Port of call: Khalifa Port Specialby Shane McGinley on Aug 30, 2012
Khalifa Port, the new state-of-the-art gateway to Abu Dhabi, commenced commercial operations on Saturday. Before the launch, Arabian Business caught up with Abu Dhabi Ports Company chief executive officer, Tony Douglas.
When Britain’s queen Elizabeth II inaugurated the $6bn Terminal 5 at London’s Heathrow airport in March 2008, British Airways boss Willie Walsh smiled as the UK’s largest free-standing structure was finally open.
Ten days later, when around 42,000 bags had gone missing and over 500 flights were cancelled, the Irishman’s smile was long gone.
As Abu Dhabi counts down the hours before the official opening of the $7bn Khalifa Port — the emirate’s largest ever infrastructure project — Tony Douglas, CEO of Abu Dhabi Ports Company (ADPC), will be hoping he doesn’t suffer the same fate as the beleaguered British Airways boss.
“On average we are doing about 1,700 tests every day at the moment… This is a megaproject, the biggest megaproject in the region and it has been deliberately kept low-key,” Douglas says with pride, having just come from briefing Sheikh Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, on the final steps under way before the big launch.
“The project is now complete. We go live and operational at precisely 7 am on September 1,” an upbeat Douglas adds.
When asked how he plans to avoid the fate of Heathrow’s Terminal 5, Douglas steals an infamous quote from former US Secretary of Defence Donald Rumsfeld: “There are known knowns; there are things we know that we know. There are known unknowns; that is to say there are things that, we now know we don’t know. But there are also unknown unknowns — there are things we do not know, we don’t know.”
“What you talk about, with big pieces of integration like this, is that you meticulously plan,” Douglas adds. “You look at risks you can sensibly identify and mitigate and then you test them rigorously.
“You try to simulate when things go wrong and how you can recover, and we’ve done all that at Khalifa Port. Are we in as good a shape you could ever possibly hope for? We think we are.”
Size matters when it comes to mega projects in the Middle East and to put the epic scale of this opening into perspective, Douglas points out that Khalifa Port and Khalifa Industrial Zone Abu Dhabi (Kizad) combined are the size of a small country.
Around 420 square kilometres (sq km) in size, the project will be four times bigger than Abu Dhabi island, two-thirds the size of Singapore and will be a quarter the size of Greater London, stretching from Canary Wharf to Slough.
While the opening of the port has been kept relatively low-key, its long-term growth plans are anything but. The port will handle about 800,000 containers this year compared with 767,000 last year which was about a 45 percent increase on the previous year.
At present the main port in Abu Dhabi is Mina Zayed, but the 40 year-old facility is set to hit its capacity of 800,000 containers, just in time for the entire container business to be transferred over to Khalifa Port from the start of September.
“When we move [to Khalifa Port] on September 1, we will use Terminal 1, which [can handle] two and half million containers… Then, when that gets to be full, we will add Terminal 2… So five million containers plays 800,000,” Douglas explains.
Once demand has exceeded the first two terminals at Khalifa Port, ADPC plans to expand further in the run-up to the emirate’s 2030 vision, which presumes a GDP (gross domestic product) growth target of about $417bn.
“Capacity is for 5 million and… when demand fulfils capacity, we will put another L-shape on [the port] and total theoretical capacity in 2030 is 15 million [containers per year],” Douglas says.
However, he is realistic that the port does not want to develop to full capacity straight away and growth will be in stages. “The smart thing is to try and phase it as best you can… You wouldn’t put 15 million in from day one.”
In 2009, about 60 percent of Abu Dhabi’s GDP was generated from oil and gas, with the rest coming from other sectors. However, by 2030, the plan is for that position to be reversed.
“There is four times more [potential non-oil and gas] GDP. There are a wide range of sectors which will provide that growth: aluminium, glass, steel, heavy engineering and targeted industry sectors which the 2030 Vision identified,” Douglas says.
Kizad was designed to supply around fifteen percent of the non-oil and gas GDP in Abu Dhabi and Douglas says around 44 industry heavyweights have signed up to lease land in the industrial zone, which will add around $40bn to Abu Dhabi’s economy.
Leasing of space began in May and so far around two square kilometres have been leased. A further eight square kilometres are in the final stages of negotiations, while a total of 22 square kilometres is available for rental.
Emirates Aluminium (EMAL) is Kizad’s anchor tenant. Its smelter opened in December 2009 and the site features the biggest one-site greenfield aluminium smelter in the world.
Silicon metal smelting company Al Braik Investments, construction parts manufacturer Talah Board and logistics firm Al Batha Trading & Industry Group are set to set up in Kizad and Sharjah aluminium manufacturing firm Mulk Holding plans to launch in the near future.
“For an industrial zone to be successful, it needs three factors,” Douglas. “Firstly, they need access to global markets and we have a deepwater port and two international airports… Etihad Rail runs all the way through the centre of [the site] and onto the port island, so it is the first ever deepwater port to have rail running out to it.
“Second is low operating cost... Energy costs and power are very competitive here. Third is ease to do business,” Douglas says of the attraction of Khalifa Port and Kizad.
United Arab Emirates