Saudi railway progress should ease fears

The major rail projects under way in Saudi Arabia have made the government, contractors and investors uneasy.

Unprecedented for the GCC in their scale and cost, they are ambitious yet daunting. More than $20bn will be sunk into building a new rail network for the kingdom. The country’s vast size has forced Riyadh to take this costly leap into the unknown before its neighbours.

Much depends on the kingdom proving that the region can deliver such projects on time and on budget. Despite the boost to the national and regional economy anticipated from the railways, no one is quite sure about the yields that can be expected or when the projects’ backers will see a return on their investment.

The nervousness of banks involved with the Saudi Landbridge railway that will link Saudi Arabia’s Gulf and Red Sea coasts demonstrates an understandable wariness of the risks involved, particularly in the current climate.

The North-South minerals railway is therefore critical. Scheduled to open next year, it is the first new heavy rail project in the region for decades. Contract awards are coming thick and fast, while the retendering of the fourth construction package has been achieved with minimal fuss.

By the summer, work will be under way on all four sections of the project. This recent progress should calm the nerves of other governments waiting to sign off on rail projects of their own.