Leighton Bags $1.7 Billion Qatar Road Project

Wednesday, March 26th, 2014
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Construction giant Leighton’s troubled Middle Eastern joint venture has bagged a $US1.7 billion contract to build a section of highway in Qatar which is set to form part of a major overhaul of that country’s road and transport network.

Earlier this week, the company announced its Middle Eastern Habtoor Leighton Group (HLG) joint venture with Al Jaber Engineering had been awarded the QR6.15 billion contract by Qatar’s public works authority Ashghal for the design and construction of the New Orbital Highway and Truck Route, Contract 3 near Doha.

Set to take around 36 months to complete, the new project covers a portion of the highway connecting the Mesaieed industrial area and New Port Projects to Selwa Road and includes around 56 kilometres of road as well as five main interchanges.

The new road is part of a seven-year overhaul of Qatar’s road network which began in 2012 and involves 34 major projects that will deliver more than 980 kilometres of new roads as well as 240 multi-level interchanges and an array of underpasses and flyovers.

A key part of the program, the new highway will include more than 200 kilometres of road, 22 major intersections of bridges and tunnels, and infrastructure improvements such as a storm water drainage network, treated sewage effluent networks, electrical and telecommunication networks, street lighting and substations.

A special feature of the design revolves around having two separated truck lanes in each direction to go along with five regular lanes, as well as provisions for two further lanes in order to segregate heavy goods vehicles from regular traffic.

For Habtoor Leighton, the new project is more than five times bigger than any other it currently has going in Qatar, a list of works that includes the building of five hotel towers in the middle of Doha with connections to the Doha City Centre Mall, the first phase of the Doha’s retail and commercial ‘Northgate’ development and a raft of new reservoirs and pumping stations.

The latest contract also comes amid ongoing turbulence for HGL – a joint venture between Leighton and UAE based Al Habtoor Group – amid increasing speculation about further write-downs resulting on uncollected debt.

An ABC report earlier this month suggested Leighton could be sitting on as much as $2 billion in write-downs not only because of difficulties in collecting HGL’s receivables but also delays with regard to work it is performing for Chevron on the Gorgon LNG plant.

In its latest half-year results released last month, Leighton said the HGL had roughly broken even in 2013 on the back of increased revenue as well as reduced costs.

HLG CEO and managing director José Antonio welcomed the latest contract win, saying Qatar was a critical market for the JV.

“The Orbital Highway is a major opportunity for HLG and our joint venture partner Al Jaber Engineering, and we are pleased to have been selected by Ashghal to work in partnership with them to deliver such an important element of national infrastructure for Qatar,” Antonio said.

Design and construction will begin in the second quarter of this year and is set to finish up in the second quarter of 2017.

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