The Middle East prepares for metro boom

10 July 2012

With $76.2bn of new projects and extensions to existing lines planned in the Gulf and North Africa, the urban rail sector is set to offer significant opportunities for contractors in the region

Metro projects are set to form a major part of the transport infrastructure projects planned across the Middle East and North Africa over the next decade, with $76.2bn-worth of light-rail schemes currently in the planning or execution stage.

Demand for the metro schemes is being driven by a range of factors, from population growth in Egypt to Qatar requiring extensive infrastructure to host football’s World Cup in 2022. With the proposed schemes intended to be built using several different procurement methods, it will provide opportunities for all players engaged in the construction sector, from lawyers advising on public-private partnerships (PPP) to suppliers, consultants and contractors submitting bids for contracts.

 “The metro is more than just a mode of transport now. It has much wider benefits; it takes emissions off the road and has economic benefits too,” says Manu Mehra, director, restructuring adviser at KPMG Abu Dhabi. “It eases pressure on treasuries of oil importers to import oil and sell gasoline at subsidised prices.”

Qatar metro packages

The Doha metro is one of the region’s biggest planned metro projects currently in the tendering phase. In April, Qatar Railways Company (QRail) invited contractors to bid for the first five major packages on its multibillion-dollar driverless scheme.

The 300 kilometre-long Doha Metro will consist of four lines: Red Line, Gold Line, Green Line and Blue Line. The rail project will have 80 stations by the time it is completed.

QRail split the 18 prequalified consortiums into four groups to bid for tunnelling packages and an additional group to bid for the two major stations planned. The consortiums will bid against the other prequalified firms for the contract specific to that package. The first four tunnelling packages are for the Red Line North, Red Line South, Green Line and the Gold Line.

The station package consists of the two major terminals for the Msheireb Downtown Doha development and Education City. The rail company has already received bids from four consortiums for an enabling works package on the metro, which includes site facilities, civil structures and removing utilities.

QRail is also evaluating prequalification entries for the elevated sections of the metro and intends to invite pre-selected firms to bid by the end of 2012.

The metro will connect New Doha International Airport (NDIA) to the centre of Doha and will link several of the stadiums that will be used for the 2022 World Cup.

“The metro is a key part of the World Cup plans. It formed a major part of Qatar’s bid presentation and will be important in allowing spectators to travel between venues and hotel areas,” says an international consultant in one of the consortiums bidding for the project.

The Doha Metro is part of the $35bn Qatar Integrated Rail Programme (QIRP), which includes plans for a 30km Lusail light-railway (LRT); a $2.7bn West Bay people-mover, connecting the new Doha Convention Centre with the West Bay area; a high-speed passenger line; and a 340km freight rail line. The US’ Parsons Brinckerhoff was appointed as the strategic programme manager for the QIRP in September 2011.

Riyadh metro

Riyadh is another Gulf city that is working on plans for an ambitious metro project. The $7bn-8bn Riyadh metro has been in the planning stage for several years, with the project originally expected to be tendered using the PPP model in 2010. However, it has faced delays, with consortiums only submitting prequalification entries in late June.

The scheme is now being tendered as a single design-and-build package, which will include the supply of rolling stock. The client for the project is the Arriyadh Development Authority (ADA).

The metro project is part of Riyadh’s Public Transport Project (PTP) that was approved by the Council of Ministers in April. The scheme has been prepared by the High Commission for the Development of Arriyadh and is part of plans to improve the city’s infrastructure to cope with a rapidly growing population. Riyadh’s population is expected to reach 8.3 million by 2025, from the current 5.3 million.

The Riyadh metro is one of several urban rail schemes planned in the kingdom as part of government’s efforts to expand and upgrade the country’s infrastructure.

The Mecca Mass Rail Transit (MMRT) is planned to help transport pilgrims during the busy Hajj period. In March 2011, Mecca Municipality appointed advisers for the project. However, progress on the scheme has slowed in recent months, with the Finance Ministry currently reviewing the funding of the project. A LRT network is also planned for the Red Sea Coast city of Jeddah. Feasibility studies for the project were completed by France’s Egis in August 2011 and are currently awaiting approval from the Jeddah Municipality and Saudi Arabia’s Transport Ministry. The LRT is part of plans to reduce heavy congestion in the city.

Metro public private partnerships

Kuwait, meanwhile, is moving ahead with region’s first PPP metro scheme. The estimated $7bn project will have a total length of 160km and comprise of 69 stations. The metro will be built in five phases, with the first phase planned for completion in 2020. The first phase will cover the construction of about 50km and 28 stations.

