KPIZ project is set to the change the face of Abu Dhabi's economy
As one of the GCC’s biggest developments of the year, the multi-billion dollar Khalifa Port and Industrial Zone (KPIZ) project is one that no contractor can afford to ignore.
Covering a total area of 420km2, it is four times the size of Abu Dhabi island, two-thirds the size of Singapore and 25% of the land mass of Greater London.
With as much as $8.5 billion in construction projects already committed, and another $18.5 billion yet to be awarded for Phase 1 alone, the opportunities for contractors and investors are immense.
Before hearing about the project’s unique characteristics and contract opportunities, not to mention the records broken and construction milestones achieved during development so far, attendees at this month’s Abu Dhabi Ports Press Conference were keen to know why such an expensive project was necessary.
Whilst the property slowdown in the UAE has created an excess of general cargo that would normally be exported, according to the audience, there is also a perfectly decent, main port in downtown Abu Dhabi already.
According to developer Abu Dhabi Ports Company (ADPC), the main reason for the project was to diversify both the Abu Dhabi and UAE economies, with a mega-scale industrial zone reflecting the Abu Dhabi 2030 economic vision by bringing a wealth of new business and manufacturing opportunities to the emirate.
In this sense, the port is set to perform a secondary role to the industrial zone, facilitating its operation by allowing manufacturers access to seawater cooling and supplies by boat.
“Abu Dhabi Ports Company plays a fundamental part in the diversification of the UAE’s economy,” says ADPC’s new CEO Tony Douglas. “The Khalifa Port and Industrial Zone will be particularly important in presenting a breadth of opportunities in line with the Abu Dhabi 2030 strategy.”
Separately, company executives were also keen to stress an imminent need to increase the capacity of Abu Dhabi ports in preparation for an extra 2.6 million tonnes of general cargo expected to hit UAE shores in 2011.
While the existing port Mina Zayed has sufficed up until now, executives from Abu Dhabi Terminals made clear that it had a rather limited capacity today considering the huge influx of incoming cargo that would be witnessed in the coming years.
This being the case, conference attendees were eager to understand why the existing port could not just be expanded.
Douglas was quick to respond: “Mina Zayed is the main downtown port and principal port of Abu Dhabi, about 3km away from Emirates Palace. Obviously when it was built in the late 60s, the head of Abu Dhabi island was absolutely a logical place to put a port, but decades later, it’s a different story.
Today it is the most populated part of Abu Dhabi, which causes problems when the road network gets constrained with a flow of wagons bringing out containers and bulks.
“Equally, this is a prime time real estate area now given its proximity to Reem Island, Saadiyat Island and the downtown business district of Abu Dhabi. At some stage, it will need to be redeveloped given its strategic location and value,” he added.
By contrast, the new port is situated between Abu Dhabi and Dubai, as well as two major airports, Jebel Ali International Airport and Abu Dhabi Airport.
Set to provide a gateway for UAE imports and exports, it will initially have a capacity of 2 million TEUs and 9 million tonnes of general cargo compared with 650,000 and 7.5 million at Mina Zayed respectively.
By 2030, the aim is to have increased capacity to a massive 15 million TEUs and 35 million tonnes of general cargo.
To compete at a global level, the port will also be connected to the mainland via a series of highways, roads and utility distribution networks, as well as a nationwide freight railway line, making it the first port in the UAE to have heavy rail connectivity.
In addition, and unlike some other ports, the Khalifa port will not receive container ships and bulk cargos exclusively, but any kind of vessels, including military and cruise ships.
However, a change of port facilities is not an easy task, and to ensure a smooth transition of port services, ADPC executives plan to gradually phase Mina Zayed out while phasing Khalifa Port in.
Bearing in mind the sheer size of the project, one of the key challenges for developers throughout will be programme management. According to the ADPC, it is essential with any mega project to make certain that construction work is carried out in the right order and to schedule, and that there is clear accountability for delivery of each set of works.
With this in mind, managers have so far split the project into Phases 1 and 2, as well as port and industrial zone, port onshore and offshore areas, industrial zone Areas A and B and a number of industrial clusters within each industrial zone Area.
In line with the existing schedule, Phase 1 of the project, due to be completed by 2012, is well underway, with the majority of construction works focused on the port side.
To date, the majority of dredging and reclamation work for stage 1 of the offshore port island, which includes the first ‘finger’ of the port, the approach channel and main causeway linking the onshore and offshore port areas, has been completed.
Along the causeway, a 60-80m-deep quay wall requiring 28,000 blocks has been constructed, together with a 3m capping beam to hold it in place and contain the utilities cables needed to power cranes and docked ships.
This first finger, which extends 4.5km off-shore and expects to receive vessels by the end of the year, will be replicated another four times out to sea as the port progresses through its five stages of construction.
Also near-completion are the two identical sets of seawater cooling intake/outfall pipework required both for EMAL (currently constructing the world’s largest single-site aluminium smelter in the area) and for the rest of the industrial zone.
This, as well as a 1.7km-long canal ranging between 45m and 80m wide between the onshore and offshore areas containing a basin of water protected from the tide and currents, will facilitate the sea-water cooling process required by the likes of glass and aluminium manufacturers.
