Special report: GCC rail
CW runs the rule over each GCC member nation's efforts
The potential for rail projects in the GCC has been talked about for years, and the numbers associated with the market seem to grow exponentially as new projects are announced.
In 2012, the organisers of the Middle East rail conference, Terrapin, estimated the size of the market to be around $108bn. This year, that had increased to $250bn, the company said, as it opened the 2014 event in Dubai last week.
The jump is hardly surprising, given that 2013 was the year in which a couple of the biggest projects actually got to a stage where contractors were appointed.
Qatar Rail in May appointed three consortia and project managers as part of $15bn worth of deals agreed for work for the Doha Metro, and in Riyadh contractors and project managers were appointed for the $23.5bn metro project which will be the biggest project of its kind under construction anywhere in the world.
Elsewhere, metro projects in Jeddah and Makkah move closer to the construction stage, whereas the complex plan to build out six national rail initiatives at the same time and join them together is moving at different speeds within each individual country.
The UAE’s Minster of Public Works and chairman of its National Transport Authority, H.E. Dr. Abdullah Belhaif Al Nuaimi, recently admitted that it is
possible that some of the countries may not hit their targets.
“We have aimed for the GCC rail (network) to be up and running by 2018,” he said. “In last October’s ministerial meeting in Bahrain, we realised that some of the GCC countries would probably witness a delay in their programmes.
“The question was, if some of the GCC countries delay their activities, do the rest delay or postpone their works as well?”
Delays are evident in other areas, too - whether this is in designs for systems being created from nothing taking longer to complete than expected, tendered projects such as phase 2 of Etihad Rail taking longer to award than anticipated (see interview, p.26), or projects currently being built taking longer to finish than anticipated (Haramain Rail), there is plenty of evidence that for all of the potential rewards firms can land from a major contract award, there is also plenty of risk.
Some of these are likely to exacerbate as more projects move from design to construction phase. Speaking at Middle East Rail, Etihad Rail’s acting executive commercial director, John Lesniewiski, said: “The biggest challenge that I think will come in the future is that as we are all developing these rail networks simultaneously, there will probably be a slight push on resources available in the Middle East.
“It does offer opportunities for many companies to come into the market and provide construction planning, programme management, actual construction, operating … there’s many aspects to the railway that are not here yet.”
A report by EC Harris in November last year stated that the region’s mega-projects were adding around $50bn a year to the GCC’s current construction bill. Of the 117 expected to have a value of $1tn between 2014-2020, 22% related to transport.
Qatar, in particular, faces a steep rise in spending over the next three years, which the firm predicted could lead to dramatic inflation in construction costs.
“There will be intense competition between Middle East countries, as well as with other emerging markets, for the necessary labour and material resource to deliver these major programmes,” said the firm’s head of infrastructure, Alistair Kirk.
“International contractors winning major programme contracts in the Middle East may find it difficult to attract unskilled labour and skilled construction professionals on the scale required to successfully complete contracts on time.”
M. Vasanth Kumar, Group CEO of Qatar-based Al Malki Holding, said: “In my opinion, the key to building so many massive infrastructure projects in tandem within a short period is to ensure seamless availability of resources, adequate facilities to support those resources during their stay and simple, but effective approval processes during various stages of construction.”
In this special report we’ll take a look at where many of the GCC’s light and heavy rail projects currently stand, and hear from those responsible for delivering them.
United Arab Emirates
As outlined in-depth in during this week’s interview with Etihad Rail CEO Dr Nasser Saif Al-Mansoori (see p. 26), the first of three phases of the $10.8bn Etihad Rail project is drawing to a close.
Speaking at Middle East Rail last week, acting executive commercial director John Lesniewski said that phase one, which runs from a sulphur granulating plant at Habshan owned by Abu Dhabi National Oil Co to the Port of Ruwais, will be operational “some time by the end of 2014.”
Lesniewski said the development of the network had been a challenge as the entire thing has had to be created from scratch at the same time as co-ordinating with other GCC members over their own efforts. It has commissioned around 10 separate studies from consultants over various aspects of the development, which led to it breaking the work into three phases.
