The Saudi Railways Organisation (SRO), which manages the kingdom's rail network, is to be shut down and replaced with a new government regulator.

The moves comes as Riyadh seeks to avoid a conflict of interest once the contract to build the $5,000 million Saudi Landbridge project is awarded

The conflict would arise from the SRO's joint position as the client for the Landbridge and the owner of the existing section of track between Riyadh and Dammam, which will form part of the full project.

'Effectively the SRO will be privatised,' says Abdulaziz al-Hokail, chairman of the SRO. 'The SRO cannot be client

and regulator.

'Whoever wins the Landbridge will take over the stretch of track between Dammam and Jeddah so the whole project is under one investor. Once that is completed, all that is needed is a regulatory body like we have in electricity or communications.'

Bids for the Landbridge are to be submitted in the first week of November, with a decision expected early in 2008, at what time the SRO will be folded into Transport Ministry and a government regulatory body established in its place.

A separate rail agency is also likely to be created, similar to those that already exist for roads and shipping, to carry out high-level studies into projects on behalf of the government.

SRO staff will have the choice of joining the new regulator or the group running

the Landbridge.