Saudi Arabian Railway to operate Landbridge project

31 March 2010

Contractors bidding for on construction deals are still unclear on when awards will be made

State-owned Saudi Arabian Railway company has become the sole operator of the $7bn Saudi Landbridge development in a sign that the stalled project will move ahead in 2010.

Saudi Landbridge is 950-kilometre long passenger and cargo railway designed to create a link between Jeddah on the Red Sea coast, and the ports of Damman and Jubail on the Gulf coast, passing through the kingdom’s capital Riyadh.

Saudi Railways Organisation, the government body which passed operations over to Saudi Arabian Railway, was scheduled to award construction contracts on the project in first quarter of 2010. Four consortiums submitted bids for the contract to build the railway in 2009.

Kuwait’s Agility Logistics leads the first consortium and the local Mada Consortium the second, while Saudi Binladin Consortium and Al Muhaidib/ACWA (Tarabot) led the third and fourth.

It is still unclear when an award will be made, says a source at one contractor, which is bidding on the contract.

The project has been beset with problems from its inception. The government originally proposed the scheme as a 50-year build-operate-transfer deal financed through debt. In August 2009, Riyadh decided to fund the scheme on its own after private banks proved unwilling to finance the project. It is now being retendered on an engineering, procurement and construction (EPC) basis.

Riyadh has stalled the bidding process on the scheme twice (MEED 3:7:09).

It will be primarily used to transport containers from the port at Jeddah to Damman from where it will be shipped to the UAE, Iran, Kuwait and other destinations in the Gulf region.

The railway, which is scheduled for completion in 2014, will also be used to transport passengers between Jeddah and Riyadh.

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