And although the second phase has been a long time in gestation – tenders were first issued in 2011, with a view to starting on site in 2012 and have yet to be awarded - this comprises the bulk of the network and the vital link to the wider GCC route from the Saudi border via Abu Dhabi and Al Ain.
Lesniewski added: “The tenders have been evaluated and we are close to awarding those. We anticipate construction will start between now and the summer and we are definitely on line to completing that work by 2018.”
The third and final stage will link the northern Emirates to industrial areas and will be used in the first instance to carry aggregates from the northern mountains.
Dubai light rail
The GCC’s first (and still only) metro system operating to date is soon set to undergo expansion following Dubai’s 2020 Expo win, according to the CEO of the Roads and Transport Authority’s (RTA) rail arm, Abdullah Yousef Al Ali.
“We did not finalise the alignment but we are tendering the project very soon so we can finish before Expo 2020,” he told Middle East Rail, with one report suggesting that tenders could be issued by April. “It will be around 10-15km, depending on the alignment.” A further 2-4 stops are likely to be added.
This extension will push out from Jebel Ali to the Expo site next to the new Al Maktoum International Airport – effectively providing a direct connection between both city airports. At the other end, meanwhile, Al Ali added that work was progressing on a 3.5km extension bringing the red line from its Rashadiya terminus out to Mirdif City Centre Mall.
“Another project we will complete before 2020 is the extension of the Green Line, which is 20.6km. It will extend to Al Jaddaf, with 11 stations serving areas such as International City, Academic City and Dubai Silicon Oasis.”
Al Ali said that since the formation of the RTA in 2005 to promote greater public transport use, the percentage of journeys has increased from 6% to 13% last year, with journey numbers climbing from 163mn to 330mn. It is targeting an increase to 20% of all journeys by 2020 and 30% by 2030.
This will be facilitated by the new Al Sufouh Tramway, for which test runs began earlier this month. Al Ali said phase one should start in November 2014 and contain 11 stations along 10.4km of track. It will be linked to Dubai Metro at a couple of locations, including Dubai Marina station.
A second phase, set to complete by 2020, will add a further seven stations and 5km, linking the Burj Al Arab area and Mall of The Emirates.
Saudi Arabia & Bahrain
Saudi Arabia is the one country in the GCC with experience of operating heavy rail systems, with the first systems being built in the 19th Century and the Saudi Railways Organisation operating a line between Dammam in the Eastern Province and Riyadh for Saudi Aramco since 1951.
HE Mohammad Khalid Al Suwaiket, president of Saudi Railways Organisation, said that it had been in business since 1951, and that rail was “the most efficient form of transportation”.
It is already contributing towards the Kingdom’s economic growth, and with the addition of further projects linking from Ras Al Khair in the North via Jubail to Dammam and from Jeddah in the West to Riyadh via the 1,000km Saudi Landbridge project, he argues the network’s expansion could play a major part in the Kingdom’s efforts for economic diversification.
Ras Al Khair, for instance, is a new minerals city linked to nearby mining facilities that will produce aluminium, phosphates, copper and other commodities for which low-cost shipping to ports and major cities will be vital.
The Kingdom’s rail projects are at various phases of development. The $11.1bn Haramain High Speed passenger rail line linking the holy cities of Makkah and Madinah via Jeddah and the new King Abdullah Economic City was meant to be nearing conclusion, but is running around a year behind schedule. Al Suwaiket told Middle East Rail that the 450km-long line, which will be capable of speeds of up to 350km/h, is currently around 50% complete.
The Saudi Landbridge project, meanwhile, is progressing with a $37mn contract to design the line awarded to Italferr in August last year.
Italferr’s Middle East manager, Luca Beccastrini, told CW that it already has 35-40 engineers working on the project, and that it will send the first batch of Saudi engineers to Italy for training later this month as part of a programme that will boost skills in the Kingdom.
Meanwhile, the line set to form the backbone of the GCC network, linking from Kuwait in the North to the UAE in the South via Qatar and Bahrain, is “now in the design phase”, according to Al Suwaiket.
