SRO appoints financial advisers

12 December 2003
National Commercial Bank (NCB)and UBS Warburghave been awarded the joint mandate to advise Saudi Railways Organisation (SRO)on how to proceed with the expansion of the kingdom's railway network. The 9 December announcement followed the approval of the two banks for the mandate by the Supreme Economic Council (MEED 14:11:03).

Under the mandate, NCB and UBS will provide services on two components of the railway expansion programme - the east-west railway, linking Riyadh with Jeddah, and the western railway, which will connect Jeddah, Mecca, Medina and Yanbu.

The financial advisers will form a consortium together with a technical adviser, which has yet to be appointed. It is understood that French railway operator Societe Nationale des Chemins de Fer (SNCF)is in line to win the technical advisory mandate. An award on this mandate is expected in early 2004, according to Khalid Al-Yahya, SRO's president.

Bidding is also under way for the legal mandate on the project, with an appointment expected by February. The successful legal adviser will make recommendations on changes to the legal and regulatory environment to allow private sector involvement in the railways, and advise on the merger of SRO with the future concessionaire of the east-west link. With the merger, SRO will effectively cease to exist and will be fully integrated in the private concession holding company.

Al-Yahya says SRO also plans to invite prequalification in the second half of next year for the two railway concessions from consortia comprising construction companies, equipment suppliers, shipping lines, rail operators and financial investors. Invitations to bid (ITBs) are due to be released to prequalified consortia in late 2004. Construction is expected to take three-four years. The railway sections will be operated by two international consortia based on 30-50-year concessions.

The expansion programme will comprise the construction of a 570-kilometre railway system in the west, the construction of a 950-kilometre east-west rail link between Riyadh and Jeddah and a 115-kilometre section between Dammam and Jubail. On completion in 2010, the railway will effectively link the kingdom's two largest ports and its two largest industrial cities, Jubail and Yanbu.

A third component in the railway expansion programme, which will not be handled by SRO, is the minerals railway, or north-south link. Saudi Arabian Mining Company (Maaden) and Saudi Oger are in the process of selecting a consultant to prepare detailed technical designs for the project, which is estimated to be worth $1,500 million (Saudi Arabia, MEED Special Report, 26:9:03, pages 59-62).

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