Infrastructure projects and population growth spell a busy time ahead for Qatar

Transport upgrades are leading construction industry growth in Qatar, following rapid expansion and billions of dollars worth of new contracts awarded in recent years. The 2022 FIFA World Cup has created an impetus to finish a number of critical transport projects on time, including thousands of kilometres of road and expressway upgrades and construction, the new Hamad Port and a major three-part rail programme. Expansion of the recently opened Hamad International Airport (HIA) also advanced in 2015 when authorities released detailed designs for the next phase of construction, which will nearly double existing capacity – a welcome upgrade, given that the airport is already operating above capacity, despite opening less than two years ago.

Under the broader Qatar National Vision 2030 (QNV 2030) development plan, these projects will pave the way for future growth across all sectors of the economy, reducing bottlenecks and traffic congestion, improving trade and investment opportunities, and supporting ongoing efforts to diversify the economy, a key QNV 2030 priority.

Oversight

The transport ministry – known as the Ministry of Transport and Communications since January 2016 – was established in June 2013 to oversee the sector’s major policy and project developments in land and sea transport, working in partnership with sector-specific bodies including the Public Works Authority (Ashghal), which is charged with delivering roads, sewage networks and social infrastructure, including schools and health care facilities, and the Qatar Ports Management Company (Mwani) and the Hamad Port Steering Committee, which are working to expand operations at the recently opened Hamad Port, as well as on a project to transform the existing Doha Port into a cruise ship terminal (see analysis).

The Qatar Civil Aviation Authority owns HIA, sets aviation policy, and works with airport operator and state carrier Qatar Airways (QA), as well as the New Doha International Airport (NDIA) Steering Committee, which is overseeing HIA’s next phase of expansion. Qatar Rail (QR) is tasked with overseeing three large-scale interlinking projects: the Lusail City Light Rail Transit (LRT) system, the Doha Metro, and a long-distance passenger and freight railway, which is designed to connect Qatar to Saudi Arabia and the rest of the GCC’s planned 2200-km line. QR was established by emiri decree in 2011.

Spending

In its June 2015 GCC Construction Industry report, investment bank Alpen Capital found that nearly $75bn worth of transport projects were in the planning stage or already under construction in Qatar. Significant among these are new roads developed under two Ashghal schemes (the Local Roads and Drainage Programme, and the Expressway Programme), the new Hamad Port, the next phase of HIA’s expansion and a rail development programme, which Deloitte estimates will cost $35bn-45bn alone.

Many of these projects are critical priorities, as the deadline for infrastructure upgrades needed to handle surging passenger volumes and local traffic during the 2022 FIFA World Cup approaches. This is reflected in government expenditure – although Qatar is set to post a QR46.5bn ($12.8bn) deficit in 2016, its first in 15 years, government spending on transport projects has remained robust. Total spending fell by 7.3% in the 2016 budget to QR202.5bn ($55.6bn), but funding to major projects, including transport infrastructure, rose by QR3.3bn ($905.5m) to QR90.8bn ($24.9bn).

The total infrastructure allocation for 2016 was QR50.6bn ($13.9bn), representing 25% of total expenditure for the year, of which the majority will be concentrated on rail projects, Hamad Port, and the Al Rayyan, Al Khor and Fifth Ring roads. The Ministry of Finance reported that there are a total of QR261bn ($71.6bn) of public projects currently under way, including QR87bn ($23.9bn) in the transport sector, QR54bn ($14.8bn) in other non-energy infrastructure, QR24bn ($6.6bn) in sports projects and QR30bn ($8.2bn) in the utilities sector.

Doha Metro 

Public transit ridership is expected to soar post-2019 with the completion of Qatar’s most ambitious transport project to date, the Doha Metro. Spanning over 200 km, the project has been under development for nearly a decade and is not expected to wrap up until 2030. The first phase, scheduled for completion in 2020, will comprise 37 stations and three lines spanning 75 km – green, gold and red, with red divided into north and south lines. Phase two will see the addition of the blue line and 60 new stations. With 21 tunnel-boring machines, QR reported in June 2016 that it had dug over 100 km of tunnels, and that it anticipates finishing the rest by the end of the year.

The red line spans 40 km and links Al Wakra in the south to Lusail in the north, via HIA’s Terminal 1 and Doha’s city centre. It comprises 18 stations, including West Bay, Katara and Qatar University, while its Legtaifiya station will connect to the Lusail LRT system. The line will significantly reduce travel time for passengers, with QR reporting that at present, a trip from HIA to Lusail takes 90 minutes, compared to a 36-minute metro trip when construction finishes. In June 2013 a consortium led by Italy’s Impregilo won a construction contract for the red line north project, while a consortium led by Qatari Diar Vinci Construction (QDVC) won the red line south contract. The following March, QR awarded a QR2.57bn ($705.2m) contract for expansion of the red line to Spain’s FCC.

