Rail boom moves closer to reality

28 November 2011

While progress is being made on regional airport and port projects, rail will be the main focus next year


The contract to expand Saudi Arabia’s Medina International airport was awarded in August as a public-private partnership

Source: MEED

The transport industry experienced mixed fortunes in the Middle East and North Africa (Mena) region in 2011. On the one hand, the GCC markets had a stellar year, culminating in a series of multibillion-dollar contract awards.

On the other, infrastructure projects in North Africa largely ground to a halt due to the wave of civil unrest that spread across the region, after beginning in Tunisia in late December 2010.

Transport contracts expected to be awarded in 2012
UAEEtihad RailwayConstruction contract for stage twon/aEtihad Rail
UAEAbu Dhabi midfield terminalConstruction contract for stage two$4bnAbu Dhabi Airports Company
Saudi ArabiaJeddah airportAircraft maintenance hangarsn/aGeneral Authority for Civil Aviation
QatarDoha MetroCivil works contractn/aQatar Railways Company
Saudi ArabiaMecca Mass Rail TransitConstruction contract for stage twon/aAl-Balad al-Ameen
Saudi ArabiaJeddah light-rail Construction contract for stage twon/aJeddah Municipality & Transport Ministry
OmanNational RailwayDesign contractn/aSupreme Committee for Town Planning
n/a=Not available. Sources: MEED; MEED Projects

The major schemes awarded in the GCC in 2011 included the main construction contracts for the first phase of the UAE’s $11bn national railway, the $7.9bn Haramain high-speed railway in Saudi Arabia and the public-private partnership (PPP) contract for the expansion of Medina International airport, also in the kingdom.

Rail plans

Next year, rail is expected to be the main area of focus in the GCC transport sector. In October, the $898m construction contract for civil and track works for the first phase of the UAE’s Etihad Rail project was awarded to a consortium led by Italy’s Saipem. Other members of the group include Italy’s Tecnimont and the local Dodsal Engineering & Construction.

After decades of planning, 2012 will be the year when national railways across the GCC start being built

In 2012, the group will carry out the design, procurement and construction of the railway infrastructure, as well as the testing and commissioning. It will also be responsible for the earth works and track site grading, bridge structures, communication systems and the development of a depot at Mirfa.

In late November, Etihad Rail said the preliminary engineering for the second phase of the project was nearing an end and it would soon be inviting expressions of interest for the second construction contract. The deal is expected to be awarded in early 2012, with construction on the second phase beginning later that year.

Rail projects are also moving forward in Saudi Arabia. The final construction contract for phase two of the Haramain high-speed railway was awarded in mid-2011 and construction will progress in 2012.

This year also saw the full opening of the Mecca metro in time for the annual Hajj pilgrimage. There are also plans to build a Mecca Mass Railway Transit (MMRT) system, potentially on a PPP basis.

In March, Mecca Municipality appointed the UK’s consultancy firm Ernst & Young and law firm Ashurst as transaction advisers for the MMRT project.

Meanwhile, feasibility studies for a light rail in Jeddah were completed in August so this project should move forward in 2012.

With just 10 years left in which to build the rail network required to transport football fans around Qatar for the 2022 Fifa World Cup, Doha will also be prioritising rail projects in the year ahead. Among the key transport contracts awarded in 2011 was the appointment of the US’ Parsons Brinckerhoff in September as the strategic programme manager for the $35bn Qatar Integrated Rail Programme.

Slow progress

The development of rail projects across the GCC is ultimately intended to link the six member states, so that both passengers and freight can be easily and quickly transported around the region and beyond. But the lack of significant progress elsewhere in the bloc is likely to delay the realisation of this vision.

After months of delay, Kuwait finally awarded its railway advisory contract to the US’ Booz & Company, together with the local NBK Capital, US-based Wilbur Smith and the UK’s Allen & Overy.

In July, Muscat delayed the prequalification of companies for two contracts on its national railway project due to political uncertainty, following a series of demonstrations in Oman. The contracts covered the design and project management consultancy.

A few months later, prequalified consultants were invited to submit bids in November for the design. The client on the project was also changed to the Transport Ministry after the Supreme Committee for Town Planning was deemed to be lacking in necessary experience.

Bahrain is the only country not to have made any progress with its part of the GCC railway and this is due to funding difficulties.

