundations, admitted to CW that they were still at the planning stage.

But on the websites of Hochtief Construction, the German contractor whose name has been connected with the project for a while, and that of KBR, which won a contract last year, there is no mention of the proposed causeway as a forthcoming project.

Hochtief may be resigned to a waiting game. Dr Bernd Putter, spokesperson, said: "We did some planning for the project and we're still interested since we submitted our bid. We have not signed a contract yet." The Qatar branch of Consolidated Contractors Company went further, telling this magazine it considered the project entirely on hold. The grey area between ‘planning stage' and ‘on hold' has been the curse of some of the biggest projects in the region in the last year.

Finance is typically at the root of the issue. Marina West, the multi-billion dirham complex on Bahrain's West Coast, originally stopped construction at the end of March, and investors were told individually that there would be no further progress. Later, it was confirmed that developer Marina West Real Estate Co met with Bin Mhana Holdings, a subsidiary of Qatar Investment Company, over possible funding.

Oman's Blue City, an OR7.7 billion real estate project, was the talk of bond markets in the Middle East as it neared liquidation. The project was to house 200,000 people with more than 200 villas, 5,000 apartments, and a number of hotels. Despite much fanfare from the government and a clear initial appetite from markets to fund the project, it had reportedly missed its sales targets.

As with Marina West, Bin Mhana Holdings had been drafted in to provide possible support, though on 9th June Essdar Investments, a fund backed by Abu Dhabi's ruling family, agreed to buy US $655.5 million of the project's bonds, telling Bloomberg it planned to take ‘significant control' over the development.

Jaber Ali Al Mohannadi, general manager of the Qatar-Bahrain Causeway Foundation, confirmed that negotiations with contractors over price was the key cause of the delay. Meanwhile, others have hinted that wider political tensions - including rumours of a recent standoff and gunfire from the Qatar coastline to a wayward Bahraini fisherman - may have temporarily hindered the drive towards a ‘friendship' causeway. It could be a bridge too far.

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