JEDDAH, 12 December 2007 — The finances for the new Haj and Umrah terminals at Jeddah’s King Abdul Aziz International Airport (KAIA) were secured yesterday when agreements were signed for the SR786.75 million ($205 million) funding of the total SR1.143 billion ($305 million) to build the project. The signing ceremony was held in the headquarters of the Saudi Binladin Group (SBG) in Jeddah. The project financing is a limited recourse Islamic (Ijara) finance plan and as such, the agreement set a new marker in financial history as the first Islamically structured BTO loan in Saudi Arabia or the Middle East.
The BTO concession has been awarded by the General Authority for Civil Aviation (GACA) for a 20-year period to the Haj and Umrah Terminals Construction and Development Company (HTDC). The company was set up for this project and is chaired by Mohammed Binladin. After the initial 18-month construction period, the project will revert to GACA after which HDTC’s revenues will be from a fixed terminal building charge and through other aeronautical and non-aeronautical services.
The total financing for the project was secured through a club deal with the Islamic Development Bank, Bank AlJazira and Credit Suisse. Gulf One Bank acted as financial adviser and structuring bank for HTDC.
“This transaction is setting the stage for the continuous success for future top international standards in infrastructure business within the region and the Islamic world,” Binladin said. “More importantly, it is attracting the most intelligent international investors to add long-term value and build strategic partnerships in the region.”
He noted that the SBG had a long history of involvement with KAIA and was the first private investor in the project in 1981. He commented on the need for the project and his expectations for the coming years. He noted that the throughput of passengers at KAIA had risen to 15.1 million by 2006. “Of these, 1.72 million were Haj travelers and 2.26 million Umrah travelers.
Umrah has been the fastest growing traffic segment since 1997 and Saudi embassies and consulates aboard have already issued 3.2 million Umrah visas in this Hijra year.”
Binladin identified four GACA objectives for the project. Overall, it will increase the Haj terminal’s capacity and standards of service quality. Parallel to this, the project will aim to turn the terminal into a commercially viable and self sustaining business, independent of financial subsidies from the government; to introduce private sector financing and expertise and implement a Public Sector Partnership that will act as a model for similar transactions at other Saudi airports and infrastructure projects. Ziad Aba Al-Khail, CEO of Bank AlJazira which is a participant in the financing said that in arguing the case for approving the financing of the project, the bank had three priorities: To provide comfort to Haj and Umrah travelers; to be in line with government economic liberalization tendencies and that the financing be Shariah compliant.
The interim phase of the project was completed in September this year and Phase 1 of the main project begins in January 2008.
