April 21 (Bloomberg) -- Qatar reduced the number of stadiums it plans to build for the 2022 soccer World Cup by a third amid rising costs and delays.
The country, which won the right in 2010 to host the world’s most-watched sporting event, plans to build eight stadiums for the games, Ghanim Al Kuwari, the organizing committee’s senior manager for projects, said at a conference in Doha yesterday. The country originally announced plans for 12 stadiums, including nine new playing fields and three refurbishments. Al Kuwari didn’t give a reason for the cut.
Qatar, which holds the world’s third-largest natural-gas reserves, plans to spend more than $200 billion on new infrastructure before hosting the sporting event, including $34 billion on a rail and metro system, $7 billion on a port and $17 billion on an airport. The stadiums will cost $4 billion, according to the ministry of business and trade.
“Their decision was motivated by cost-cutting following an assessment of the real needs on the ground,” John Sfakianakis, chief investment strategist at investment company MASIC in Riyadh, Saudi Arabia, said in an e-mail. “It does always make good sense to do necessary cost-cutting and reviews of capex for such huge projects that are front-loaded.”
The Middle Eastern state of 2 million people faces delays and escalating costs related to the event. Work started later than planned on the metro system, and the opening of the new airport is six years behind schedule.
“As is the case with any FIFA World Cup, once a country is chosen as host, a review of the bid plans is made with the organizers to propose the final host cities and stadia projects, which then need to be approved by the FIFA Executive Committee,” Qatar’s Supreme Committee for Delivery & Legacy said in an e-mailed statement today. “The requirement is a minimum of eight and a maximum of 12 stadia.”
Qatar’s surplus in its 2014-2015 budget shrank by 1.4 percent, compared with the previous fiscal year, amid a 17 percent gain in spending on “key projects,” the country’s official Qatar News Agency said last month. The inflation rate will rise to 3.8 percent this year, Qatar National Bank, the country’s largest lender, said on April 14. It was 2.6 percent in March, according to government data.
The country was negotiating with FIFA, world soccer’s governing body, to cut the number of venues to eight or nine from the 12 originally planned, Bank of America Merrill Lynch said in an April 2013 note to investors following meetings with the Qatar 2022 organizing committee. Costs will probably exceed the bank’s initial estimate of $95 billion, Alberto Ades, head of emerging-market fixed-income strategy at the bank, said in the note.
In addition to the stadiums, 92 training sites will be constructed, Al Kuwari said. Qatar is preparing to host the World Cup in June and will use air-conditioning to cool all the venues. Temperatures can rise above 50 degrees Celsius (122 Fahrenheit) in Qatar during the summer.
FIFA has said it may move the tournament to the cooler months of the year. FIFA President Sepp Blatter said Nov. 9 that the months of November and December would work best.
Construction has started on the Al Wakrah stadium, while work on the Al Rayyan stadium is set to start later this year, or early in 2015, Al Kuwari said. Qatar plans to award $1.7 billion of road projects in coming months and seek bids for 20 others in the next two years, Jalal Yousef Salhi, director of infrastructure affairs at the country’s Public Works Authority, said yesterday.
To contact the editors responsible for this story: Andrew Blackman at email@example.com Bruce Stanley, Shaji Mathew