Saudi Ports Authority signs major contracts with DP World, Red Sea Gateway

Saudi Ports Authority signs major contracts with DP World, Red Sea Gateway
Terminal tractors line up as they are loaded with containers from a cargo ship at DP World’s fully automated Terminal 2 at Jebel Ali Port in Dubai. (File/Reuters)
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Updated 24 December 2019

Saudi Ports Authority signs major contracts with DP World, Red Sea Gateway

Saudi Ports Authority signs major contracts with DP World, Red Sea Gateway
  • The agreements will help the Kingdom to transform into a vibrant trading hub in the region

JEDDAH: Mawani, the Saudi Ports Authority, has signed concession contracts with global port operator DP World and regional port operator the Red Sea Gateway Terminal (RSGT) to develop and operate container terminals and use Jeddah Islamic Port as a regional hub for transshipment.

In its announcement on Monday at the signing ceremony held in Jeddah, Mawani said that the Build, Operate, and Transfer (BOT) contracts are valued at around SR9 billion ($2.4 billion).

The event was hosted under the patronage of Deputy Makkah Gov. Prince Badr bin Sultan, in the presence of Jeddah Gov. Prince Mishaal bin Majed, Transport Minister and Mawani Chairman Saleh bin Nasser Al-Jasser, and Minister of Industry and Mineral Resources Bandar Al-Khorayef.

In his speech Al-Jasser said: “The agreements between Mawani and DP World and RSGT are part of the Ministry of Transport’s and Mawani’s strategic plan to transform Saudi Arabia into a vibrant trading hub in the region.”

He said the contracts also fulfill Crown Prince Mohammed bin Salman’s vision in utilizing the Kingdom’s geographical location as a midpoint connecting the three continents and a global trade hub through which nearly one-third of international trade travels.

Al-Jasser spoke of the importance of increasing the capacity of Saudi ports by strengthening partnerships with the local and global private sector, providing the latest operating systems aligned with global standards, and accelerating the import and export ecosystem.

“The agreement also contributes to the utilization of the differential advantages of Saudi Arabia’s strategic location on international maritime trade routes and enhances Jeddah Islamic Port’s position and role in the national economy in line with Saudi Arabia’s Vision 2030,” Al-Jasser said.

Mawani President Saad bin Abdul Aziz Al-Khalb said the concession contracts, the largest in the history of Saudi ports, are one of the Kingdom’s biggest privatization deals, with a duration of 30 years.

He said that the project was designed in collaboration with the Ministry of Transport and the National Center for Privatization to activate the memorandums of understanding that Mawani had signed in the presence of the crown prince during the launching of the National Industrial Development and Logistics program last February.

He said that Mawani aims to strengthen public-private partnership in line with Vision 2030, and to increase private sector investment in long-term contracts to advance operational efficiency of infrastructure and optimize the benefit from investments. It also plans to increase the share of the private sector in Saudi ports to 70 percent by 2020.

Chairman of DP World Sultan Ahmed bin Sulayem valued this partnership as an initiative that reinforces the brotherly relations between the Kingdom and the UAE. 

He said this step confirms the Kingdom’s huge potential that will ensure its success in the strategic transformation toward revenue diversification, which is depicted through its trade development initiatives in ports and logistics services.

The CEO of Saudi Industrial Services Co. (SISCO) and member of the board of directors of RSGT, Mohammed Al-Mudaris, said the contract represents an extension of a journey that started a decade ago when RSGT became the Kingdom’s first national container terminal to be built by the private sector. 

“During that project, the company invested more than SR2.5 billion in infrastructure and Saudi workforce that contributed to achieving the highest global productivity rates,” he said.

Al-Mudaris said that RSGT’s commitment to inject SR6.6 billion over the contract term confirms the company’s confidence in the Kingdom’s reliable business environment that attracts private investments in the relevant fields. He indicated that such investments will enhance Jeddah Islamic Port’s position as a basic pillar and a global logistics hub for maritime trade.

The signing of the new concession and operation contracts for Jeddah Islamic Port represents a major step toward achieving Mawani’s developmental strategy which aims to increase the container terminals’ capacity by more than 60 percent (to over 12 million containers annually, compared to the current 7.6 million containers), in addition to providing around 4000 new jobs in the sector, and increasing demand for local content and investments flow. This will reflect positively on achieving the objectives set for the ports sector and enhancing its performance, both in terms of quality and quantity.