Regional governments are investing in multibillion-dollar metro projects to deal with growing urban congestion. These projects are offering significant opportunities for contractors
Every day, from Jeddah to Dubai, and Abu Dhabi to Kuwait City, the GCC’s major cities are gridlocked by the huge volume of traffic resulting from the region’s rapid growth of urban centres. While the region’s traditional response to congestion is to increase the capacity of their road networks, the current generation of urban planners are turning to rail as they face the prospect of a doubling in urban mobility demand by 2025.
Light-rail schemes already serve regional cities such as Tehran, Cairo, Tunis and Algiers. But of the GCC states, only Dubai has a metro, which opened in 2009. The coming decade is set to see a shift in this picture.
If all of the metropolitan rail schemes currently planned go ahead, then by 2030, almost every major city in the GCC will have some form of metro or light-rail network. According to regional projects tracker MEED Projects, some $76.2bn of urban rail projects and extensions are planned over the next 10 years in the Gulf and North Africa, generating potentially sizeable project opportunities.
Slow progress
Yet progress in getting these schemes up and running has been patchy at best. The worsening traffic jams bedeviling major urban centres are a clear spur for action, but so far, the authorities are struggling to keep up with the pace of demand. Four years after Dubai’s metro was inaugurated, none of the Gulf states are ready to move passengers from car to rail.
“There’s been a number of metro projects talked about over the past four to five years, but very little has happened,” says one UAE-based project finance lawyer. “There have been a lot of false dawns and very little in way of concrete developments to date.”
Indecision over the means of financing these schemes is one cause of delay. Prominent metro schemes in Saudi Arabia and Kuwait had all been conceived as public-private partnerships (PPPs). But for various reasons, the authorities have either shelved private funding in favour of traditional engineering, procurement and construction (EPC) schemes, or put them on hold pending review.
Whether in Riyadh, Doha or Abu Dhabi, clients’ contracting approach is to procure the main packages on a design and build or design, build, operate and maintain basis, with full government funding.
This resort to pragmatism may prove beneficial in achieving projected timelines, but the suspicion remains that if they had been structured as EPC-backed schemes from the outset, Gulf cities would be closer to having metro trains in operation.
Finally, authorities appear to be speeding up the pace of project development. Metro projects in Abu Dhabi and Saudi Arabia has seen some progress in recent weeks.
Abu Dhabi is making headway on its metro, four years after its Surface Transport Master Plan (STMP) set out an objective to develop an integrated transport infrastructure system able to meet an urban population that is expected to rise to 2.6 million by 2030, from 600,000 today.
On 1 May, the emirate’s Department of Transport (DoT) held an industry briefing outlining technical aspects of the project, detailing the proposed procurement timetable and pre-qualification process.
The DoT plans for Abu Dhabi comprise one 18-kilometre line between Zayed Sports City and the Mina Zayed/central business district area, five kilometres of which will be underground. There will be 12 stations, eight above ground, with a line serviced by fully automated 80-metre rolling stock. The separate Abu Dhabi light-rail transport network will comprise two lines covering the north section of Abu Dhabi island, with one line running for 15km with 24 stations and the other for 13km with 21 stations.
Abu Dhabi plan
The DoT plans to split the metro line into three separate contracts, aiming for awards in 2015 and completion in 2017. This is an ambitious timetable that reflects the intense pressure that the authorities are under to prevent gridlock. Prequalification submissions are expected in July 2013, with evaluation in the third quarter of this year. Issuance of request for proposals to prequalified bidders is due in the first quarter of 2014.
There’s been a number of metro projects talked about over the past four to five years, but very little has happened
UAE-based project finance lawyer
In Saudi Arabia’s Western Province, the newly created Jeddah Metro Company is reviewing its metro network, after indications late last year that a tender was imminent. The Jeddah metro will have three lines, a 67km Orange Line connecting Mecca Road with Obhur, including 22 stations, a 24km Blue Line with 17 stations, connecting King Abdulaziz International Airport to the Old Airport Toad, and a Green Line running parallel to Palestine road, stretching 17km.
In neighbouring Medina, a Turkish-Lebanese consortium of Khatib & Alami and Istanbul Ulasim was awarded the consultancy services contract for the metro in April 2013. The network will connect to the Haramain high-speed railway line, which is currently under construction and links the city to Mecca.
Riyadh metro
Riyadh’s planned metro is more advanced than these two projects, with bids for construction contracts under evaluation by Arriyadh Development Authority. The authority received bids from three consortiums in February 2013 for the main construction contracts on the estimated $7bn-8bn project. The client has divided the six-line metro project into five major design and build packages, with lines 1 and 2 as one package, and with the other lines all as single packages.
