Region revives metro ambitions

20 November 2012

Population growth and the need to upgrade infrastructure have encouraged regional governments to push ahead with the construction of light-rail network

Metro projects are set to form a major part of transport infrastructure construction projects planned across the Middle East and North Africa over the next decade, with $76.2bn of light-rail schemes currently in the planning or execution stage.

Interest in metro schemes is being driven by various factors, from population growth in Egypt to Qatar’s need for extensive infrastructure to host football’s 2022 World Cup. With the projects intended to be built using different procurement methods, they will provide opportunities for all players engaged in the construction sector, from lawyers advising on public-private partnerships (PPPs) to suppliers, consultants and contractors submitting bids for deals.

$76.2bn of urban rail projects and extensions are planned over the next 10 years in the Gulf and North Africa

“The metro is more than just a mode of transport now. It has much wider benefits; it takes emissions off the road and has economic benefits too,” says Manu Mehra, director and restructuring adviser at Dutch firm KPMG’s Abu Dhabi branch. “It eases pressure on treasuries of oil importers to import oil and sell gasoline at subsidised prices.”

Qatar metro

The Doha metro is one of the region’s biggest planned light-rail projects currently in the tendering phase. In April, Qatar Railways Company (QRail) invited contractors to bid for the first five major packages on its multibillion-dollar driverless scheme.

The 300-kilometre Doha metro will consist of four lines: Red line, Gold line, Green line and Blue line. The project will have 80 stations when finally completed. It will connect New Doha International Airport to the centre of Doha and will link several of the stadiums that will be used for the 2022 Fifa World Cup.

In October, contractors submitted bids for two of the station packages and will offer prices for the remaining packages before the end of the year. QRail is also evaluating prequalification entries for the elevated sections of the metro and intends to invite pre-selected firms to bid by the end of 2012. The Doha metro is part of the $35bn Qatar Integrated Rail Programme.

Riyadh is another Gulf capital that harbours plans for an ambitious metro project. The $7bn-8bn Riyadh metro has been in the planning stage for several years, with the project originally expected to be tendered using the PPP model in 2010.

The metro will feature six lines, covering a total length of 180 kilometres. The scheme has been prepared by the High Commission for the Development of Arriyadh and is part of plans to improve the city’s infrastructure to cope with a rapidly growing population. Riyadh’s population is expected to reach 8.3 million by 2025, from the current 5.3 million.

Contractors are scheduled to submit bids for the main construction package in January.

Kuwait, meanwhile, is moving ahead with the region’s first PPP metro scheme. The estimated $7bn project will have a total length of 160km and comprise 69 stations. The metro will be built in five phases, with the first phase planned for completion in 2020. This phase will cover the construction of about 50km and 28 stations.

In June, Kuwait’s Partnerships Technical Bureau (PTB), the body set up to oversee the country’s PPP programme, received expressions of interest for the contract to supply rolling stock and systems for the metro, the first of five deals to be tendered in the first phase.

The PTB is preparing to issue a request for qualification (RFQ) for the rolling stock and systems package in the first half of 2013.

“The first package was well attended by the market,” says Joss Dare, head of the Middle East practice of UK law firm Ashurst, which is advising the PTB on the metro scheme. “We are now writing the RFQ, which is the next part of the process, and hopefully we should be issuing that to the market soon.”

Abu Dhabi rail

Abu Dhabi hopes to follow its neighbour Dubai and build a metro network to reduce congestion in the UAE capital. The emirate’s $68bn Surface Transport Master Plan, which was announced in 2009 as the transport strategy of its 2030 vision plan, was downsized in 2011 as a result of the government’s efforts to rein in spending.

It is not only oil-rich Gulf states that are investing in metro projects as part of infrastructure development programmes. Egypt and Algeria are also planning large extensions to the metro networks in their capital cities.

With $76.2bn of new urban rail projects and extensions planned over the next 10 years in the Gulf and North Africa, the sector is set to offer significant opportunities for regional contractors, materials suppliers and financial institutions.

While the Middle East’s construction sector has suffered in recent years after the collapse of Dubai’s real estate market and the ongoing political uncertainty, metro schemes are driven by sustainable factors such as population growth. This demand will ensure the projects remain a focal point for the region’s construction industry.

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