Golden opportunity for rail in the Gulf

05 January 2011

Qatar winning the rights to host the 2022 Fifa World Cup will inject new dynamism into plans to develop a GCC rail network

Key fact

Doha has committed to building more than $40bn-worth of transport infrastructure

Source: MEED

The decision to select Qatar as the host of the 2022 Fifa World Cup is set to trigger a massive building boom in the small Gulf state. Doha has committed to building more than $40bn-worth of transport infrastructure, in addition to several stadiums and thousands of hotel rooms.

The GCC Rail Authority, when formed, will have to solve issues such as customs, immigration and passport checks

Staging football’s showpiece event in the region should have a much wider impact. In particular, it should motivate the six GCC states to push on with construction of national railway networks and the integrated GCC rail project. To date, progress on some of the proposed schemes has been disappointingly slow, with the exception of the UAE and Saudi Arabia.

Rail infrastructure in the Gulf

Qatar itself is planning $25bn-worth of rail schemes. In addition to the Doha metro, the investment includes high-speed rail links between New Doha International airport, Doha city centre and across the proposed Qatar-Bahrain causeway, and a light-rail system that will connect to a new real-estate development, Lusail City. A freight line will also run between Ras Laffan port in the north of Qatar to Mesaieed port in the south, via Doha, and then onto Saudi Arabia further south. The plan is to have this up and running by 2017.

Qatar Railways Development Company (QRDC), a joint venture formed by Germany’s Deutsche Bahn (DB) and local Qatari Diar Real Estate Investment Company, will be responsible for managing the design and construction work for the metro and rail projects. Although it was established in 2009, the QRDC does not yet appear to be operational.

The estimated $3bn Qatar-Bahrain causeway is central to the Gulf’s rail plans. However, development of the project stalled in June 2010. In September, the general secretary of the Qatar Bahrain Causeway Foundation, Nayef al-Emadi, said work would resume once financial negotiations with the contracting consortium had finished. The causeway will eventually include rail lines as well as roads. It will enable passengers to travel easily between the two states and around the Gulf. However, it is unclear when the financing issues are likely to be resolved.

Bahrain’s own rail schemes have also been moving more slowly than expected. In April, Bahrain’s Works Ministry prequalified 10 consultants for a contract to conduct a transport study for a railway, light-rail transit system and metro. Eight months on and an award has yet to be announced. The scheme is still waiting for funding approval, expected to come in the 2011 budget.

Meanwhile, in Kuwait, the Partnerships Technical Bureau (PTB) is studying bids from 10 prequalified firms for the transaction advisory contract for its $10bn railway scheme having extended the submission deadline. Kuwait is planning to build the railway on a public-private partnership (PPP) basis and the transaction adviser will have to assist in structuring, procuring and negotiating the transaction. The PTB will later assign an independent operator to design, build, finance, operate and maintain the railway for a fixed duration.

Oman’s Supreme Committee for Town Planning is expected to complete prequalification for its proposed national railway network in early 2011. Progress has been sluggish after companies submitted prequalification documents for the design and project management contract in May. The railway is intended to be constructed in three phases. The first phase will comprise a 230-kilometre line that runs from Sohar to Muscat. The second phase will be a 560km line running from Muscat to Duqm. Oman may later decide to extend the line to Salalah, which would involve building another 580km of track.

Saudi rail progress

Riyadh is making the most headway in building its rail infrastructure. Its plans include the 1,486km North-South minerals line that will run between the capital and Haditha on the Jordanian border. Several other lines are planned to branch off this main line. Another line will run to bauxite and phosphate mines in Jelemaid in the northeast to minerals processors at Ras al-Zour, which is near the industrial city of Jubail. Another track will run from Al-Zabirah on the main line to Ras al-Zour. The 800km first phase of the minerals line is expected to start operations in the first quarter of 2011. Passenger traffic on the route is scheduled to commence in 2013, with trains running through Riyadh, Sudair, Qassim, Hail and Al-Jouf.

In early December, the Saudi Railways Organisation awarded German Corporation for Technical Cooperation in joint venture with Fayez Zuhair Architectural Engineering and Consulting the contract to provide consulting services to develop a railway masterplan that will outline plans until 2040.

The masterplan will determine future freight volumes and passenger traffic, improving existing rail operations and executing new rail projects, such as the $7bn Haramain high-speed railway, which will link Mecca and Medinah via Jeddah.

The construction contracts for phase two and package two of phase one are due to be awarded imminently. Phase two involves construction of the track, signalling, telecommunications, electrification and building an operational control centre for the railway, while package two of phase one covers the contract to build the four stations.

UAE rail plans

The UAE is the region’s next most-advanced market in terms of rail schemes. The tender process for a national railway is progressing quickly and according to schedule.

Contractors are currently waiting to hear whether they have been prequalified for the construction contracts for the first phase of the UAE’s $11bn federal railway. These contracts include an AED300m ($81m) enabling works and earth moving package and an estimated AED2bn civil and track works package. A separate tender for a sand study has been cancelled and the winning contractor will carry out a sand study as part of the two construction contracts.

The first phase of the railway involves building a 265km line between the port of Ruwais and gas fields at Shah and Habshan.

Swiss bank UBS was appointed financial adviser for the scheme in September and is now working on plans to fund the construction and operation of the railway. Contracts for material supply are due to be awarded in the second quarter of 2011. Details of the alignment to Khalifa Industrial Zone Abu Dhabi, which comprises the new Khalifa port, and the link to Dubai are likely to become clearer in 2011. The various national schemes will form the basis of the planned regional railway, which itself is running behind schedule. The GCC Secretariat plans to begin the study to form the GCC Rail Authority in the first quarter of 2011 after receiving approval from member states. The study will look into the organisation of the authority and its mandate, how it will operate and implement the rail project, says Ramiz al-Assar, senior adviser to the GCC Secretary General and transport specialist at the Washington-headquartered World Bank.

Challenges ahead for Gulf rail network

In a separate study, all six states are due to submit detailed engineering design briefs and regulation ideas to the GCC Secretariat by the end of 2011.

A later second phase of the railway could see the GCC railway extended to Yemen. The line would potentially run from Muscat in Oman to the Yemen border, linking up with the ports of Salalah and Duqm.

The challenges for the GCC railway are manifold. Trying to effectively coordinate six different countries to ensure their designs are not just feasible within their own borders, but also that they adhere to a common set of standards will require meticulous planning. The GCC Rail Authority, when formed, will have to solve issues such as how the network will work in terms of customs, immigration and passport checks.

In the original timetable, construction if the GCC railway was set to begin in 2010. Discussions have been allowed to drag on. But the secretariat and national rail authorities now have a concrete deadline to work towards. With thousands of visitors set to descend on the region in 2022, the entire Arabian peninsula would be able to benefit from the event in Qatar.

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