Infrastructure report
Transport Infrastructure - Outlook And Overview
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Transport Infrastructure - Outlook And OverviewBMI View : Iraq's transport networks remain woefully inadequate by global standards, with armed conflict, under-investment, and bureaucratic inefficiency combining to weigh on transport sector growth. The country's port subsector is set to outperform in the coming years, primarily due to ongoing progress on the flagship Grand Faw Port project in Basra. Latest Updates
Structural Trends2017-2026: Very Dependent On Security SituationIraq's transport segment is in dire need of additional funding inflows following years of conflict and underinvestment. As a point of reference, Iraq's performance on the Quality of Transport pillar of our Operational Risk Index continues to underperform the global average by a wide margin, with the country scoring 30.1 compared to 48.4. However, the sector's immense growth potential will continue to be plagued by persistent government inefficiency, lingering security concerns, and a poor business environment, all of which will combine to stymie growth in the transport space. As things stand, port infrastructure (centred upon the planned USD6bn Grand Faw Port Project in Basra) and rail infrastructure are the key value drivers within the country's wider transport space, with these sectors accounting for 41% and 30%, respectively, of a total USD16.7 in transport sector value currently in the construction pipeline, according to our Key Project Database. Although the government is committed to developing Iraq's transport network, as questions are increasingly raised over what the future of Iraq will look like and as the government continues to focus on security, many of the major projects that would boost domestic and international trade will remain subject to delays. Government projects are also likely to come under further pressure as low global oil prices restrict public funds. However, from 2017 onwards, as the security situation improves and the oil price slowly rises, we expect reconstruction efforts, supported by international institutional funding and growing foreign direct investment, to drive projects in the transport sector. No government in post-Saddam Iraq has succeeded in realising their spending within the transport sector, despite considerable budgetary allocations. In 2009 and 2010 the transport ministry executed just 59% and 50% of their budget, with these figures unlikely improved in more recent years given the ongoing political crisis affecting the country. Any improvements in organisation and planning provided by a transport masterplan would be a much-needed driver of growth in the sector. The National Investment Commission (NIC), while no surrogate for a masterplan, is a formal body with the power to award projects and also acts as a kind of 'shop window' and marketer for Iraq's development requirements and opportunities. The NIC outlines four broad areas of priority transport development in Iraq:
According to the NIC website, the projects seeking investment by sector are as follows: Railways
Ports
Airports
Many projects have been on the table for some time and have struggled to get through preliminary proposal stages. Yet the scope and volume of work required and proposed by the NIC is a clear indicator of the potential inherent in a country in dire need of committed rebuilding. RailwaysThe 2,272km railway network in Iraq currently plays a minimal role in freight transport, highlighting the reliance of supply chains on the country's roads. Although railways provide a transport option which is in many ways safer than the road network, usage of the northern and western sections is constrained by the poor security situation. There are currently no active rail connections with neighbouring states, though one lies idle with Syria, while others are in the planning stages with Iran and Jordan.
Iraq is also seeking to improve connections with Iran. In January 2017, Iraqi Republic Railways (IRR) announced it was devising a plan to connect the Iranian city of Basra with the Al Shalamcheh border terminal in Iran via a 32km-long extension. The proposed extension will help passengers to easily travel between the two countries, particularly during the pilgrimage seasons. The new extension will be connected to an internal rail line in Iraq to include the cities of Basra, Baghdad, Yusufiya, Musayyib and Karbala. Another severely delayed project is the USD3bn passenger and freight rail line known as the Baghdad Loop Line. The project involves construction of a 112km double-track line around Baghdad. The line has two main stations: one to the east of the capital and one in the west. While the rail line has been designed to cater for passenger and freight rail, the freight trains will not enter the capital; instead, a dry port will be established south of Baghdad where the trains can load and unload. This is planned to help with congestion in the city. The line will link with the existing rail network in Iraq. The Loop Line is expected to have capacity to carry 23mn passengers per year and 46mn tonnes of freight a year, according to Reuters. According to Iraqi Railways, the rail line will take four years to build. The project was initially due to be announced in 2010, but three years later there are still no updates or progress, and in light of its cost we do not expect it to gain traction any time soon. The development of Iraq's railways is hoped to turn the country into a freight hub. Instead of days sailing to the Suez Canal it is hoped that freight will be taken overland to Europe after being delivered to Iraq's Southern ports. Extending the rail network would also facilitate regional trade: in mid-2014 it was reported that Jordan, Egypt and Iraq were in talks to develop a rail network between the three countries. No further details are currently available but such a link would greatly benefit international trade in the region. Like many emerging markets, Iraq is courting Chinese investment. China's 