The green line – a 22-km route from Al Riffa in the north-east to Al Mansoura in the west – will pass through Education City and is therefore also known as the Education Line. It will comprise 11 stations including stops at Hamad Hospital, Al Shaqab and the Qatar National Library. In June 2013 QR awarded the line’s construction contract to a consortium led by Austria’s PORR Bau, and comprising the Saudi Binladin Group and Qatar’s HBK Contracting.

The shortest of phase one’s metro lines is the 14-km gold line, running east-west and connecting Ras Bu Abboud to Al Aziziyah. The line stops at several important cultural and recreational attractions, including the Qatar National Museum, Souq Waqif and Al Waab, near the Villagio Mall.

A consortium led by Greece’s Aktor, and including Qatar’s Al Jaber Engineering, Turkey’s STFA, and India’s Larsen & Toubro, announced in April 2014 that it had won a $4.4bn design and construction contract for the gold line. The heart of the metro will be the Msheireb main station in downtown Doha, which will provide a major interchange for all three lines.

LRT

The Lusail LRT will connect the new Lusail City development’s anticipated 200,000 residents to major residential, commercial and business hubs, and is the most advanced of QR’s projects, with the company reporting 100% of its required tunnelling works had been completed as of December 2015. The network comprises four lines – red, green, purple and yellow – and includes 37 stations, with metro connections planned for the Legtaifiya and Lusail Central stations. Connection times between stations will average under two minutes, and trams will run at around 29 km per hour (km/h). In June 2014 a consortium led by QDVC and France’s Alstom was awarded a design-and-build contract for the LRT project, after QDVC won two construction contracts for the development in 2007 and 2012. The agreement will see QDVC build 25 stations and an LRT depot, while Alstom will supply 35 light rail vehicles, electrification, power supply, track, signalling and train control.

Traffic Control

The metro and LRT system are expected to make an extremely positive impact on traffic congestion in the state, where population growth has led to an influx of new vehicles on the road (see analysis). In November 2015 the Supreme Committee for Delivery and Legacy released promising ridership projections for the metro and LRT networks. Passenger numbers for the first phase of the metro are projected to rise from 447,000 in 2020, its first full year of service, to hit 752,000 by 2026. The Lusail LRT is expected to serve 42,000 passengers per day in 2020, and up to 60,000 daily by 2021, with passenger numbers rising by 7-10% annually to hit 90,000 in 2026. In total, the metro and LRT projects will remove an estimated 170,000 cars from the roads, reducing the state’s emissions by 258,000 tonnes of carbon dioxide annually, according to QR.

Long-Distance Rail 

The next major project on QR’s agenda is the planned long-distance freight and passenger rail line, which will connect Doha to Saudi Arabia and the rest of the GCC through a five-phase construction programme. On completion the 486-km network will consist of a mixed passenger and freight line running from Qatar to Saudi Arabia, a proposed high-speed passenger line linking Doha to Bahrain, a freight line running from the Port of Mesaieed to Ras Laffan, a mixed passenger and freight line connecting Doha to Dukhan, and a mixed passenger and freight line running from Doha to Al Shamal. Comprising nine passenger stations, the network’s high-speed passenger trains will travel at 270 km/h, regular passenger trains at 200 km/h, and freight trains at 120 km/h. By 2021 QR expects 8000 passengers will travel on the rail daily, rising to 24,000 by 2031.

The first phase of the project will connect the south-eastern Port of Mesaieed’s Hamad Port Container Terminal and North Freight Terminal to the planned Doha South International station, before heading west to Abu Samra. The rail line will connect to Saudi Arabia, where work on the GCC rail network is expected to commence soon, through the Salwa crossing point. In November 2015 Saudi Railways Organisation told media that the blueprints and technical designs for its portion of the GCC Railway would be released shortly, with construction set to commence in 2016. Oman and the UAE have already begun construction on their GCC rail lines.

Railway Contracts 

Although new transport contracts slowed in 2015 following a slew of awards in 2013 and 2014, QR continued to invest in new segments of development, including supply and services. In February 2015, for example, a consortium of five companies signed a contract with QR to build and deliver fully automated, driverless metro trains. The consortium, which includes Mitsubishi Heavy Industries, Mitsubishi Corporation, Hitachi, the Kinki Sharyo Company and Thales, will deliver 75 sets of three-train cars, platform screen doors, tracks and a railway yard, as well as signalling, power distribution, telecommunications and tunnel ventilation systems. The contract also includes up to 20 years of maintenance provision for the metro system. More recently, design and consultancy firm Arcadis announced in June 2015 that it had won a $22m contract to provide architectural, branding, design and construction consultancy services for the gold line.

