Saudi Arabia and contractor settle rail dispute

23 May 2018
Government and local/Spanish consortium understood to have reached settlement

Saudi Arabia’s Transport Ministry and local/Spanish consortium Al-Shoula Group have agreed on a new opening date for the 450km Haramain High-Speed Rail following a series of negotiations, Spanish media reports.

MEED understands the first high-speed rail linking the kingdom's two holiest cities, Mecca and Medina, will commence partial operations in September, with full operations scheduled for early 2019.

According to Spanish media reports, the agreement is understood to include €210m ($246.8m) in compensation to the contractor consortium, which maintained that delays in the earlier phase of the project, awarded to a separate set of contractors, caused the delay in the commissioning phase of the entire scheme.

An earlier report in the Spanish media indicated that the Saudi government was seeking €1m in daily compensation from the Al-Shoula consortium from March 2018, the first revised date that the railway was due to begin commercial operations, until the date that the railway entered service.

It is the second time the rail project has faced delays. Initially, it  was expected to enter service in January 2017. The Saudi Arabia government and Al-Shoula Group entered into arbitration in 2016 and, following a $158m settlement, agreed on a new opening date of March 2018.

Trial runs on the railway began in November 2017, but it was revealed earlier this year that construction work on at least three of the five terminals was behind schedule.

A consortium led by local firm Al-Rajhi Construction won the civil works contract for Haramain High-Speed Rail in 2009. Two years later, a second package covering the construction of passenger stations in Jeddah and King Abdullah Economic City (KAEC) was awarded to a team of local firms, Saudi Binladin Group (SBG) and Saudi Oger, while another package for the construction of passenger stations in Mecca and Medina was awarded to a team comprising SBG and Turkey’s Yapi Merkezi.

The Al-Shoula Group won the $8.2bn contract for phase 2 of the project in 2011.

Spanish companies that are part of the Al-Shoula consortium include:

  • Adif/Renfe: 12-year operation and maintenance
  • OHL/Copasa/Imathia: track construction and maintenance
  • Inabensa/Cobra: electrification and electro-mechanical equipment
  • Talgo: rolling stock
  • Dimetronic (recently acquired by Siemens): signalling
  • Indra: ancillary and control systems including intrusion detection and ticketing

The kingdom’s first high-speed rail will have five stations including two terminals in Mecca and Medina. The other three stations are located in KAEC, the King Abdulaziz International airport and Jeddah.

 

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