'One Belt, One Road', Silk Road initiative, which aims to develop trade routes between Asia and Europe by rail, road and sea, is seeing billions of dollars being pumped into the countries on the route, and Iraq is hoping to join this. In line with our expectation that the Chinese are set to play a bigger role in the infrastructure markets of MENA countries, the government of Iraq is planning to build an elevated metro link between the cities of Karbala and Najaf, and has approached China North Industries to conduct a preliminary study. In December 2016, Iraqi Prime Minister Haider al-Abadi visited China and met with the country's president and prime minister, while also attending meetings with about 60 domestic firms. Al-Abadi is turning to China for investment and expertise in developing Iraq's rail network from 2,000km to 5,000km, which would help secure greater oil trade to China. Trade between China and Iraq increased 50-fold between 2003 and 2014. Iraq is seeking to make China a strategic partner and guarantee investment to support infrastructure development, something the Iraqi government is challenged in doing, given falling oil revenues. Ports Leading The Way Transport Project Value By Subsector, USDmn 30%
12% 17%
Ports Airports Roads & Bridges Rail Source: BMI Key Project Database PortsIraq's port infrastructure is unable to cope with the rise in demand as the country begins to rebuild its infrastructure and the economy grows. Iraq has a small coastline, less than 100km on the Persian Gulf and boasts just one deep-sea commercial facility, the Port of Umm Qasr. Iraq's ports make up the one sector of the country's transport network which is not directly affected by the recent rise in sectarian violence, as they are located in the Shi'a-dominated south which is much more secure. Investment in port infrastructure is, therefore, expected to continue apace. This will be necessary as the ports are experiencing an increase in throughput which they are ill-equipped to deal with, and congestion is posing a growing risk of supply chain disruption. In April 2014 the Philippines-based International Container Terminal Services Inc (ICTSI) signed a contract with General Company for Ports of Iraq, agreeing to operate, develop and expand the Port of Umm Qasr. The contract grants ICTSI the right to manage and operate the existing container facility at Berth 20 for a 10-year period. It will also build, under a build-operate-transfer scheme, a new container and general cargo terminal in the port for a 26-year concession period, and provide container and general cargo terminal services in both components. The company will invest USD130mn in the first phase of the deal and will build an initial 200 meters of quay with an estimated capacity of 300,000 TEUs. However, plans are in place to expand the country's port sub-sector, with a large seaport - the Port of al- Faw, near Basra - being developed. Tenders have been opened for the construction of the USD7.4bn container terminal as well as the USD1.3bn contract for the port's marine works. The second of three phases of construction is currently assessing bids from firms in the UAE, Iran, Turkey and China among others, with the tender expected to have been awarded by end-2015. According to official reports in June 2015, the government had agreed to award the contract on a post-payment basis, due to budget constraints. However, no single firm was touted as the winner and it will remain to be seen how such a large-scale project will progress on a pay-after-delivery basis. The country announced plans in January 2016 to raise funds to build the Faw Container Port Terminal by selling shares in the company behind the project. The government plans to create a company - Basra Holding - which will own 51% of the project in the southern province of Basra. The shares sale is intended to help raise the USD1.4bn needed for the first phase of the long planned project, which is just one of several major projects that have been hindered by falling oil prices and the government's ability to finance. The history behind this project is somewhat erratic, with the port being delayed by war, international sanctions on Iraq and a disagreement with Kuwait over the port's position as a Gulf shipping hub; however, the entire project is now expected to be completed within three years. To hopefully ensure the ports completion, the Iraqi government has exempted any company working on the project from any taxes or duties. To date, Archirodon Construction Company with a contract worth USD264mn and South Korea-based Daewoo Engineering & Construction Company have been awarded 11 quay walls and a breakwater for the port. Daewoo's USD690mn contract was awarded in December 2013 and will see a breakwater constructed by 2016. The second phase of construction will involve the construction of 10 platforms including eight container cranes. BMI's Shipping team has highlighted the risks posed to the Grand Faw project on numerous occasions in the past. A glut of port expansion projects in the Gulf is serious competition for the new port, none more so than Kuwait's Mubarak al-Kabir port, which is currently under construction. The port's development is being managed by URS Corp. Competition over shipping lanes and transhipment opportunities have led to numerous diplomatic stand-offs over the last two years. Despite Kuwaiti assurances that the Mubarak al-Kabir port will not affect Iraqi shipping, the cost of importing a container into Kuwait is considerably cheaper than into Iraq - USD1,085/container as opposed to USD3,550/container in 2012, according to the World Bank. If even some of this cost - which covers customs clearance, ports fees etc. - could be reduced through shipping through Kuwait and then transporting onwards by land into Iraq, the Grand Faw port may struggle to attract the business it needs. Elsewhere in the port sector, Japan has offered loans of about JPY120bn (USD1.24bn) to Iraq to build a new refinery and rebuild the port of Khor Al-Zubair. Both loans will have a term of 40 years and JGC Corp and Chiyoda Corp are expected to bid for the Rumaila refinery project, while Toyota Tsusho, Toyo Construction and Toa Corp are expected to bid for the Khor Al-Zubair rebuilding project. Gateway To Iraq Coastline Of Iraq 