In June, the Partnerships Technical Bureau (PTB), the body set up to oversee Kuwait’s PPP programme, received expressions of interest for the contract to supply rolling stock and systems for the metro, the first of five deals to be tendered in the first phase.

“The first package was well attended by the market. We are now busy writing the RFQ [request for proposals], which is the next part of the process, and hopefully we should be issuing that to the market soon,” says Joss Dare, head of the Middle East practice of UK law firm Ashurst, which is advising the PTB on the metro scheme.

The recent vote by Kuwait’s parliament to scrap plans for the country’s first independent water and power project (IWPP) has led many in the construction sector to question the future of the metro scheme. The Al-Zour IWPP is the first of 32 planned PPP schemes in Kuwait and is viewed as a test case for the success of future projects.

However, those involved with the metro project say that teething problems with the PPP programme are to be expected. “We will need to wait and see how the IWPP develops, and no doubt the market will react accordingly,” says Dare. “The fact of the matter is you are starting doing PPP under a new jurisdiction and a new law. It will involve some fun and games to get that done.”

Abu Dhabi hopes to follow its neighbour Dubai and build a metro network to reduce congestion in the UAE’s federal capital. Abu Dhabi’s $68bn Surface Transport Master Plan (STMP), which was announced in 2009 as the transport strategy of the emirate’s 2030 vision plan, was downsized in 2011 as a result of the government’s efforts to rein in spending. However, the metro scheme received approval from Abu Dhabi’s Executive Council in January.

The executive council approved the Department of Transport’s (DoT) budget for the consultancy work on the second phase of the metro project, which involves preliminary engineering and the preparation of tender documents. The first phase, which consists of feasibility studies, has already been completed.

Iraq is also planning to build a $3bn metro in Baghdad as it seeks to rebuild its transport infrastructure. France’s Systra is currently carrying out design work on the two-line metro network, which will cover a distance of 40km.

It is not only the oil-rich Gulf states that are investing in metro projects are part of infrastructure development programmes. Egypt and Algeria are also planning large extensions to the metro networks in their capital cities.

The original two lines on the Cairo metro carry more than 700 million passengers a year, making it the 15th busiest metro system in the world. However, Cairo’s planners are aware the metro must be extended to cope with the country’s growing population, which has increased 8 per cent in the past five years.

Work is under way on the second and third phases of the new third line, the first phase of which became operational in February. A consortium led by France’s Vinci Construction is currently building phase two of the third line, while France’s Systra is working on the designs for phase three.

The construction contracts for the third phase are scheduled to be tendered towards the end of this year. The third phase of the line will take the metro another 4km underneath the Nile, linking the metro to the Zamalak island district above. The third line will be 50km long.

Cairo is planning to add a further three lines, totalling 60km, to its metro network over the next decade. The first of these, the planned Line 4, will be 16km long and will link 6th October City to the centre of Cairo. In June, Egypt’s National Authority for Tunnels (NAT) signed an agreement with the Japan Bank for International Cooperation (Jbic) for a $426m loan to cover the cost of the first phase of the fourth line. The fifth and sixth lines are planned to extend the Cairo metro by 20km and 19km, respectively.

Algiers rail expansion

In Algeria, the Enterprise Metro d’Alger (Ema) invited firms in May to submit bids for the consultancy contract to provide a preliminary study into the second extension of the Algiers metro. It will run from the west of the capital and connect the cities of Chevalley, Dely Ibrahim and Cheraga.

Contractors submitted bids in December 2011 for the contract to carry out the civil works for the first extension of the Algiers metro scheme. This part will run from Hai el-Badr in the centre of Algiers to El-Harrach Centre in the east of the city. The metro project is part of the government’s plans to improve congestion across its main cities as the country’s population continues to grow. According to IMF estimates, Algeria’s population will reach 37 million by the end of 2013, an 8.4 per cent increase on the 33.9 million recorded in 2007.

With $76.2bn of new urban rail projects and extensions planned over the next 10 years in the Gulf and North Africa, the sector is set to offer significant opportunities for regional contractors, materials suppliers and financial institutions.

While the region’s construction sector has suffered in recent years after the collapse of Dubai’s real estate market and the ongoing political uncertainty, metro schemes are driven by sustainable factors such as population growth. This demand will ensure the schemes remain a focal point for the region’s construction sector.

In numbers

8.3 million: Riyadh’s estimated population by 2025 compared with the current 5.3 million

$35bn: Value of the Qatar Integrated Rail Programme

Source: MEED

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