IFC advised the General Authority of Civil Aviation (GACA) of the Kingdom of Saudi Arabia, which had been operating at a deficit of $5 per departing passenger, in two landmark private sector participation projects: the expansion and rehabilitation of the Hajj terminal at King Abdulaziz International Airport (KAIA) in Jeddah (which is the terminal dedicated to the pilgrims visiting Mecca for the Hajj and Umrah pilgrimages); and the development of a new 30,000m³/day desalination plant to supply potable water to the KAIA airport and its associated facilities. The projects will have a tremendous impact on the millions of pilgrims that use the airport, improving the current sub-standard facilities and intermittent supply of water, and reducing the extremely long processing and waiting times.
The project resulted in significant savings for GACA, which was previously operating at a deficit, to sustain the operations of the Hajj terminal. It is estimated that GACA will save over $23 million per annum, starting from the first year of the project, increasing to an estimated $25 million as a result of the growth in passengers and the change in the traffic allocation to the terminal. Savings are further increased when taking into account the capital costs avoided, with $250 million of private investment expected to be mobilized over the life of the project. The project is also the first step in the General Authority’s redevelopment program to meet the airport’s increasing volume of passenger traffic.
Expansion and Rehabilitation of the Hajj Terminal:
Development of a New Desalination Plant to Supply Potable Water to King Abdulaziz International Airport:
The desalination project will significantly lower the cost of water and introduce international best practices in the operation of the desalination plant at the airport. This will lead to a more sustainable and improved water supply, impacting millions of airport users every year. It is estimated that the price quoted by the winning bidder will save GACA about $12 million per year as a result of technical, economic, operational, and managerial efficiencies. Savings are further increased when taking into account the capital costs avoided. In fact, it is estimated that the project will mobilize over $35 million in private investment in the country.
In addition, the projects have set a precedent in Saudi Arabia for transparency and the establishment of best practices in the selection of private sector partners for infrastructure projects. This helps to demonstrate the benefits of transparent and competitive processes in the selection of long-term partners for the government.