June 24, 2014 / 11:35 AM / 6 years ago

Yemen to begin $3.5 billion international road project

DUBAI, June 24 (Reuters) - Yemen has announced plans to build a $3.5 billion highway linking the southern port city of Aden to Saudi Arabia, starting work in the next three months on what will be one its biggest ever infrastructure projects.

The World Bank, which is contributing $134 million toward the 441-mile (710-km) road, has said it will help jump-start the struggling economy and boost confidence in Yemen’s political transition since mass protests forced its veteran president to step down in 2011 after three decades in power.

A revolt by Shi’ite militants in the north, secessionist unrest in the south and al Qaeda militancy across the country has sapped Yemen’s economy, as oil and water resources decline. The road will pass through several conflict areas.

It was not completely clear how the impoverished state would afford the project. A year after Yemen came close to economic collapse in 2011, it received $7.9 billion in aid pledges from foreign donors which it badly needs for budget spending as currency reserves shrink. The aid has been slow to arrive.

Yemen’s minister for public works, Omar al-Korshomi, signed pledges on Monday to start work on two stretches of the road in the centre of the country, state news agency Saba said.

That 53-mile (85-km) of road will cost around $477 million, 80 percent of which will be covered by the state-owned Saudi Development Fund and the rest by the Yemeni government.

Indian engineering firm Punj Lloyd and a Chinese company will build the two sections, Saba said.

“Preparation and readying of equipment and contracting companies is under way to begin carrying out in earnest the strategic highway plan this September,” chief engineer Abdul Jabar Salem told the website of the defence ministry’s newspaper.

The World Bank said this month that the road would “play a vital role in the country’s transition by targeting the root causes of instability, such as lack of access to economic opportunities and poor national integration, and rebuilding the country’s social and economic base.”

Together with the World Bank, the Saudi Development Fund will fund $320 million of the road’s southernmost stretch going north from Aden.

More than 30,000 people will be affected by the process to acquire land on the road’s planned route, the bank added, and many of them will need to be compensated for lost homes, businesses and farmland. (Writing by Noah Browning; Editing by Robin Pomeroy)

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