Meanwhile, the partly constructed EMAL smelter, which will produce up to 1.4 million tonnes of aluminium per year when complete, is constructed as far as Phase 1, together with a vacuum suction and conveyor belt system to aid the transportation of alumina and coke supplies from incoming vessels to the main facility.
Perhaps some the most critical port elements already constructed include the environmental breakwater that extends around the perimeter of the port and out into the shipping canal, and the bridges connecting the onshore and offshore port areas.
While the bridges hold the record for being the longest and third longest in the whole of the UAE, according to Douglas, the 17km sea wall, costing US$240 million (AED880 million), is significant in “protecting the largest coral reef and seagrass meadows in the UAE” and in demonstrating “the manner in which environmental challenges have been embraced in the Khalifa Port project”.
Project managers say that it will also protect the reef from spills and currents that occur during construction and reclamation of the port island.
While most project elements already completed are ports-focused, the main construction work taking place today is related to the industrial zone.
This follows the assignment of two major earthworks contracts as far back as 2008 to Al Jaber Transport and General Contracting, and Ghantoot Transport and General Contracting Establishment, requiring the contractors to move 40 million m3 of sand from Area B to Area A to raise the ground level in area A by 2.5m above mean sea level.
Scheduled for completion within 36 months of the contracts being awarded, and marking the start of construction in the industrial zone, the works are now steadily progressing, with 1,500 truck movements per day, the equivalent of 1.2 million m3 of sand each month.
“The main activity in terms of construction is the mass land filling work in the industrial zone,” says ADPC project manager Jurjen Groen.
“They’re moving the land from Area B, where there is a big surplus of sand, to Area A, where the ground level needs to be higher because of its proximity to the sea. The other reason for raising the area was because some of it was actually lower than the design ground level based on a stone surface analysis.”
Other contracts already awarded, in line with the project schedule, are associated with the port. According to Douglas, this was not because the port was a priority, but rather, because it was the first stage of development.
“Most of the contracts we have awarded already are pretty much exclusively linked to the port,” he says.
“These are the biggies, the ones in excess of a billion dirhams. That said, the port, for all intents and purposes, is actually one of the smaller elements of the project – the development being an industrial zone with a port rather than a port with an industrial zone. But it’s the first part of the job.”
Other contracts already awarded include those for the construction of onshore and offshore port facilities, and for the construction, testing and commissioning of the port’s power supply. Probably the furthest ahead is the construction of onshore port facilities, which was awarded to Al Habtoor Leighton Group last year.
One of the main things the firm was assigned to was the construction of 47 official buildings, the largest of which is the central facilities building – over 300m long and five storeys high.
In addition, the company was also required to manage the associated infrastructure works for the area, including a series of road networks, bridges, utility installations and landscaping. The works are steadily progressing towards completion in 2011.
The remaining two contracts on the other hand, were not awarded until this year, hence, construction is still in its early stages.
In March, Larsen and Toubro began works for the design, construction, testing and commissioning of an electrical, medium-voltage power supply for Phase 1A of the port.
Here, the company’s primary role was to install a 33kV power cable network and three primary substations to provide the main power supply for the entire Phase 1A of the port, in addition to the construction of civil buildings with utilities such as air conditioning, fire protection and lighting systems.
In July, Ed Zublin AG and Al Jaber Transport and General Contracting were assigned to design, construct, fit-out, test and commission the offshore port’s civil and structural building works, providing the necessary infrastructure to support the commencement of port operations in 2012.
Among the works required of the contractors was the construction of 23 buildings and associated structures, including the six-storey Terminal Operations Building, over 1,000m of additional quay wall and associated marine fenders and bollards.
This was in addition to a 5.4km dual carriageway linking the offshore port to the mainland, as well as associated service roads, street lighting and two helipads. In the future, Zublin and Al Jaber will also be responsible for implementing site-wide utilities in the area, including electrical, drainage, sewerage, potable water and telecoms.
With AED18.5 billion-worth of contracts yet to be awarded for Phase 1 alone, the KPIZ project certainly offers attractive new business prospects to qualified contractors.
According to Groen, there are three new contracts on the cusp of being awarded for the north, central and south areas of Area A within the industrial zone.
“We are currently in the process of procuring the contracts for the primary road, infrastructure and utilities works in Area A,” he says.
“So that basically involves work on the roads, utilities, sewage, seawater cooling, and telecoms systems in the primary corridors. We have divided the area into three parts and will be awarding three separate packages, although the contracts will be fairly general in terms of the work involved.”
Though keeping quiet about the total value of the project, Douglas is also keen to stress that there is “a lot more to come” for those with high health and safety standards and a strong sense of corporate social responsibility.
“We’re looking for world class practice as opposed to regional practice when it comes to safety management,” he explains.
“A formal part of our evaluation is to look at the manner in which contractors demonstrate their corporate social responsibility and how that reflects in the way they operate.”
He adds: “We’re also looking for companies who can act as delivery partners. Others talk bluntly about contractors, but we’re looking for people who will make a very formal commitment to participating in this vital piece of infrastructure for Abu Dhabi.”
As well as hosting the World Ports and Trade Summit in March 2011, the developer has promised to provide more information about contract opportunities and the programme of works at a press conference in November.
The Summit in March will take place at the Abu Dhabi Exhibition Centre (ADEC) with a view to unveiling new projects and giving further explanations as to the investment and development opportunities.