Financing troubles have also hit rail investment in Abu Dhabi. Plans for a metro and tram network in the capital are not even close to being realised, with the Department of Transport cutting its announced $68bn budget.

Dubai, on the other hand, which has previously suffered funding problems of its own, has managed to get its schemes back on track. The second line of the Dubai Metro opened in September and the Al-Sufouh tram project is moving ahead once again.

The situation outside the GCC is much less positive, however. Plans to build a metro in Damascus are on hold due to continued unrest and fears the country may be heading towards civil war. The timing is unfortunate as in March the French government agreed to fund a feasibility study into whether to develop the metro on a PPP or build, operate, transfer basis.

The Cairo Metro project also stalled at the beginning of the year due to the revolution. Work on phases one and two of Line 3 has now resumed and tenders for phase three will now be invited in early 2012.

The extension of the Tehran Metro remains on hold due to a lack of funds. The head of the metro, Mohsen Hashemi, resigned from his position in March following a disagreement with the country’s President Mahmoud Ahmadinejad.

Aviation sector

As for the other transportation sectors, the aviation industry has had a good year, with the contract to develop the region’s first airport on a PPP basis awarded in August.

A consortium led by Turkey’s TAV Airports Holding won the contract, along with the local Saudi Oger and Al-Rajhi. The consortium will design, finance, build and operate Medina International airport in Saudi Arabia for a concession period of 25 years.

Financial close on the project is expected by July 2012 and construction will begin after that. The scheme is expected to be a template for other PPP airport projects in the region.

The two main construction contracts for Saudi Arabia’s Jeddah airport were also awarded this year to the local Saudi Binladin Group. The first contract involves building a 600,000-square-metre passenger terminal that will be able to handle 30 million passengers a year. The second contract covers designing and building the runways and tunnels, landscaping and a light rail system.

In Qatar, the New Doha International airport project is also progressing. The first phase of the airport is on course for completion by March 2012.

Abu Dhabi Airports Company (Adac), meanwhile, has received bids from six groups for the contract to build the new midfield terminal building at Abu Dhabi International airport. Work is expected to get under way next year; the deadline for completion was originally set for 2010.

Kuwait, Bahrain and Oman have made up for the lack of progress in their rail sectors by focusing on aviation.

Bids for the new runway at Kuwait International airport will be submitted in December. Bids for the main works at Bahrain airport are due in the first quarter of 2012 and work at Muscat and Salalah airports in Oman is progressing.

Airport tenders are also expected to be issued in Iraq next year. In April, Baghdad unveiled its Iraqi National Aviation Plan, a $60bn masterplan to develop its airports and aviation infrastructure. The majority of this will be spent on a five-phased rehabilitation of Baghdad International airport and the development of an airport city.

For ports, at least six consortiums submitted bids for phase two of the New Doha port project in November. The second phase covers the dredging works at the port, including dredging an access channel. In January, China Harbour Engineering Company won the $880m construction contract for phase one, which covers excavation works.

The first phase of the port will have a capacity of 2 million 20-foot equivalent units, a 15-metre-deep approach channel, an 8-metre by 13.5-metre-deep harbour basin and berths for general cargo, including vessels from the Qatari and visiting navies.

In the UAE, the Abu Dhabi Ports Company (ADPC) is to complete the first phase of its Khalifa Industrial Zone Abu Dhabi (Kizad) development in the fourth quarter of 2012. Abu Dhabi Terminals won the contract to operate the new Khalifa port at Kizad in March. The port is being developed 4.5 kilometres offshore. The first phase will handle 2 million containers a year and 9 million tonnes of cargo.

ADPC also has a partnership agreement with Etihad Rail to extend a branch of its railway network to Kizad.

Decision pending

Jordan’s New Aqaba port project is not progressing as well. In January, Amman announced it would fund the development of the new port itself after the PPP agreement with the selected consortium broke down. However, in May, the Transport Minister said the government would decide whether to proceed with the project on an engineering, procurement and construction basis or revert to the PPP approach. A decision has yet to be made.

After decades of planning, 2012 will be the year when national railways across the GCC start being built. The region’s great rail revival has been hugely anticipated, but now projects are finally moving beyond the drawing board to the actual reality of building and operating railway lines in extreme environments.

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