ALG was engaged by Mawani, the KSA port authority, to provide commercial and technical support in the negotiation of concession contracts for three container terminals, two in Jeddah and one in Dammam, that are within its scope.
The Port of Jeddah, the second most important port in the Middle East and the largest in KSA, is the country’s crown jewel, as it serves the main commercial city of Jeddah and is the biggest gateway for imports.
Dammam is Saudi Arabia’s eastern gateway and receives the majority of incoming cargo. It has a large hinterland comprising the nation’s Eastern and Central Regions, as well as a direct railway connection to the capital, Riyadh.
The concession process for the container terminals for these ports was a significant opportunity for the Kingdom and would be a stepping stone for future agreements.
The main objectives of the concession process include:
- Optimise land occupation in the port.
- Create an environment for operators that will facilitate strategies to increase maritime traffic and produce new business opportunities for the port.
- Reduce risks for the Saudi ports authority.
- Define clear KPIs and penalties for operators.
- Standardise the contents and structure of concession contracts to facilitate future negotiations.
Objectives, goals and purposes
The objective of the project was to define the concession model, support the tender process and provide comprehensive support for the handover between the old and new operators of the terminals.
Study methodology and activities
The scope of work included analysing KSA’s container market, a technical review of the terminals, a development plan for the port, and producing a standardised model for new concession agreements, KPIs and tender documents.
The process was divided into three phases to cover the scope of the project:
- Review of projects and proposals and preparation of shadow bids:
● Review of the projects and preparation of shadow bids.
● Review of the existing technical information.
● Market research, which is key for the technical due diligence.
● Technical due diligence for the existing infrastructure.
● Definition of the most suitable development plan for the port.
● In parallel, the consultant will work on analysis of the concession risks and the inputs for the financial model.
● In this phase, the proposals of the tenderers will be analysed to identify areas for improvement, and a negotiation process will be triggered. - Negotiation: once the proposals had been reviewed, a negotiation process was launched with the tenderers with new proposals and counterproposals.
- Finalisation: the consultant will provide support in the finalisation of the deal once the parties have agreed.
Success and outcomes
With ALG’s support, Mawani was able to review a number of high-quality bids presented by local operators and consortiums of large international players.
The award process was completed within Mawani’s tight timeline with a smooth transition process. These three operators will provide premium services that will help Mawani grow business at the ports of Jeddah and Dammam.