Transport Infrastructure Sector MENA June, 2015 Produced by: Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 1 - Table of Contents I. Regional Sector Overview 2. Investment Climate (cont’d) 1. Definition of MENA Region 3. Government Infrastructure Projects 2. Transport Infrastructure Sector in MENA 4. Government Infrastructure Projects (Cont’d) 3. MENA Region: Quality of Overall Infrastructure Biggest Infrastructure Projects 4. MENA Region: Quality of Road Infrastructure 5. MENA Region: Quality of Port Infrastructure III. Saudi Arabia 6. MENA Region: Ports Throughput 1. Sector Highlights 7. MENA Region: Quality of Air Transport Infrastructure 2. Economic Indicators 8. MENA Region: Airport Capacity 3. Quality of Infrastructure 9. MENA Region: Quality of Railroad Infrastructure 4. Road Infrastructure 10. GCC Regional Railway Project 5. Port Infrastructure 6. Port Infrastructure (cont’d) II. Qatar 7. Port Infrastructure (cont’d) 1. Sector Highlights 8. Port Infrastructure (cont’d) and Ports Throughput 2. Economic Indicators 9. Air Transport Infrastructure 3. Transport Infrastructure Indicators 10. Air Transport Infrastructure (cont’d) 4. Transport Infrastructure Indicators (cont’d) 11. Investment Climate 5. Quality of Infrastructure 12. Investment Climate (cont’d) 6. Road Infrastructure 13. Government Infrastructure Projects 7. Port Infrastructure 14. Government Infrastructure Projects (cont’d) 8. Ports Throughput 15. Biggest Infrastructure Projects 9. Air Transportation Infrastructure 10. Investment Climate Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 2 - Table of Contents IV. United Arab Emirates V. Main Players 1. Sector Highlights 1. Top M&A Deals 2. Economic Indicators 2. M&A Activity, 2013-2014 3. Quality of Infrastructure 3. Arabtec Holding PJSC 4. Road Infrastructure 4. Arabtec Holding PJSC (cont’d) 5. Port Infrastructure 5. Drake & Scull International PJSC 6. Port Infrastructure (cont’d) 6. Drake & Scull International PJSC (cont’d) 7. Port Infrastructure (cont’d) 7. Combined Group Contracting Co. 8. Port Infrastructure (cont’d) 8. Combined Group Contracting Co. (cont’d) 9. Port Infrastructure (cont’d) 9. Galfar Engineering And Contracting SAOG PLC 10. Port Infrastructure (cont’d) 10. Galfar Engineering And Contracting SAOG PLC (cont’d) 11. Ports Throughput 11. National Marine Dredging Company PSC 12. National Marine Dredging Company PSC (cont’d) 12. Air Transportation Infrastructure 13. Appendix 13. Investment Climate 14. Investment Climate (cont’d) 15. Government Infrastructure Projects 16. Government Infrastructure Projects (cont’d) 17. Biggest Transportation Projects Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 3 - I. Regional Sector Overview Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 4 - Definition of MENA Region Middle East and North Africa Region Comments The current report outlines the development of the agricultural sector in the Middle East and North Africa (MENA) region, which is composed of 17 countries: Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates (UAE) and Yemen. The report focuses on three main countries, namely Qatar, Saudi Arabia, and the United Arab Emirates. They were selected on the basis of their superior performance in all infrastructure subsectors, combined with extensive government investments in infrastructure projects that will undoubtedly fuel future growth. Source: EMIS Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 5 - Transport Infrastructure Sector in MENA MENA and the Middle East in particular benefit from extremely advantageous geographical location. Middle East is at the centre of the globe with 86% of the world population and 63% of world GDP at a maximum distance of 9,000 nautical miles, as noted by Airbus and Blominvest Bank. The region is equally Geographic accessible by sea and by air and provides excellent opportunities that arise by the surging movement of people and goods between the East and the West. Location In addition, oil exporting countries from the region rely heavily on sea transportation to ship their petrochemical products globally. All of these factors, in addition to the funds provided by the oil & gas export, have led to extensive investments in transport infrastructure. Governments aim to boost local competitiveness, to diversify hydrocarbons based economies by enhancing sectors like construction, transportation, logistics, tourism, and services, and to intensify even more the movement of people and goods. Road construction in MENA is particularly challenging due to the harsh natural conditions in the region - high temperatures, desert terrain and sand storms. Road However, countries like Saudi Arabia have adopted sophisticated road construction methods and manage to build thousands of km of new roads despite Infrastructure the