The consortium led by Japan’s Mitsubishi Corporation is the low bidder for the first phase of the Dubai light rail transport (LRT) project after commercial bids from four groups were opened on 28 February. The opening of commercial bids culminate six months of bidding for the construction contract.

The announced price of the Mitsubishi-led consortium known as Dubai Rapid Rail Transit (DRRT) was AED 6,285 million ($1,711 million), about 40 per cent lower than the next two lowest bids from the Dubai Star consortium, including Germany’s Bilfinger & Berger and France’s Alstom, and the Salsabeel consortium led by Germany’s Siemens and Saudi Binladin Group. Metro One, led by Canada’s Bombardier, submitted the highest bid opened at about AED 10,000 million, some 60 per cent higher than DRRT’s bid.

Contractors involved in the bidding process warned against drawing too many conclusions from the announced prices, given that bidders were asked to quote numerous options. ‘Mitsubishi’s price is a surprise, but we will have to see what this figure actually includes,’ said a source from one of the rival bidders.

Sources at Dubai Municipality (DM) said they had anticipated prices closer to the AED 8,500 ($2,314 million) mark. The municipality will now evaluate the overall bid proposals with a view to selecting a preferred bidder by the end of March. The contract is scheduled to be awarded by 5 May.

The consortia were relieved in January of the lengthy task of financing the project after DM took the decision to ensure fast-track execution of the scheme in view of the city’s deteriorating traffic situation. DM declined to comment on how the project will be financed. The only other precedent for a Dubai government entity securing financing for an infrastructure project came last year, when the Department of Civil Aviation (DCA) launched a $1,000 million sukuk issue to finance part of the $4,200 million expansion under way at Dubai International Airport.

Completion of phase 1 is scheduled for May 2009. Work is scheduled to begin shortly after for phase 2, to be completed by May 2012. It is expected that the successful bidder for phase 1 will also carry out the second phase, although DM is entitled to exercise the option of launching another tender, according to sources.

Phase 1 covers a 35-kilometre section on the planned red line linking the Rashidiya depot with the American University of Dubai (AUD), while the second phase involves extending the red line by 16 kilometres from AUD to Jebel Ali port and building the second line. The 16-kilometre green line will link Dubai International Airport with Dubai Healthcare City (DHCC) via Saeediya. In total, the LRT network, which will be served by fully automatic, driverless trains, will run over a distance of 67 kilometres, of which about 30 per cent will be underground.

France’s Systra, which was awarded the $12.7 million design-engineering contract for the LRT scheme in March 2003, is assisting the municipality in the tender and bid evaluation process. The client has yet to select a consultant to oversee construction, although Systra is widely expected to win the mandate due to its involvement in the design phase. The municipality is also being assisted by French audit and consulting firm RSM Salustro-Reydel.