The award of the $1.1bn contract for the third phase of Cairo Metro Line 3 would not have had a major impact on the the region’s rail sector in 2013, when companies were busy winning work on the Doha and Riyadh metro schemes.

This year, there have been few rail project awards. Apart from the Cairo Metro contract, the other projects awarded between January and July this year include the $2.9bn Route 2020 in Dubai in addition to the Tehran high-speed rail in Iran.

It is widely anticipated that Egypt will award its monorail project for Greater Cairo this year. Hopes are high that Iran will also begin the construction of its high-speed rail by early next year.

At $7bn, the total value of contracts awarded during the first half of 2016 needs to quadruple over the next five months if the forecast has to live according to expectation.

Living up to expectation, set very highly in 2013 when the $23bn Riyadh Metro along with the first package of the Doha Metro was awarded, however, seems to be the least thing that worries the agencies that approve government budgets especially in the GCC.

 Rail july 2016

Rail july 2016

Source: Source: MEED Projects,

It is ironic that that low oil prices have to a great extent put on the brakes on the mainline and urban rail projects in the GCC, whereas the dire need for new infrastructure in Iran and Egypt is pushing infrastructure projects to go ahead despite the low oil prices.

It is one thing to argue that government revenues should not change the economic imperative of an infrastructure project like rail, as one consultant tells MEED, but it is another to understand the amount of adjustment that most GCC decision-makers are taking on due to extraordinary pressures on government income.

The clear message from Egypt and Iran is that they cannot wait on oil prices to dictate the delivery dates of their infrastructure projects. They offer opportunities, albeit comparatively low in value vis-à-vis the collective planned GCC projects, while the rest waits for the next big rail project to be released to the market.

However, sustained low oil prices seems to guarantee the next big project will no longer take the form of the $23bn Riyadh Metro, which was awarded in a single year. It is conceivable that the final form of the planned rail projects across the GCC will not only feature less of the iconic stations that the ongoing projects have set out to build, but they will also be broken down and awarded in smaller packages to make them more manageable from a fiscal point of view.