Iraq scraps its USD 764 mn Baghdad airport PPP over corruption concerns

Watch this space

Turbulence in Baghdad: Iraq scrapped a USD 764 mn agreement to overhaul Baghdad International Airport over corruption suspicions, Reuters reports. Baghdad pulled the 25-year build-operate-transfer (BOT) contract — awarded last year to a consortium of Corporación América Airports and Iraqi real estate firm Amwaj International — after flagging potential irregularities in the tender and contract terms.

Why this matters: The deal was meant to be Iraq’s private-capital showcase in a push to modernize airports backed by the IFC. The plan aims to raise the airport’s capacity to c. 8.5 mn passengers in phase one, with the consortium running terminals, ground services, and air cargo while the state keeps control of customs and fueling.

The cancellation comes before the financial close, which caps the legal exposure but not the reputational hit. “Canceling before financial close is less damaging than terminating a fully operational concession,” Wouter Dewulf, professor of air transport economics at the University of Antwerp, tells our LogisticsAM Desk. “[The] signal is still important, because international investors look not only at law-related closure but also at the credibility of the entire procurement and award process,” Dewulf says.

IN CONTEXT- The move comes as Iraq’s new Prime Minister Ali Al Zaidi turns to combating corruption as one of the early priorities of his term. That came after he disclosed he was offered a bribe to cover up embezzlement in the Oil Ministry, which ultimately led to the arrest of the deputy oil minister for refining affairs Adnan Al Jumaili and the establishing of a new council tasked with investigating and cracking down on organized corruption in government.

Morocco is carefully weighing a freetrade proposal from China, with Industry and Trade Minister Ryad Mezzour saying the proposal is “under reflection.” An agreement could deepen supply chain ties with China, which has pledged more than USD 6 bn in EV and battery commitments in the country. However, Morocco’s industrial model leans on tariff-free access to Europe and the US, and Brussels has already flagged concerns about Chinese oversupply.

A China deal would give local manufacturers access to the Chinese market and help Morocco diversify beyond Europe, Mezzour said. Another FTA with Chile is also in the works, aimed at booting Morocco’s exports — particularly automobiles — to South America’s Mercosur trade bloc.

Kuwaiti developer Urbnlanes is in final negotiations to acquire a 430-feddan plot in Egypt’s Ras El Hekma for EGP 7 bn (USD 137 mn), where it plans to set up a tourism and hotel project with expected total investments of EGP 80 bn. The move follows the reported withdrawal of Sky Abu Dhabi Developments (Sky AD) from its previous development agreement on the site, according to the sources.

The exit: Sky AD — the real estate arm of UAE-based Diamond Group — recovered EGP 900 mn it had paid to the landowner and refunded all customer down payments, the sources said. Sky North — as the project was called — was planned to span 430 feddans across five phases with a total investment of EGP 80 bn.