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Qatar’s FIFA Spending Plan

Major investment in transport and logistics infrastructure holds the key to diversifying Qatar’s economy as the FIFA World Cup 2022 approaches. Jason O’Connell writes.

On 21 November 2022, the eyes of the world will turn to the tiny emirate of Qatar as it becomes the first Arab nation to host the FIFA World Cup, the greatest sporting spectacle on earth. Though there are still more than six years to go until a football is kicked, the sheer scale of this event is driving robust economic growth in Qatar just as a slide in oil prices has threatened to put the brakes on progress elsewhere in the Middle East.

The country’s 2016 budget estimates revenues of $42.9bn, well below $62bn in 2015, yet total spending for the fiscal period will fall by less than $5bn to $55.6bn this year. As far as Qatar is concerned it’s full steam ahead with its ambitious mid-term goals.

Alongside the obvious investments in stadiums and a 400% expansion in the number of hotel rooms to accommodate the estimated 1 million visitors that are expected to descend on Qatar for the World Cup, the country is investing billions of dollars in huge projects such as airports, ports, railways and roads. Government spending on infrastructure has risen from 14% to around 25% of the budget with a strong emphasis on transportation infrastructure which will receive an injection of $140bn over the five years through 2020.

“Qatar has made significant progress in developing its logistics infrastructure in recent years in line with its overall strategic vision, QNV 2030,” says Sam Achampong, GM of The Chartered Institute of Procurement and Supply (CIPS) MENA. “In addition to the recently completed Hamad International Airport, ongoing development of road infrastructure and a major rail infrastructure project, other examples such as Lusail City and Mesaieed have led to an estimated increase of 35% of development in this area.”

Hamad International Airport (HIA) opened to much fanfare in May 2014, giving Doha the capacity to handle 30 million passengers per year compared to 14 million previously and 1.4 million tonnes of cargo per year. The $15bn project’s existing passenger terminal will soon be expanded to handle 53 million passengers per year by 2020, with an enlarged main building to make room for more check in areas while the addition of two new concourses (D and E) will eventually add 24 new gates. Close to the airport there are plans to build Airport City, a 10m-sq-metre development organised into four zones – including a Logistics District.

Qatar Rail is overseeing construction of an integrated rail network, comprising the Doha Metro as well as the Lusail Light Rail Transit (LRT) and a long distance railway line to connect with Saudi Arabia and onwards to the rest of the GCC. The first phase of the metro is set to be operational in 2019 with three lines and a total of 37 stations. The second phase involving another line entirely underground should be complete in 2026 bringing the total number of metro stations to 100.

Meanwhile, construction is progressing on Lusail City’s LRT system which will comprise four lines totalling some 33km of track and 30 stations. The first three phases of construction have already been completed with the remaining two phases expected to be concluded in January 2019 and June 2020, respectively. The LRT system will be integrated with the Qatar National Railway network, and will also connect to the Doha Metro at its Pearl City station.

A new long-distance passenger and freight railway will link major urban and industrial centres in Qatar to Saudi Arabia and the larger GCC-wide railway system. The Qatar section will consist of five main lines built in four phases with the first consisting of a 140km line to Saudi Arabia. However progress on this project has been slow, not just in Qatar but in the GCC as a whole. The original deadline for completion of a GCC network was 2018 but that now looks highly unlikely with significant work yet to get underway. GCC officials met recently to discuss a more realistic target date for the project but as yet there is no word on the new deadline.

But probably the centrepiece and most critical element of Qatar’s transport and logistics infrastructure is the development of the Hamad Sea Port located in Umm Al Houl near Mesaieed, whose first phase was originally planned to be operational in 2016, but was brought forward and made operational last December. The initial timeline for the completion of the $7.4bn scheme was also brought forwards by a decade – from 2030 to 2020 – on the orders of Qatar’s prime minister.

