Barring any major contract awards before the end of the year, the value of deals awarded in the Mena region’s rail sector is down by an estimated 36 per cent in 2015, with $7.4bn of new contracts let.

Contract awards hit more than $33bn in 2013 due primarily to the award of some $23bn packages for the Riyadh Metro and over $7bn packages for the Doha Metro. This value declined to about $11.5bn in 2014 before falling further this year.

The largest single contract awarded in 2015 is the $4.1bn deal for Doha Metro’s systems, rolling stock and track work. Qatar Railways awarded the contract to a consortium comprising mainly Japanese firms Mitsubishi Heavy Industries, Mitsubishi Corporation, Hitachi and Kinki Sharyo, along with France’s Thales.

The value of contracts awarded this year is also 70 per cent lower compared to forecast, based on the projects that were due to be awarded this year.

Contract awards delays were encountered by the initial segment of the Oman Rail, the first phase of the Mecca Metro, and phase 2 of the Etihad Rail. The first phase of Qatar Rail’s long distance rail was also expected to be tendered and awarded this year but the tender has been postponed to late 2015 or early 2016.

The award of the civils package for the first phase – Lines B and C - of the Mecca Metro was directly hit by the Finance Ministry-mandated contracts award freeze in Saudi Arabia for the rest of the year. The preferred bidder for the contract was announced in July. The consortium comprises Spain’s Isolux Corsan, the local Haif Contracting and Turkey’s Kolin, which submitted an offer of $2.6bn.

Industry players say the cautious stance will continue in 2016 as government liquidity remains dampened due to lower oil revenues. This will result in all rail projects undergoing additional levels of scrutiny before any award is made. “2016 will be a very cautious year but I expect there would be major contract awards around the second and third quarter,” says Harj Dhaliwal, vice president and head of rail sector for Middleast and Africa at Parsons.

Dhaliwal said he expects projects like the Mecca metro to be out in the market by 2016. Passenger rail, he said, will also take off.

The process of scrutinising rail projects before they get awarded would include reassuring the clients that the rail infrastructure will be self-sustaining at least from an operations cost perspective. “What we do not want to happen is for the [rail] asset to be a drain to public infrastructure budget over its lifetime,” Dhaliwal explained. ”It is important to drive the perspective that the initial rail infrastructure investment may be underwritten as a government investment with long term operations self-supporting.”

A review of the phasing of these big-budgeted projects is also likely to take place. The executive tells MEED that ”appropriate phasing of projects must be prioritised to fit with the fiscal budget.”

Over the coming year and indeed perhaps over the medium-term, key government decision makers will be prioritising rail projects in terms of funding and also focus on what the private sector finance could offer.