GCC railway to proceed as PPP

23 February 2017

Funding the only factor holding back project

The planned GCC railway network will be utilising a public-private partnership (PPP) model, sources familiar with the project tell MEED.

It is understood that Saudi Arabia’s Transport Ministry will be taking the lead in the 2,177km rail scheme that will link the entire GCC.

It is not clear whether all the GCC member states have already committed to the preferred funding model.

The target completion date for the project has been moved from 2018 to 2021.

In November last year, MEED was told that funding is the only factor that was holding back the GCC railway network project. “Every rail organisation in the GCC is looking at the best funding option, most likely public-private partnership (PPP),” Ibrahim al-Sabti, senior adviser for the transport department at the GCC Secretariat, told MEED in November last year.

Al-Sabti said they are continuing to secure commitment from both the government and private sectors to ensure the development of the region’s rail industry.

However, many are still unconvinced that banks will be willing to take on the risks associated with a greenfield rail project like the GCC railway. “It will be extremely challenging if not impossible to make a full-fledged PPP work for this kind of project, unless they are looking at partial PPP for certain parts or elements of the scheme,” a source tells MEED.

Status of GCC member states’ mainline rail projects

UAE: Procurement of stage 2 of Etihad Rail was cancelled in January 2016. In November 2016, David Quastel, rail and safety expert at the FTA, said “there is a lot going on in terms of Etihad Rail’s second phase” but did not provide further details. It is understood that a meeting between stakeholders took place in late 2016.

Oman: Segment 1 of Oman’s national railway programme was put on hold following the cancellation of the tender for Stage 2 of Etihad Rail. The first segment was supposed to run 207km from Sohar Port to Buraimi on the sultanate’s border with the UAE, comprising a major link for the planned GCC railway.

Kuwait: The Kuwait Authority for Partnership Projects (KAPP) has said it will release an expression of interest (EoI) in the first quarter of 2017 for its national railroad scheme. The scheme has six packages, of which two - civil works; and systems, track and a station - have been strauctured as PPPs.

Qatar: Qatar Rail said in early 2016 that the tender for its long-distance passenger rail is to be released this year. The scheme has been under procurement for two years, with prequalification documents released in March 2014.

Saudi Arabia: It is understood that the blueprints and technical designs of the regional railway network have been completed and that the kingdom was preparing to implement its part of the route in 2016.

Bahrain:  The state’s Transport and Telecommunications Ministry (MTT) continues to work closely with Saudi Arabia in undertaking the required studies for the Hamad Causeway rail link, which will eventually comprise its link to the planned GCC Railway network.

Apart from allowing mass transport of goods and passengers more securely at more affordable rates, the GCC railway network is expected to create employment for thousands of GCC nationals.

Proposed GCC Railway network by country

Country

Length (km)

Bahrain

36

Kuwait

145

Oman

306

Qatar

283

Saudi Arabia

663

UAE

684

Source: Saudi Railways Organisation

 

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