Meanwhile, the mega project is preparing its second and third container terminal expansion, which will increase the annual handling capacity from 2 million TEUs by the end of 2016 to 6 million TEUs by the year 2020. Tenders for the design contract will be issued soon, and any designs submitted are expected to address three main elements: the shipping terminal, the naval base, and the third Qatar Economic Zone.

GWC Warehouse

GWC Warehouse

Special Economic Zones and Logistics Hubs

Integral to these megaprojects as well as the billions of dollars being invested in road networks, is the creation of major logistics hubs and special economic zones. In December the government allocated some 1,654 plots to local companies at a logistics hub covering three separate sites strategically located near Al Wakrah in the south of Qatar close to Hamad Port, Mesaieed Industrial City and the country’s Orbital Highway. The aim of this hub is to help satisfy the shortage of warehousing and industrial space in Qatar and is particularly targeted at small and medium sized enterprises (SME), the government says.

Companies are expected to invest in excess of $8bn to build a variety of facilities such as warehousing, showrooms and workshops in the three areas at Al Wakrah, Birkat Al Awamir and Aba Salil. They have until the middle of 2018 to begin operations of their businesses and facilities, the Ministry of Economy and Commerce said last year. Plots range in size between 1,000m2 to 67,558m2 on 30-year leases starting at QAR40/sqm per year, rising by 5% every three years.

The logistics zone project is operated by state-run Manateq, which is also overseeing the development of Qatar’s Special Economic Zones (SEZ).

“The various projects handled by the Economic Zones Company (Manateq), aim to address Qatar’s needs of logistics infrastructure and economic zones,” says Abdulaziz Al-Sahlawi, director of PR, at Gulf Warehousing Company (GWC). The firm’s footprint in Qatar covers 2 million square meters and includes Logistics Village Qatar, Ras Laffan Logistics Hub and Messaieed Logistics Hub, besides others in the Doha Industrial Area. Its portfolio includes warehousing and distribution centers, open yards, and container yards in addition to maintenance workshops, data centers and staff accommodation.

“Manateq, in cooperation with the National Logistics Task Force has been taking swift action to bolster the local economy, most recently by securing QAR 1.8 bn in funding for the logistics areas to be constructed in the south of Wakra. This is in addition to its previously signed commitments to develop the Jery Al Samur area.

“The aim is to provide the best possible solutions to both the major corporations as well as SMEs and start-ups, the latter in particular are seen as the way forward in the nation’s quest to diversify the country’s economic sectors. The GWC Bu Sulba Warehousing Park is a good example aiming to fulfill a gap in the small and medium enterprises vertical within the logistics arena.”

A special economic zone will be built in Ras Bufontas as a warehousing and logistics hub next to Hamad International Airport. The 4 km2 facility is the smallest of three planned special economic zones, the other two being the 38.5 km2 site in Al Karana and a 33.5km2 site at Um Al Houl near Hamad Port, south of Al Wakrah.

“The construction of the economic zones is the biggest current investment in the logistics sector in the State of Qatar,” explains GWC’s Al-Sahlawi. “The aim of these zones, of course, is to encourage both the development of Small and Medium Enterprises from within as well as encouraging international direct investment in the country. These projects have therefore had major government support, which sees them as key investments in the nation’s economy.”

With the price of oil having fallen by so much over the past two years, logistics infrastructure is playing a vital part in helping to diversify Qatar’s economy, an effort which is at the heart of the Qatar National Vision 2030.

“With the hydrocarbon industry facing a new reality, it fell upon the non-hydrocarbon industries to make up for the gap, having for the first time surpassed the 50% contribution mark to the GDP of the nation,” says Al-Sahlawi. “The company is in a strong position to capitalise on the high priority the state is placing on diversifying income sources, and increasing the participation of the private sector in various aspects of economic activity and the overall development of the state.

“The current global trade slow-down can be a challenge toward these mega projects. Nonetheless, the logistics sector will be there to support the country’s initiatives in the short and long-term.”

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