Decision time nears for Saudi rail expansion

A successful bidder will receive a 50-year concession to carry out the build-own-operate east-west "Landbridge" rail project rather than 30 years mooted earlier. Separate operating licences are expected to be awarded for freight and passenger services on the new line.

In a key move the government has also approved a financial grant for the winning consortium to cover part of the planned project though how substantial this will be remains to be seen.

The estimated $5 billion project involves building a 950-kilometre railway from Jeddah to link with the Saudi Railways Organisation's (SRO's) existing Dammam-Riyadh railway and to build a new a 115-kilometre line from Dammam to Jubail. Requests for proposals are expected to be issued by the end of December.

State grants

SRO's president Khalid Alyahya, believes that competition will ensure reasonable demands for state assistance because of the attractiveness of the project. The new line is expected to have a significant impact on freight traffic with containers able to transit from the Gulf to the Red Sea in 24 hours avoiding a sea voyage around the southern Arabian Peninsula.

Mada Industrial and Commercial Investments and Binladen Group from Saudi Arabia are vying with Kuwait's Agility (formerly PWC Logistics) and France's Bouygues Travaux to gain the BOT contract.

As well as receiving a government grant the chosen consortium will take over Saudi Railway Organisation's existing assets including track, stations, rolling stock and locomotives. In preparation for privatisation, the SRO is currently upgrading communications and safety measures on the Dammam-Riyadh line and is also awaiting delivery of new high-speed trains.

However, Alyahya has cautioned that the government could drop the project altogether if a chosen bidder demands "unacceptably high levels of state financial grant."

Landbridge

The Landbridge is one of three rail projects planned to add a total of 3,900 kilometres of track to the existing network essentially comprising a single line between Dammam and Riyadh with a spur to Hofuf.

The Kingdom's railway expansion envisages 3,900 kilometres of new track. In addition to the Landbridge two other major new rail project are moving closer. These include a 450-kilometre high speed line for passenger traffic planned to link Jeddah with Makkah and Medina. Bidders have until the end of next February to provide qualification details.

However, a third 2,400 kilometre north-south railway seems likely to be the biggest priority due to its importance to industrial development. Sponsored by the Public Investment Fund the north-south track is integral to planned phosphate and bauxite mining projects in the north of the country which will link up with processing and smelter ventures on the Gulf coast.

The minerals railway will connect Riyadh with Haditha and to Jalamid and Basayta with spurs from a junction at Zabirah to Ras Az Zawr and Jubail. Twelve consortiums have made bids.