Source: BMI AirportsSeveral airport projects and smaller-scale road projects are in the pipeline, but none that would add notable value creation, though there is longer-term potential for Iraq to expand its currently limited air transport facilities. The country's existing airports in Baghdad, Basrah and Najaf (among others) are subject to expansion plans and Iraq has approximately USD50bn in the long-term project pipeline. These include the construction of new terminals, operations and air traffic management contracts. Domestic airline Iraqi Airways is positive about the potential for future growth, having ordered 55 new airplanes (at a cost of USD2.6bn) from Bombardier and Boeing. Other plans include the construction of an international airport to serve the provinces of Karbala and Najaf. Initial studies for the project, dubbed the Mid-Euphrates Airport were carried out by France's Aeroports de Paris (ADP), which displayed its designs in late 2010. In May 2013 the process for prequalification for the three phases of the airport were opened. Although companies from the US, Italy and Germany have been invited to take part in the bidding process, Turkish and Emirati firms will be the most likely winners of the contract. This is partly explained by geographical proximity, cultural affinities and their tolerance for high-risk ventures. Turkish TAV is a case in point; after withdrawing from the Istanbul airport bidding process, the company has expressed its interest in participating in the construction of other airports, particularly in the Middle East. Hussein al-Yassiri, deputy chairman of the Al-Diwaniyah governorate investment authority, spiked interest when he said multiple major project announcements were imminent. These included projects related to the long-delayed USD1.35bn Al-Diwaniyah International Commercial Airport, including a USD210mn cement plant and five other investment contracts worth about USD250mn. Kuwaiti firm Al Nasriyah signed an agreement to build and operate the new airport under a 45-year contract and construction was expected to begin in 2015. No further news has been forthcoming since. RoadsSupply chains in Iraq are dependent on its 59,623km of roads, but the use of this freight mode is plagued with risks due to damaged infrastructure, congestion, and the unstable security situation. In addition, large sections of the road network in the north and west of the country are currently unusable due to the poor security situations, while land border connections to Syria remain closed. In the roads sub-sector, the Iraq Transport Corridors Project, for which a USD355mn commitment from the World Bank Board of Directors was approved in December 2013, aims not only to invest heavily in transport projects to boost trade within Iraq, but also to remedy the institutional weaknesses that have dogged the implementation of projects historically. It will be implemented in partnership with the government of Iraq, which will contribute USD384mn, and the Islamic Development Bank, which will contribute USD217mn at the first phase. The project will facilitate trade movement between Iraqi governorates and with neighbouring countries. Other road projects include the construction of a dual carriageway, which will link Erbil to Haji Omaran in Kurdistan. The project consists of two main sections. Work on the first 8.82km section includes the construction of Pirmam Road, the 3.57km Bani Harir tunnel, a 2.45km tunnel and an 850m road, and expansion of the 21.32km Korey-Shaqlawa-Mama Jalka road. The second section involves building a 16.69km dual carriageway from Choman to Haji Omaran, to be completed by end-2017. The ministry completed the design and preparation of a 62.69km dual carriageway road and tunnel between Mama Jalka and Choman. Table: Major Projects - Transport Project Name Sector Value (USDmn) Size Unit Companies Time- frame End Status Status Notes Grand Faw Port Project, Basra Ports 6100 99000 '000 tonnes General Company for Ports of Iraq (GCPI) [Operator]{Iraq} In tender/ Tender launched January 2016 - Iraq Plans to Sell Shares in USD1.3 Bn Grand Faw Port Plan; June 2015 - The deadline for receiving applications expires at the end of June, but it may be extended by the Transport Ministry to allow more firms to apply; Port will have an annual handling capacity of 99mn tonnes per year, a 39-km container quay and another 2-km berth, a container warehouse spreading over 1mn square metres Kurdistan Electric Tramway Project Rail 4500 150 km Ministry of Transportation & Communication of Iraq[Sponsor]{Iraq}, Kurdistan Regional Government[Sponsor] {Iraq}
2017 At planning stage May 2014 - Completion of the project expected in June 2017; Construction contract for the project expected to be awarded by February 2015 Al-Diwaniyah Airports 1350 Al-Diwania 2017 At
March 2015 - International Commercial Airport Project Governorate[Sponsor] {Iraq}, Iraqi National Investment Commission[Sponsor] {Iraq}, Al- Nasriyah[Operator] {Kuwait} planning stage Construction expected to begin shortly; January 2015 - Agreement signed between Al- Diwaniyah governorate officials and the National Investment Commission of Iraq
Major Projects - Transport - Continued Project Name Sector Value (USDmn) Size Unit Companies Time- frame End Status Status Notes Baghdad - Turkey Highway (Highway No. 2) Project
Roads & Bridges 1200 508 km Government of Turkey[Sponsor] {Turkey}, Government of Iraq[Sponsor]{Iraq}, Kaltig[Construction] {Iraq}, Cowi[Design/ Architect]{Denmark}, International Monetary Fund[Financier]{United States} Contract Awarded January 2013 - MoU signed between Kaltig and Iraqi Ministry of Construction and Housing; Total Length 508km
*Where blank = not available. Source: BMI Key Projects Database Yüklə 406,76 Kb. Dostları ilə paylaş:
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