With the amount of freight and passenger traffic uncertain, banks are concerned about taking on all the traffic risk. The Saudi Railways Organisation has not updated expected traffic volumes since 1999, although a new assessment is under way.

A source at one international bank suggests the Finance Ministry takes on some of the risk by granting subsidies to the winner.

One regional bank has pulled out of a consortium, partly because of the tenor of the debt. The concession on the project is expected to last for about 40 years.

“We have some concerns about the very long dated concession agreement and the traffic risk being wholly on the banks,” says another international banker.

However, an adviser to the Saudi Railways Organisation dismisses the criticisms. “While a number of concerns have been raised, all technical bids had been received with financial support, meaning that the banks cannot be too concerned,” he says.

The $5bn project is intended to link the Gulf with the Red Sea, via Riyadh. The four consortiums are led by the local Mada, backed by Samba Financial Group and Gulf International Bank; Kuwait’s Agilit, with National Bank of Kuwait and Riyad Bank; Saudi Binladin Group with Deutsche Bank; and Korea’s Samsung Corporation with backing from Calyon and BNP Paribas.