Advisory mandate due for railway

20 November 2003
A team of three international advisers has been recommended by Saudi Railways Organisation (SRO) to the Supreme Economic Council (SEC) to advise on how to proceed with the expansion of the railway network. Under the programme, two concessions will be awarded to foreign consortia covering two components - the east-west railway, linking Riyadh with Jeddah, and the western railway, which will interconnect Jeddah, Mecca, Medina and Yanbu (MEED 20:12:03).

The consortium in line for the technical and financial advisory mandate is understood to comprise National Commercial Bank (NCB), UBS Warburgand French railway operator Societe Nationale des Chemins de Fer Francais (SNCF). The selected team has still to be approved by the SEC. More than 30 companies expressed interest in the project in November 2002.

The consortium will provide advisory services for the 570-kilometre western railway extension, the construction of the 950-kilometre east-west rail link between Riyadh and Jeddah and a 115-kilometre section between Dammam and Jubail. On completion in 2010, the railway will effectively link the kingdom's two largest ports and its two largest industrial cities, Jubail and Yanbu. The railway sections will be operated by two international consortia based on 30-50-year concessions.

Bidding is also under way for the legal mandate on the project, with an appointment expected by February. The successful legal adviser will make recommendations on changes to the legal and regulatory environment to allow private sector involvement in the railways, and advise on the merger of SRO with the future concessionaire of the east-west link.

With the merger, SRO will effectively cease to exist and will be fully integrated in the private concession holding company.

A third component in the railway expansion programme, which will not be handled by SRO, is the minerals railway, or north-south link. Saudi Arabian Mining Company (Maaden)and Saudi Ogerare in the process of selecting a consultant to prepare detailed technical designs for the project, which is estimated to be worth $1,500 million (Saudi Arabia, MEED Special Report, 26:9:03, pages 59-62).

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