EXCLUSIVE: Contractor's bid bonds for Mecca Metro expire

21 January 2018
Mecca Metro is among the schemes now being considered to be procured using a public-private partnership model

Saudi Arabia’s Mecca Mass Rail Transit (MMRT) has not requested for a further extension of the bid bonds offered by consortiums who participated in the tendering process for the engineering, procurement and construction (EPC) contracts to build lines B and C of the Mecca Metro.

“They have requested for an extension for a couple of times in the past,” a source with knowledge of the transaction tells MEED, who cites that a further request has not been made.

A bid bond is a bank guarantee that covers a certain percentage of the work being proposed by contractors. It typically carries a validity period of up to six months.

MMRT received offers for the civil works, rolling stock and systems contracts for the Mecca Metro in 2015, with awards for the four packages, worth an estimated $8bn, expected later that year.

However, the contract awards were stalled as the kingdom undertook a review of all major contracts due to to falling oil revenues.

In early 2017, Rumaih al-Rumaih, president of Saudi Arabia’s Public Transport Authority and Saudi Railways Organisation, said that the Mecca Metro, along with several other planned metro and rail schemes, will be procured using a public-private partnership (PPP).

In October last year, Saudi Arabia’s National Centre for Privatisation (NCP) received bids for the technical, legal and financial services advisory roles for the public transport PPP projects in Mecca, Jeddah, Medina and Dammam.

MEED understands the Ministry of Economy and Planning commissioned a study in 2016 with respect to the review and optimisation of the planned public transport systems across the four cities.

Prior to this, the four schemes were developed independently by the concerned authorities at the municipal level.

Of the four public transport schemes, the metro component of the Mecca Public Transport Programme was at the most advanced procurement stage.

The Mecca Metro was initially planned as a PPP. The MMRT appointed UK-based consultancy EY and law firm Ashurst and the US’ Parsons Brinckerhoff as transaction advisers for the project in March 2011. A feasibility study for the metro was prepared by a joint venture of France’s Systra and the US-based Aecom, who were appointed as consultants in April 2012. However, the plans to develop the Mecca Metro on a PPP basis were dropped after the government decided to fund the scheme directly in 2013.

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