Development is being stepped up in a key port city

The last year was a good one for the Jordanian construction sector, which registered an 8.3% expansion in 2013 compared to the previous year’s relatively static performance. Much of this improved showing can be attributed to increased state spending on large infrastructure projects and sizeable tranches of foreign investment, both of which have provided a fillip to overall GDP. Yet the most interesting aspect of Jordan’s construction data for 2013 is that it shows that the centre of building activity has shifted from the capital Amman to the port city of Aqaba.

As Jordan’s only seaport, this coastal city, situated at the northern end of the Gulf of Aqaba, has been a central component of the country’s economy. As well as serving as the access point for the bulk of Jordan’s imports, it became a major site for imports of Iraqi goods until this trade route was closed off by the Gulf War of 1990-91. More recently, it has re-emerged as a useful route into Iraq, due to the traffic-related delays often experienced at that country’s Umm Qasr port. In 2013, Jordanian exports and re-exports to Iraq totalled JD987m ($1.39bn), nearly four times greater than the value of imports Jordan received from Iraq, at JD252.9m ($357.25m).

Development Plans

Since 2001 the city has taken on even greater prominence in the economic landscape, thanks to the creation of the Aqaba Special Economic Zone Authority (ASEZA), an independent body tasked with managing ASEZ, through which the government aims to develop the city as a regional hub for trade, tourism, and logistical services. A master plan created in 2002 maps out an ambitious vision for the city, including: a newly designed Aqaba Town; three port areas (a main port, a container port and the Southern Industrial port); the Coral Coastal Zone, featuring residential, hotel and entertainment facilities; and two industrial zones – the Southern Zone and the Airport Zone.

Investor Benefits

Incentives offered to investors locating in ASEZ include a flat 5% income tax rate on net profit, exemptions from a range of taxes, duty-free import of goods in commercial quantities, full repatriation of profits and capital, full foreign ownership and the ability to utilise up to 70% foreign labour. Kamel O Mahadin, the chief commissioner of ASEZA, told OBG, “Investors have realised that Aqaba as a multi-sectoral investment destination has staying power and stability, and that we are capable of accommodating any kind of investment needs. We have become a driving force for the economic growth and development of the kingdom.”

The zone covers 375 sq km, being developed over two decades from the 2001 publication of the master plan. Much of the focus so far has been on the 27-km coastline, where tourism facilities, port infrastructure and mineral-related industries are well established. The first phase of Aqaba Container Terminal’s berth expansion project was completed in 2013. The expansion, which includes new cranes and gantries, is set to boost annual capacity to 1.5m twenty-foot equivalent units and reflects the king’s vision of making Aqaba a key regional logistics hub.

The signing of a memorandum of understanding between the ASEZA and Turkish free zones represented another major development over the past year. Under the deal, the parties will exchange expertise, draft joint plans to improve the investment climate, and work to increase Jordanian and Turkish investment in the zone. In addition, ASEZA just signed another memorandum of understanding with a French company to build a dry port in Aqaba, which will enable the city to operate as a centre for transshipment of sea cargo to inland destinations.

Green For Go

As with most economic zones of this scale, ASEZ is being developed in line with stringent environmental guidelines based on international best practice. However, the location of Jordan’s new project means that environmental issues play an even greater role in its development than in similar projects globally. The coastline of the northern tip of the Gulf is well known for the richness of its reefs and marine life. Extensive coral communities extend across many kilometres of the proposed development site’s coastline in a series of reefs arrayed beyond the shallow lagoons that line the shore. Some 118 genera and 161 species of fish have been recorded in these fertile waters, as well as a range of echinoderms, algae and amphipods, many of which are endemic to the Gulf of Aqaba.

Sustainability

Mindful of the biodiversity that exists in close proximity to what will be an area of intense development, the government is working through the ASEZA to mitigate any adverse impact of the new zone. Its principal conservation and protection efforts are brought together in the creation of the Aqaba Marine Park, which has been established to “conserve and manage the natural near-shore marine environment of the Aqaba south coast region with its rich biodiversity, while allowing for certain touristic uses at sustainable levels”.

In The Zone

The park is 7 km in length, extending southwards from the passenger terminal, with a marine boundary 350 metres west of the mean high-water mark. It is made up of a number of zones: the Strict Reserve Zone will act as an area for non-invasive research and provide a completely protected environment; the Beach Recreation and Swimming Zone will allow for activities such as swimming and diving from demarcated access points; the Diving and Snorkelling Zone is designed to permit a safe environment for these activities, with entry to dive sites restricted to a number of shore entry points and to predetermined mooring points for boat access; and the Beach Zone will be established on the terrestrial territory of the park, and will be dedicated to simple beach use by individuals.

LNG Facility

It is likely that Aqaba will continue to account for a large proportion of the nation’s construction activity. In late 2013 the government released more details of a planned liquefied natural gas (LNG) facility, to be built 18 km south of the city. This facility is considered essential for Jordan’s fuel security in the wake of service disruptions on the Arab Gas Pipeline due to unrest in Egypt. The Ministry of Energy and Mineral Resources first called for expressions of interest in providing consultancy services for a techno-economic study of the facility in 2011, and an array of regional and global players made it to a shortlist via a prequalification stage, including PwC, Halcrow International Partnership, GL Noble Denton, Arup Gulf, Clyde & Co and PKF.

An Enabling Environment

Once completed, the development will feature a single-berth jetty designed to berth a floating storage regasification unit (FSRU) and take gas from it. LNG transfer will be carried out on a ship-to-ship basis, utilising hydraulic arms fitted to the FSRU, while berthing and mooring dolphins will make up the marine structure. A number of related onshore works will enable operations at the facility and provide a connection to the existing Jordan Gas Transmission Pipeline. The development of the terminal area, including roads and two buildings, also forms part of the contract.

The project is being overseen by the Aqaba Development Corporation, launched by ASEZA in 2004 to run the seaport, airport and strategic parcels of land, and in November 2013 it awarded a joint venture – between Irish firm BAM International and the Jordan-based MAG Engineering and Contracting – an engineering, procurement and construction contract to build the new terminal.

The substructure works for the terminal building were nearing completion in August 2014, and the substructure works for the administration building had begun. BAM has also successfully driven the first pile for the LNG jetty, which will ultimately include a 100-metre trestle on steel piles and a 20x20-metre concrete offloading platform. The project is being developed according to schedule, and the latest estimate envisions a handover to Aqaba Development Corporation as early as April 2015.