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Fast tracking development: Road infrastructure in GCC

Roads, highways and bridges are among the most prominent infrastructure projects in the Gulf Cooperation Council (GCC)

Recent data shows that road infrastructure projects have accounted as the largest share of government spending, which was estimated at $122.6 billion in 2017 alone Projects including upgrading of road infrastructure such as flyovers and road widening are underway in various phases, valued at $171.54 million Saudi’s Eastern Region has also a total of nine separate road projects worth $400 million

Roads, highways and bridges are among the most prominent infrastructure projects in the Gulf Cooperation Council (GCC) as the region increasingly becomes a major player in hosting high-profile world events.

Recent data shows that road infrastructure projects have accounted as the largest share of government spending, which was estimated at $122.6 billion in 2017 alone. This report reveals that road developments are part of the short- and long-term economic and social objectives in the region, providing vital links cities and towns, in line with urbanization programs aimed at diversifying non-oil economic activities such as tourism, logistics, high-value manufacturing, among others.  

From a global perspective, the UAE and the Kingdom of Saudi Arabia  rank among the top 12 global markets for infrastructure investment and expenditure on road infrastructure has been a major growth factor in the region-with governments continuing to find these investments as vital to both social and economic growth.

Rationale for road projects

Most of the region continue to attract business and leisure visitors as key cities play host to high-profile global events.

Across the region, the UAE continues to be the leading market for construction as the country gears up for the upcoming Expo 2020 and there is overall optimism among businesses regarding opportunities. A series of projects including upgrading of road infrastructure such as flyovers and road widening are underway in various phases, valued at AED 630 million ($171.54 million). Alpen Capital noted in a 2015 construction report that the UAE is the third most competitive in the world when it comes to infrastructure and tops the chart when it comes to roads development. However, in terms of awarding projects to contractors, Saudi Arabia remains the largest market in the GCC.

Data shows that the total value of active infrastructure projects in the GCC is worth $1.14 trillion.

Even when low oil prices have impacted the regional economy in 2014-2015, GCC countries have maintained a positive approach to infrastructure development and has since been actively exploring new ways of financing important initiatives. For example, governments are increasingly welcoming the idea of private sector investments.

Kuwait is one of the countries keen to adopt the public-private partnership (PPP) model to finance half of its capital expenditure for new development projects. In the UAE, Dubai has also institutionalized private sector involvement in project financing through a new law encouraging the use of the PPP scheme.  

UAE

The number and scale of road infrastructure development in the UAE makes it undoubtedly one of the most lucrative places for the construction industry, with Dubai putting over 21% of its public spending on infrastructure in 2018 in preparation to the World Expo 2020. Internal road projects are also being implemented in full swing in Abu Dhabi and Al Ain with a total value of $96 million, eyeing completion by August 2019.

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Dubai has allocated AED 15 billion to complete key projects in the run up to the Expo 2020, with upgrading of flyovers, ramps and road widening projects receiving AED 630 million budget.  Other road projects across the UAE under the Ministry of Infrastructure Development is part of an investment program under the five-year Plan 2021 with a total cost of AED 9.7 billion. Four of these projects are to be completed by 2019 which include Khor Fakkan West Road, the Sheikh Khalifa Road, the Khatam Navigation Center and the Yepsa Road in Fujairah, with an estimated cost of AED 477 million.

Expansion of roads in other emirates such as the Sheikh Khalifa Road in Fujairah, Khatam Mallaha Center and the E99 Road Kalba Al Daijri are in line with the government’s plan to ease congestion and movement of trucks on the road and pave way for commercial and tourism growth in the area and the whole of the Eastern province.

The second phase of the Emirates Road stretching towards Ras Al Khaimah in the Suhaila and Shamel regions have reached 77% completion, valued at AED 67.9 million, while the first phase of the project is valued at AED 90 million.

In Ajman, there are six major road projects in the pipeline aimed at developing main roads and entrances to the emirate including the Sheikh Ammar Street, the development of the northern entrance, the intersection of the Sheikh Zayed Mosque, as well as various internal roads within residential areas, valued around AED 300 million.  

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Saudi

The Kingdom of Saudi Arabia has embarked on a major transformation program under Saudi Vision 2030, which seeks to diversify the economy through spurring growth in key sectors such as high-value manufacturing, defence, renewable energy, mining, transport and logistics and boost non-oil revenue to $160 billion by 2020 and $266.6 billion by 2030 .

Data shows that during the first half of 2018, the total number of road projects completed has reached to 55, spanning 1,689 kilometres and valued at SAR 4.978 billion. During the period, the total number of implemented projects reached 447, covering 12,046 kilometres. In addition, the Transport Ministry signed up a total of 70 new projects valued more than SAR 2.4 billion covering all the regions.

Saudi Arabia’s Eastern Region has also a total of nine separate road projects worth $400 million, as well as looking into the feasibility of building the King Hamad Causeway in 2019 through a public-private partnership model.

Linking the GCC

Apart from individual projects within each GCC country, there are numerous planned and existing roads, bridges, and tunnels across the region. Some of these projects include:

1. Saudi-Oman Highway

A 680-kilometre road which links Oman and Saudi Arabia is paving the way for a much shorter distance, and thereby shorter travel time between the two countries, which takes up nearly 2,000 kilometres via the UAE.   

The road was open in October 2018, is expected to bring in trade and tourism between the two countries; the Oman Government has invested $517.2 million on construction in its territory, while Saudi Arabia has spent $266.7 million on its side.  

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2. Mafraq-Ghuwaifat International Highway (Saudi-UAE)  

The $1.4 billion project upgraded to $5.3 billion, was undertaken in phases. The Mafraq-Ghuwaifat 327-kilometre-long International Highway project aims to facilitate commercial transport between UAE and Saudi Arabia via Abu Dhabi’s western region.

3. King Fahd Causeway

Bahrain is also ramping up its investments at the King Fahd Causeway, a strategic artery that links Bahrain to Saudi Arabia.   Current expansion initiatives under Phase 2 of the project involve a 48 two-two lane bridge measuring 1.5-kilometres connecting two islands, with a capacity for up to 4,000 vehicles per hour. It will have a custom area capable of accommodating up to 400 buses and a waiting area for 400 trucks.