Bahrain is set to issue tenders for infrastructure development projects, covering key sectors of housing, utilities and education, worth $4.4 billion over the next three years, said a report.

Nearly half of the project’s total value, or $2.18 billion, will go to housing developments, according to the report by Oxford  Business Group.

The first wave of infrastructure development, announced in January, is gaining momentum, and new construction tenders are starting to be awarded, it stated.

In the first quarter of the year, the Ministry of Works had awarded tenders for three public school construction projects worth a total of around $30 million.

In March, Crown Prince Salman bin Hamad Al Khalifa hinted that officials were ready to announce the winners of a $651 million round of infrastructure contracts, compring new housing developments in Northern City and East Hidd.

As of mid-May, however, contract awardees had yet to be officially announced.

This new round of projects represents the first wave of development spurred by the GCC Development Programme, a $10 billion aid package from GCC constituents approved in 2011 and to be disbursed over 10 years.

Funded by Kuwait, Saudi Arabia, Qatar and the UAE, the programme is intended to help stimulate the Bahraini economy and strengthen social programmes. In January, Deputy Prime Minister Sheikh Khaled bin Abdullah Al Khalifa had announced plans to launch $4.43 billion worth of projects tied to the GCC aid package.  

"The Kingdom plans to build 2,500 houses next year, 1,400 in 2016 and push for another 5,000 units in 2017. These particular projects will be financed by development funds from Kuwait, Saudi Arabia and the UAE," he stated.

King Hamad has made adequate housing supply a priority issue and earlier this year renewed his call to meet a goal of 40,000 new units.

According to OGB, the decades of intense local and regional development have strained Bahrain’s supply of housing. Even as the country’s population growth has slowed – dropping from 6.5 per cent in 2009 to 1.9 per cent in 2012, according to the World Bank – a huge backlog of demand has remained.

As of early 2014, the waiting list for government housing topped 50,000, local media reported. According to a 2011 Gallup poll, 41 per cent of Bahrainis surveyed said they had trouble finding affordable housing.

One perennial issue holding up new construction is the lack of available land. An island of only about 760 sq km, the kingdom is small and, at 1631 people per sq km, the seventh-most densely populated country in the world.

Compounding the challenge, certain areas regulated as “greenbelt” zones are off limits for new development. City councillors in Manama have advocated government purchase of available private lots within development zones for use in housing or other social infrastructure, said the report.

Tight project financing has constrained private sector development in the residential market – an issue Bahrain shares with other GCC countries. A February survey by an international law firm found that 96 per cent of those polled in the construction industry said the cost of capital was as expensive or more so than in 2013.  

Electricity production has been another investment target since the GCC package was assembled in 2011. Of the first round of aid, about $2.2 billion will be devoted to water and power projects, including two, 400-KW electric transmission stations, expected to be put to tender soon.

According to the Electricity and Water Authority, peak demand for power nearly doubled between 2003 and 2012, from 1540 MW to 2967 MW, straining the country’s supply of natural gas, which fuels its power plants.

Current capacity stands at about 4000 MW – enough to meet demand until 2016, according to government estimates.

To help meet future demand, the Kingdom is also pushing forward with developing renewable energy. In 2012, it launched its first solar power project, a 5-MW solar power and smart grid installation in Awali.

An additional 5 MW of combined solar and wind capacity was to begin operations late last year, the OBG report stated.-TradeArabia News Service