Public-Private Partnership Impact Stories Saudi Arabia: Hajj Airport Terminal Photo © Jean Laprevotte/IFC The millions of religious pilgrims who visit Makkah and Madinah every year are experiencing better quality services at the Hajj Terminal at Jeddah’s King Abdulaziz International Airport as a result of a concessions awarded by the General Authority of Civil Aviation of the Kingdom of Saudi Arabia (GACA) to expand and modern- ize the terminal facilities. The concession agreement was signed in December 2006, the construction was completed in September 2010, and the terminal is now fully operational. A consortium led by the Saudi Binladin Group in association with Aéroports de Paris Management won the 20-year build-transfer-operate concession for the Hajj Terminal in Jeddah. The consortium has invested $249 million in a new terminal has the capacity to process 3,800 arriving passengers and 3,500 departing passen- gers per hour, which meets the level “C” service standard from the International Air Transport Association (“IATA”) for peak operations. This series provides an overview of public-private partnership stories in various infrastructure sectors, where IFC was the lead advisor. 6.2 million Hajj and Umrah pilgrims were served in 2010 and IFC Advisory Services in Public-Private Partnerships processing and waiting times have markedly improved. 2121 Pennsylvania Ave. NW Washington D.C. 20433 ifc.org/ppp BACKGROUND ensure selection of a reputable consortium capable of handling Since 1981, the Hajj Terminal at King Abdulaziz International such a complex airport infrastructure project. Airport in Jeddah has been the main facility for processing Nine (Saudi and international) consortia were prequalified and pilgrims visiting Makkah and Madinah for the Hajj and Umrah five submitted bids. Based on the combined scores of the technical pilgrimages. The increasing number of Hajj pilgrims every year and financial proposals, the consortium led by the Saudi Binladin overburdened the capacity of the outdated facilities, resulting Group in association with Aéroports de Paris Management was in poor service and long processing and waiting times. GACA awarded the contract, along with two other shareholders, Al Najah recognized that the existing terminal was inadequate to handle Economic Development Company and The Al Najah Investment the growth of Hajj and Umrah pilgrims and looked to IFC for Development Compnay. The companies have joined forces advisory assistance. through a specialist purpose company called Hajj and Umrah Terminals Development Company. IFC’S ROLE GACA appointed IFC as the lead advisor for structuring and implementing a public-private partnership with an international airport operator that had the experience to build and operate POST-TENDER RESULTS modern terminal facilities. • The fully modernized East Hajj Terminal was GACA’s objectives included: completed in time for the 2010 Hajj. • Increasing terminal capacity and the quality of airport services. • 6.2 million Hajj and Umrah pilgrims were served • Developing the terminal as a commercially viable business in 2010 and processing and waiting times have to minimize government subsidies. markedly improved. • Introducing private sector financing, technical expertise, • The terminal is expected to serve 11 million and efficiencies. pilgrims by 2022. TRANSACTION STRUCTURE • $249 million has been invested in the project Because the existing terminal had such serious capacity and as of 2010, in line with original estimates and service deficiencies, GACA emphasized the need for timely timeframes. improvements. The concession agreement included three phases: • Between 2013-2017, the fiscal impact of the proj- • Interim: immediate operational and facility rehabilitation ect will be $14 million, higher than the original to improve passenger processing before the concessionaire estimate of $10 million for that time frame and is takes over operations. expected to generate $55 million by 2028 • Phase I: increased capacity to process 3,800 arriving passengers * Unless otherwise stated, monetary values are presented and 3,500 departing passengers per hour, which meets the level in 2010 US dollars. Results are from a post-completion “C” service standard from the IATA for peak operations. evaluation completed November 2010. • Phase II: implementation of the concessionaire’s strategy and vision for the long range rehabilitation of the complete Hajj terminal complex. This story was originally published in 2010, and updated on 08/2013 In return for the capital investment, the concessionaire was granted exclusive rights to: • Handle all Hajj and Umrah passengers at the airport. • Collect fees from airlines using the terminal. • Collect terminal building charge payments from GACA; the payments are based on the volume of passenger traffic in the terminal. • Collect non-aeronautical fees at commercial rates. BIDDING IFC organized a transparent international bidding process to