Dubai: Saudi Binladin Group (SBG), the kingdom's largest civil contractor, yesterday signed an 8.5 billion Saudi riyal (Dh8.32 billion) syndicated finance package from a consortium of regional and international lenders that will help the company to execute a 27.1 billion-riyal project to develop and expand King Abdul Aziz International Airport (KAIA) in Jeddah.
KAIA is the major gateway to Makkah, where more than three million pilgrims gather for the annual Haj and a growing number of Muslims perform Umrah throughout the year.
SBG last year won the contract to develop KAIA from the General Authority of Civil Aviation (GACA), Ministry of Defence and Aviation and the Inspectorate General.
Led by Gulf International Bank (GIB), the consortium includes Abu Dhabi Commercial Bank, Maybank (Malaysia), Samba, Union National Bank, Ahli United Bank, Emirates NBD, Arab National Bank, BNP Paribas, Arab Banking Corporation, Arab Bank plc and the Bank of Bahrain and Kuwait.
"GIB was initially mandated to arrange a 6 billion riyal syndicated facility for SBG, which subsequently was raised to 8.5 billion riyals to accommodate additional financing requirements of SBG," the company said.
Named after King Abdul Aziz Al Saud, the airport is Saudi Arabia's third largest air facility and busiest airport by passenger volume. The airport occupies 15 square kilometres.
Construction of KAIA airport began in 1974 and was completed in 1980. Finally, on May 31, 1981, the airport opened for service after having been officially inaugurated in April 1981.
Because of Jeddah's closeness to Islam's holiest city of Makkah, the airport stands for one feature in particular: the Haj Terminal specially built to handle foreign pilgrims.
Many airlines from Muslim and non-Muslim countries have used the Haj Terminal, providing the capacity needed to carry pilgrims to Saudi Arabia. It was designed by Fazlur Rahman Khan of the architectural firm Skidmore, Owings and Merrill LLP (SOM).
Gulf nations are set to spend Dh330 billion ($90 billion) on airport development by 2020, a recent report said.
"Given the recent expansion by Saudi Arabian Airlines and its ongoing fleet modernisation, development and growth at Jeddah Airport is poised to focus on the ever growing numbers of passengers and pilgrims that flock to the western side of the country, most notably during the Haj," said Saj Ahmad, UK-based aviation analyst with FBE Aerospace.
New competition
Of all the GCC countries, Saudi Arabia has been conservative in its expansion plans and wary of opening up to new competition.
"Expanding the airport gives hope to increased flights and consumer choice as well as giving Saudi Arabia a better chance of snaring further traffic away from key hubs such as Dubai and Doha. However it remains to be seen if this expansion does translate into more competition," he said.
The region's aviation sector is poised to see a number of airports redevelop and expand, as Gulf states move to position themselves as global travel hubs.
Dubai has allocated $10 billion, Abu Dhabi has allocated $6.8 billion, Qatar $11 billion, Jeddah $8 billion, Muscat $1.2 billion and approximately $2.1 billion in Kuwait.
Aviation and tourism have been earmarked as key growth areas for the Gulf over the next decade. The wider Middle East is forecast to see 400 million air travellers by 2020, according to IATA statistics.
Due to high passenger demand, the Saudi government earlier ordered massive expansion of the KAIA.
The new development is taking place in three stages that started in September 2006, and is currently scheduled for completion in 2014.
Three new terminal buildings, a high-speed rail link and a capacity for up to 80 million passengers a year are among the targets proposed for a new airport.
Dr. Yahya Alyahya, GIB's Chief Executive Officer, said, "SBG has an outstanding track record in executing large value contracts in the GCC and beyond. GIB and the other financial institutions present today are pleased to have supported SBG for this very important project, and look forward to continue their important role in financing major contracts in the GCC."