Upcoming Contracts 

Private sector investment and expertise will remain critical for rail development, as evidenced by the Ministry of Transport and Communications’ recent announcement that the share of rail contracts awarded to private sector entities for the metro and LRT projects stood at 70%. The announcement, made at QR’s Industry Awareness Day event in July 2015, also saw the minister of transport and communications, Jassim bin Saif Ahmed Al Sulaiti, tell 600 attendees that the ministry had partnered with Qatar National Bank to identify 104 new rail investment opportunities for private players.

Service and supply contracts for the long-distance rail line are also expected in 2016, following the April 2015 announcement that Deutsche Bahn’s DB International will assume the role of the line’s “shadow operator”, providing assistance and information during the preparatory process to mitigate any potential challenges in delivering the project. The company’s responsibilities include defining the project’s construction, equipment and rolling stock requirements prior to tendering, assisting in drafting operator contracts and regulations for operation and maintenance, and providing consultancy services related to safety issues, customer care, ticketing, pricing, and managing passenger and freight operations.

In January 2016 QR announced that it is preparing to award several new contracts for metro and LRT construction. A tender for operation and maintenance of both systems is expected to launch in the second quarter, followed by an additional maintenance and operation contract for the long-distance rail. The company is also considering tendering additional service contracts, including contracts for IT provision and commercial services used by passengers. The state’s current contracts with its railway consultants will also finish in July 2016, when new four-year contracts are expected to be signed.

HIA 

One of the most significant developments for Qatar’s transport sector was the May 2014 opening of HIA, a $15.5bn project offering capacity for up to 30m passengers annually, compared to 14m at Doha International Airport (DIA). At 4850 metres, HIA’s western runway is one of the world’s longest, allowing for 100 aircraft movements each hour, or five every three minutes. Its 600,000-sq-metre passenger terminal is the largest building in the state, and its maintenance hangar is the largest such facility globally, offering capacity for 13 aircraft at a time. Its baggage handling system offers capacity for 120,000 bags daily, or 5000 per hour. Ongoing expansion plans will further bolster capacity, following a very strong opening which saw the airport meet and exceed its passenger capacity within 24 months of its launch.

Passengers

Combined passenger volumes at DIA and HIA reached 26.48m in 2014, according to the Ministry of Development Planning and Statistics (MDPS). Since HIA opened, however, passenger volumes have soared, rising by over 1.5m between June 2014 and May 2015 to reach 28m in total, according to government website Hukoomi. Growth continued in 2015, with the MDPS reporting that passenger numbers jumped to 3.3m in November, a 17.8% year-on-year (y-o-y) increase over November 2014’s 2.8m. Arrivals rose by 15.3% y-o-y, departures by 17.5% and transfers by 19.1%, according to MDPS data. In December 2015 Badr Mohammed Al Meer, COO at HIA, announced that the number of passengers travelling through HIA between December 2014 and December 2015 had exceeded 30m, with the airport already operating at capacity.

Expansion

In September 2015 the NDIA Steering Committee released the design for the next phase of a major expansion project under way at HIA’s terminal. The expansion includes construction of two new concourses, which will effectively increase the size of HIA’s existing passenger terminal by 50%, enlarging it to roughly 900,000 sq metres and adding 24 new gates, bringing the total to 65 and boosting capacity to 53m passengers annually.

Expansion plans also include Airport City, a sizeable development expected to house 200,000 residents, as well as hotels and a special economic zone. The next phase of expansion will cost $3.5bn-4.5bn, with tenders for the main construction packages expected to float in 2016, with work finishing in 2019. Airport saturation is expected by 2028/29. The authorities also announced plans to reclaim land and expand HIA’s existing runways in November 2015. The QR277m ($76m) project will see construction of new taxiways, enabling the airport to handle more flights, with work expected to finish in 2017.

Cargo

Cargo volumes are also expected to surge, following years of double-digit growth at DIA. HIA’s cargo terminal, one of the largest in the world, was the first facility to become operational in December 2013, offering additional capacity of 1.4m tonnes per year. The impact of this new facility on air cargo volumes is noticeable. Incoming cargo volumes at DIA rose by 24% between 2010 and 2013, from 386,903 tonnes to 478,750 tonnes, according to MDPS figures. Combined incoming cargo volumes at DIA and HIA rose a further 17% to hit 561,293 tonnes in 2014. Outgoing cargo rose by 24% between 2010 and 2013 to hit 386,919 tonnes, and a further 13% in 2014 at HIA and DIA, to 435,274 tonnes.

