Orbital Highway Supports Forecasts, Eases Congestion
The awarding of two major road contracts in Qatar reinforces our views that transport will be the major focus of infrastructure investment over the next few years and that the road sector will register a period of growth. The new contracts, worth over QAR10.4bn (USD2.8bn), are for the New Orbital Highway and Truck Route, which aims to cut congestion in Doha by looping around the city, enabling heavy vehicles travelling from the New Doha Port to the Ras Laffan industrial area to bypass urban areas.
The newly awarded contracts comprise the second and third of four major design and construction packages for the 180km road, part of Qatar's Expressway Programme. Thus far, the contracts awarded include:
Contract 1: In early January, Ashghal awarded contracts for the design and construction of the first phase (45km and four major interchanges) to a joint venture (JV) between J&P Overseas Ltd and J&P Avax SA., under a contract worth USD895mn.
Contract 2: Awarded to a JV comprising QDVC - which is 51% owned by Qatari Diar and 49% by Vinci Construction Grands Projets - and Qatari Bin Omran Trading & Contracting. The design and construction contract for the 41km section of highway is worth USD1.2bn
Contract 3: This 57kmn section, worth USD1.6bn, has been awarded to the Leighton Contracting Qatar W.L.L - Al Jaber Engineering LCC JV.
The fourth contract for the final section of New Orbital Highway is expected to be awarded in the coming quarters, although it has not been given as high a priority as those roads circumnavigating Doha, where the real congestion problems are being felt. Along with the USD600mn Al Wakrah Bypass which was awarded in March (the largest foreign contract ever won by Indian firm Larsen & Toubro), these projects are all expected to begin in Q214 and be completed in 2017. This very much supports our road sub-sector forecasts, which see buoyant medium-term average growth of 6.5% between 2014 and 2018, taking into account any delays these projects may encounter as capacity within the Qatari construction industry is stretched in the run up to the World Cup.
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