Smaller metro projects are also being rolled out in the kingdom, with France’s Egis Rail undertaking studies on a light metro to serve King Saud University campus in Riyadh. The campus metro would serve the Medical City and include an interchange with Riyadh metro.
Doha is also setting a more ambitious pace this year. Qatar Rail selected contractors in April for the first construction packages on the four-line Doha metro scheme, which will stretch to 216km, with more than 100 stations. The metro will link the King Hamad International airport to the centre of Doha, as well as the football stadiums proposed for the 2022 World Cup. Kuwait’s metro progress has been slow. The Communications Ministry’s decision to review both of the country’s major rail project PPPs late last year is a setback for its plans for a metro scheme that was set to be fully operational by 2020. Phase one of the metro project will cover 50 kilometres, incorporating 28 stations.
Other Gulf states’ ambitions to develop metro services struggle. Bahrain had plans for metro/light-rail transit system comprising a 29km monorail line, a 21km tram network and two light-rail transit lines, but the scheme has failed to register any progress in the past two years.
Baghdad agreement
Outside the Gulf, Iraq is ahead of the curve, signing an agreement in February with France’s Alstom to undertake detailed planning and design work for the 25km first phase of an elevated metro starting from Al-Mustansiriya University. The 14-station line will cross the River Tigris to reach the Kadhimiya district, terminating near Baghdad Central railway station at Alawi. A second stage would run from Alawi to Saidiya. A third phase could run from Saidiya to Jadiriyah and Karrada, looping back to Alawi. Construction on the Baghdad metro is set to begin in 2014, with a 2020 completion deadline.
Some existing metro schemes are planning to expand. Designs for Cairo’s 17.7km phase three extension of the third metro line are being finalised, with the aim of tendering construction contracts before year-end 2013.
However, the political unrest in Egypt could derail the project timetable, despite having secured $1.2bn in funding from the EU and the French Development Agency last year.
Metro use: Reducing the dominance of cars
Cities such as Riyadh, Dammam and Jeddah will have to confront some stark realities over the next few years. With mobility demand in the region expected to grow by a factor of 3-4 in the next 15 years, according to US consultants Booz & Co, these growing cities will be unable to function if an alternative to the dominance of cars is not found.
The case for metro is given added impetus by the rising volume of domestic energy consumption in major producers like Saudi Arabia. The kingdom is foregoing profit as users burn subsidised fuel, leaving less crude available for export on the global market.
Capacity challenges will have to be overcome. Ulrich Koegler, a transport consultant and partner at Booz & Co, says: “Number one, can you build rapidly enough a workforce able to run these systems? You will need to build several metro companies (one in each major city), a railway company, and you need to have people to do that work. There is likely to be a shortage soon of skilled employees.”
Outside the Gulf, Iraq is ahead of the curve, signing an agreement in February … for an elevated metro
Another requirement is to ensure that the network alignments are well organised, particularly with Gulf cities so spread out distance wise. Lessons may be learned from Dubai’s experience with its metro system. “The alignment needs to sensibly touch the large origination and destination points so that passengers do not have large distances to walk,” says Koegler. “Further, a well-designed network of feeder buses will be inevitable to bridge the last mile.”
Perhaps the biggest challenge is getting more people to use the systems, turfing them out of their cars, and onto the metro. A mixture of carrot and stick may be needed. “Singapore managed to get the share of public transport use up to 60 per cent through the brutal restriction of private car ownership,” says Koegler
But there is a question mark as to whether the Gulf states are willing to take similar punitive action. “People are used to jumping into their cars and until gasoline gets more expensive or cross subsidises the use of public transport, I don’t think that is going to change,” says one Gulf-based sceptic.
“The reality is that unless you price people out of their cars, people are not going to use the metro through choice.”
A mixture of incentives and price triggers may be necessary “They have to resolve whether they would be happy with a 15-20 per cent public transport share initially?” says Koegler.
“Achieving a modal share of 50 or more per cent requires to be as draconian as Singapore. Starting out with 15 per cent target may be more realistic.
“And if there’s a proper system of taxis and buses feeding into the metro, and they make it more difficult to find parking spaces, and sensibly increase the cost of private mobility, they stand a very good chance of success.”
Key fact
Some $76.2bn of urban rail projects and extensions are planned over the next decade in the Gulf and North Africa
Source: MEED Projects
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