obstacles. Due to the evident difference in economic development within the region and the related ability to invest in infrastructure, MENA is the home of both countries that have high quality roads and such that have largely underdeveloped road networks. With the exception of Iraq, all MENA countries under analysis have access to sea, and they have built a solid port infrastructure. By far, sea ports have mainly supported the export of petrochemicals, and have also accommodated the export and import of foods, vehicles and other large cargoes. MENA is Port the world’s most food import-dependent region. Countries like Jordan, Kuwait, Libya, Lebanon, Saudi Arabia, UAE, and Yemen import virtually their entire Infrastructure domestic consumption of crops chiefly through sea transportation. However, as tourist flow to MENA countries is growing over the years, sea ports are being adapted to accommodate large groups of cruise tourists, as well. In 2013, Jebel Ali Port in Dubai was the 9th busiest port worldwide in terms of TEUs handled. MENA is rapidly positioning itself as one of the world’s major air transportation hubs. The region offers large network of growingly sophisticated airport Air facilities. Moreover, anticipating fast growth of passengers travelling from, to and through the region, local governments are incessantly investing in Transport increased airport capacity. Regional competition on who is going to become the dominant air transport hub is heating up and airports that have just been extended announce new extension works to start shortly thereafter. In particular, the 20-month old Al Maktoum Intl Airport (Dubai, UAE) is currently Infrastructure undergoing construction works to become the biggest airport in the world having annual capacity of 220 mn passengers. It is also noteworthy that another Emirati Airport, Dubai Intl, was the world’s busiest airport in terms of international passengers traffic between March 2014 and March 2015 (ACI data). Railways are the most underdeveloped transport infrastructure subsector in MENA. In 2015, only eight countries – Algeria (network in exploitation 3,854 km), Egypt (network of 5,153 km), Iran (network of 12,998 km), Iraq (network of 2,138 as of 2012), Jordan (Hejaz Railway network in exploitation 451.5 Railway km), Morocco (network of 2,109 km), Saudi Arabia (network of approx. 1,380 km) and Syria (network of 2,139 km as of 2012) – have operational rail networks. Across the region, there are just a few international connections between major cities, like that between Damascus and Amman or Tehran in Infrastructure Iran, as noted by Blominvest Bank. However, major railway expansion projects are underway, including the construction of regional network connecting the six Gulf Council countries, as well as individual national programmes. Saudi Arabia, for instance, is planning to build a 9,900 km. network by 2040. Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 6 - MENA Region: Quality of Overall Infrastructure Quality of Overall Infrastructure Highlights 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 . Overall, MENA countries under analysis have slightly MENA Average* 4.7 4.7 4.5 4.4 4.2 deteriorated their performance over 2011-2014 versus 2009-2011, and perform at average global levels during Global Average 4.3 4.3 4.3 4.3 4.2 the last two years, the World Economic Forum’s Executive Algeria 3.8 3.7 3.5 3.8 3.6 Opinion Survey infrastructure quality survey shows. Bahrain 5.6 5.9 6.0 5.7 5.6 . Business executives from UAE, Bahrain, Oman, Saudi, Egypt Arabia, and Qatar perceive the overall infrastructure in 4.3 3.9 3.8 3.3 2.9 their countries as among the best in the world with Iran 4.0 4.0 4.2 4.2 3.9 average 2009-2014 indices of 6.3, 5.8, 5.7, 5.6, and 5.4 Iraq n/a n/a n/a n/a n/a respectively. On the other hand, overall infrastructure in Yemen, Libya, Jordan 5.2 5.0 5.1 5.1 4.8 and Lebanon is considered to be significantly Kuwait 4.9 4.7 4.5 4.6 4.3 underdeveloped with respective average 2009-2014 Lebanon 2.5 2.5 2.4 2.3 2.3 values of 2.7, 2.6, and 2.4. Libya 3.2 n/a 2.9 2.3 1.9 Note: Information on Quality of Overall Infrastructure is provided Morocco 4.1 4.3 4.8 4.9 4.6 by World Economic Forum’s Executive Opinion Survey. This is Oman 5.8 5.9 5.8 5.8 5.4 an index that measures business executives' perception of their country's overall infrastructure (e.g. transport, telephony, and Qatar 5.1 5.6 5.5 5.4 5.4 energy). Saudi Arabia 5.5 5.6 5.8 5.7 5.2 The data for the latest year are combined with the data for the Syria n/a n/a n/a n/a n/a previous year to create a two-year moving average. Scores range from 1 (overall infrastructure considered extremely Tunisia 5.5 5.0 n/a 4.1 3.9 underdeveloped) to 7 (overall infrastructure considered efficient United Arab by international standards).