As one of the region’s biggest players when it comes to Airport projects, Turkish construction firm Tepe Akfen (TAV) has completed no less than nine projects on airports in Turkey, Dubai, Egypt and Georgia, and currently has a further seven under development in Qatar, Libya, Oman, Macedonia and Saudi Arabia.
Following an announcement on Monday August 8 that the firm has just been awarded a BOT contract under a public private partnership for Prince Abdulaziz International Airport in Medinah, Saudi Arabia, Gulf regional director Yusuf Akcayoglu explains the contract to The Big Project.
What will TAV be specifically responsible for at Medina International?
We have been successful with our bid for the PPP contract of the expansion of the Medina International Airport. Consortium led by us, includes Saudi conglomerates: Saudi Oger and Al Rajhi Holding. Proposals were submitted to the Saudi Arabia’s General Authority of Civil Aviation (GACA) in June this year. After the technical evaluation that took almost two months, commercial proposals were opened on Monday.
Under this PPP scheme, we will design, finance, build and operate the airport for 25 years. First phase is an expansion of more than US $ 1 Billion that will increase the current annual passenger capacity from 4 million to 8 million. This includes the construction of a new terminal building and the renovation/construction of runway-apron-taxiway systems. Also there is a second phase expansion planned for 10 years ahead, which will ultimately increase the yearly capacity to 16 million passengers.
TAV has worked on a number of airport projects; can you please list these and tell me which one was completed most recently.
We have extensive experience for airport projects under this scheme. In fact, TAV was born with the BOT project of the Istanbul Ataturk International Airport. Capitalizing on our success at the implementation of this model, we built and currently operate the Ankara, Izmir and Alanya Gazipasa international airports in Turkey; Monastir and Enfidha international airports in Tunisia; Tbilisi and Batumi international airports in Georgia; Skopje and Ohrid and Ishtip airports in Macedonia. Medina International Airport is our 11th.
On the other hand, through TAV’s construction arm, we have also pursued several multi-billion dollar worth EPC airport project contracts. To begin with, we are the main contractor of the Passenger Terminal Complex package of the New Doha International Aiport that is due for completion in early 2012. In Oman, we are working on the MC-1 package of the Muscat International Airport, which includes runway-apron-taxiway and related infrastructure works. We are also building the Pile Caps and Associated Works, of the Abu Dhabi International Airport Midfield Terminal Complex. This one is similar to an enabling works package. We are currently underway with our preparation for the main tender of the terminal complex itself. Tender submission date has been extended to November.
We have two halted projects in Libya; the Passenger Terminal Buildings package for the New Tripoli International Airport and the Sebha International Airport. We expect to continue these two next year when the unrest is over. Finally, we built the 300,000 square meters Terminal Building 3 of the Cairo International Airport project in Egypt.
Why are PPP contracts significant for airport development in the region?
Winning the tender for the Medina International Airport signifies our long-term commitment to the region and Saudi Arabia. Saudi Arabia, the largest oil exporter in the World, is one of the most important economies of the Middle East. More importantly, Medina is one of the holy cities of the Islam religion; therefore, it is even a greater pride for us to have the opportunity to be present at the gateway of this inspirational city to the World.
What makes this a remarkable success is the fact that this will become the first application of PPP scheme not only into airport developments but also to the GCC’s transportation industry. Gulf Region, because of its geographical location, is a natural hub bridging the rising East, led by China and India, with the West. Therefore, I believe that the GCC countries are absolutely correct for the invesment into their aviation infrastructure and they are also very successful with the results yielded.
PPP projects are usually implemented in geographies where there is shortage for funding. In the Gulf, obviously there is no shortage for finance; but choosing the PPP scheme can be described as the more efficient and effective way of the realization of the development. It optimizes each party’s interest; and public sector, which can be categorized as the Ministries and Authorities as transportation is the case, still have the final word for decisions taken for the development. However, the expert company or group, bring-in the know-how, operational experience and financing into the picture in a more timely and less complex manner. Hence, the consortium that undertakes the contract is encouraged to make the development operational rapidly, as the early completion means early revenue generation.
Specifically for airports, I believe that PPPs are more favourable because the operational excellence will add value to the countries. Meanwhile it is mostly successful because having the actual operator build the airport, discrepancies/deficiencies that may arise during the Operation Readiness – Airport Transfer stage are mitigated. Hence, the ORAT stage is less time consuming and more effective. Therefore, from the planning, design, financing stage until the operation; the process is very efficient.
There have been some discussions in the past casting doubt on the future of PPP projects in the Gulf’s transportation industry. We may have seen some projects that still remain uncertain; but the important thing is that implementation of PPP at Medina Airport will prove that this model is doable. Therefore, in the Gulf, I think that we may hear some more transportation projects awarded under the same scheme in the near future.