“The current QA cargo terminal has a capacity of around 1.4m tonnes. We are expanding this by building another cargo terminal that will add 3m tonnes of capacity. This is scheduled to be completed by 2018, bringing the total cargo capacity to 4.4m tonnes, which demonstrates the rapid growth we have seen since opening HIA,” Al Meer told OBG.

Qatar Airways

QA plays an essential role in ongoing aviation expansion, acting as both the state’s flagship carrier and the manager of HIA, and benefitting from one of the most aggressive expansion strategies and fleet upgrades in the world. QA accounts for most of the air traffic in the state – its flights comprised 78% of total aircraft movements in Doha in 2014, according to MDPS data.

Formed in 1997, QA has quickly become one of the fastest-growing carriers globally, and is in the midst of an expansion plan that has seen total destinations on offer rise from 120 at the end of 2012 to 152 as of November 2015. It is also undertaking a major fleet upgrade, with over 330 aircraft valued at $70bn on order. The existing 168-strong fleet comprises both Boeing and Airbus aircraft. The Boeing fleet includes 29 777-300ERs, nine 777-200LRs, 23 787 Dreamliners, one 747 freighter and eight 777F cargo freighters. Airbus vessels include four A340-600s, 38 A320s, 15 A330-200s, 13 A330-300s, six A330 freighters, two long-range A319LRs, eight A321-200s, six A380s and six A350s. Aircraft on order include 100 Boeing 777Xs, 74 Airbus A350s and 37 Boeing 787s.

QA’s earlier plans to add 12 destinations a year during 2013-18 were scaled back in 2015 to eight, of which two were increased frequencies to existing routes. A further 14 routes are planned in 2016, focusing on expansion into the US. New agreements with the Philippines have boosted flight frequencies on the popular Doha-Manila route (see analysis).

Ports

Early operations at Hamad Port officially began in 2015. The port will assume the existing Doha Port’s commercial shipping activities, the latter being transformed into a dedicated cruise ship terminal (see analysis). “Cruise ship tourism can contribute greatly to both the Qatar Tourism Authority’s sector vision, as well as the economy of the state. Tourism is important to Qatar’s diversification, and is an extremely flexible industry with many opportunities. It is very important that we have a dedicated tourist port, and its development remains a critical priority for all stakeholders,” Abdullah Al Khanji, CEO of Mwani, told OBG.

Hamad Port and the revamped Doha Port will round out Qatar’s maritime shipping portfolio, joining the Port of Mesaieed, which serves Mesaieed Industrial City south of Doha through two terminals, the Port of Ras Laffan, a petroleum export facility, Halul Island’s oil export facilities, and two offshore terminals, Al Rayyan and Al Shaheen. “Lower oil and gas prices have seen a decline in demand for offshore service vessels, though there has been an uptick in demand for crude carriers and product tankers,” Abdulrahman Essa Al Mannai, president and CEO of maritime and logistics firm Milaha, told OBG. “Commercial shipping is driven primarily by economic activity in non-energy sectors, which remains strong and continues to be supported by government spending on infrastructure projects. Qatar’s economic diversification away from oil and gas has acted as a natural hedge.”

Hamad Port 

The Hamad Port Project was launched in June 2007 with the recognition that Qatar’s import demands were set to rise dramatically in the coming years. Located on a 26.5-sq-km area south of Doha, the QR27bn ($7.4bn) project is one of the world’s largest greenfield port developments, and will include a new port, a new base for the Qatar Emiri Naval Forces and the Um Alhoul Special Economic Zone.

Its facilities include a general cargo terminal, multi-use terminal, offshore supply base, coast guard facility and marine unit, as well as a centralised Customs area, administrative district and multiple maritime facilities. On completion of all construction phases, Hamad Port will offer capacity for 6m twenty-foot equivalent units a year, as well as 1.7m tonnes of general goods, 1m tonnes of food grains and 500,000 vehicles. In mid-December 2015 the Ministry of Transport and Communications announced that Hamad Port would officially start early operations.

Outlook 

Under the dual deadlines of the 2022 FIFA World Cup and QNV 2030, the transportation sector should maintain momentum in 2016, as authorities continue to push to deliver critical projects, designed to enable the state to better manage its surging population, traffic and imports. Demand for new infrastructure should see planned facilities operating at capacity over the long term, transforming the sector through increased ridership on public transit networks, a smoother flow of goods and services, greater tourism arrivals and less traffic congestion.