The prequalification process will be followed later in the year by the award of the concession to a private consortium, which could include construction and rail operating companies, equipment suppliers, shipping lines, financial institutions and passive investors, Al-Yahya said.

Under the concession, the successful consortium will design, finance, build and operate a new 950-kilometre line between Riyadh and Jeddah, an additional 115-kilometre connection between Dammam and Jubail, and integrate these new links with the existing two lines running between Riyadh and Dammam. The so-called landbridge railway will eventually provide a seamless connection between Jubail and Jeddah. It will be largely dedicated to freight transport, although limited passenger services will be offered.

The concession will be granted for an agreed period of time which, according to Al-Yahya, could be anywhere between 20 and 50 years. Land needed for the project will be provided by the government. Handing over the network to a concessionaire will also see SRO being merged with the new operator. 'The core assets of SRO will be transferred to the concessionaire while SRO staff will be transferred on a selective basis,' Al-Yahya said.

A concession agreement draft and asset and staff transfer policies are expected to be drawn up by May. Several other steps towards preparing the railway sector for privatisation and abolishing the state monopoly are being prepared, notably SRO's plans to finalise the route alignment in April and the land acquisition plan by June.

A proposal for the special purpose vehicle to run the concession is also due to be finalised in June, Al-Yahya said.

A second concession for a new 570-kilometre rail network in the west, which will link Jeddah, Mecca, Medina and Yanbu, could also be tendered in 2005, Al-Yahya said. The western network will largely be dedicated to passenger services, with the Jeddah-Mecca link to be served by a high-speed train system. 'This will be a competition led between different technology providers,' Al-Yahya said. A passenger study for the project is still being carried out and is due to be completed in the first quarter of next year.

The advisory team on the railway expansion programme is: Linklaters, working in partnership with the Saudi Law Office of Abdulaziz H Fahadas legal advisers; Societe Nationale des Chemins de Fer (SNCF)as the technical adviser; and a consortium of National Commercial Bank (NCB)and UBS Warburgas the financial advisers (MEED 27:2:04).

SRO is also pressing ahead with the upgrade of its existing two lines (see page 21).

www.meed.com/transport