“In 2014, we will decide on the design to make sure we are ready to deliver by 2018,” he added.
A feasibility study on linking the rail network to Bahrain via a bridge is currently underway, but is expected to be finished within six months.
As already mentioned, the $23.5bn contracts awarded for Riyadh Metro last year made it the biggest metro construction project anywhere in the world. It is split into six lines being carried out by three consortiums overlooked by two project management groups (see diagram).
A Bechtel-led group containing Consolidated Contractors Corp (CCC), Almabani Contractors and Siemens has the biggest deal for lines 1 and 2, containing 42 of the network’s 85 stations, including the main KAFD stop.
“It’s one of the biggest EPC contracts Bechtel has had in its history,” the company’s EMEA president, David Welch, tells Construction Week.
The contracts were announced in July last year, and Bechtel received its notice to proceed in November. Since then, the firm has been working on an eight month-long design period before starting work on a four-year construction element, which will be followed by a four-month testing and commissioning period ahead of the metro opening in 2019.
“We have begun our mobilisation efforts and we’ve opened our office. The initial engineering design works is already underway at a number of locations around the world, but we are also staffing up here in the Kingdom,” he added.
Further announcements about the timing of the works and likely construction date starts will be handled by the Arriyadh Development Authority, but Welch thinks that they will be made soon.
“I don’t think you’ll have to wait too long to see us,” he said.
The other two consortia working on the project include an Ansaldo/Salini Impregilo-led group completing a $6bn project for the longest line (line 3) and a group led by Spanish contractor FCC completing lines 3, 4 and 5.
Welch said the project is seen as key to the economic development of Riyadh. In 1977, just after Washington DC opened its Metro system, both cities had around 600,000 residents. The US capital’s population has stayed at around the same level since (although its transport system has extended). Riyadh, meanwhile, has seen a ten-fold increase in its population to around 6mn and still doesn’t have a public transport system of any note.
The Kingdom’s second-biggest city has had plans in the pipeline for a metro system for many years, with a masterplan initially developed in 2008 subsequently abandoned for being outdated, according to Jeddah Metro Co’s director of studies & design, Dr. Osama I. Abdouh.
Speaking at Middle East Rail, Abdouh said that the old masterplan didn’t take new schemes like Kingdom Tower into account.
He added that work has picked up pace since a ministerial decree issued last year to provide government funding for metro and light rail projects in major cities including Jeddah, Makkah, Madinah and Dammam was passed.
He also said that the initial cost of the project has been estimated at $12bn (SR45bn), with the caveat that this could change as it progresses.
Ibrahim Kutubkhana, CEO of the Jeddah Metro Company, said that Jeddah’s population is growing quickly. It currently stands at 3.8mn, but is expected to reach 6.2mn within 20 years.
“The city right now is experiencing a lot of challenges,” he said, citing congestion as a problem.
The solution set to be implemented by Jeddah Metro Co, which is a joint venture between the Municipality and Jeddah Urban Regeneration Co, is a proper integrated transport mega-project that will include metro, tram and commuter rail elements with a combined length of 293km, a 750km-long bus system with more than 3,000 stops, ferries and taxis.
“The design has already started, and we expect the construction will start next year,” he said.
“We have a mandate to complete the construction within six years, which is 2020. So we have a lot of challenges we have to meet. We expect the participation of all major companies in our project so we can meet those and work together as partners to develop this,” he said.
The first major step forward in the development of Oman’s $15bn national rail project was taken in August last year, when the Ministry of Transport and Communications announced that it had awarded a $36.5mn contract to design the country’s 2,200km-long network from scratch to Italferr.
Oman National Railways Co’s Abdulrahman Al Hatmi pointed out at Middle East Rail that the network is one of the main pillars of the Sultanate’s economic development policy as it allows for the integration and expansion of key coastal ports such as Sohar, Duq’m and Salalah.
There will also be links to areas where new cities are expected to flourish.
Al Hatmi said that Oman faced a tougher challenge in delivering its aspect of the projects than other GCC states as a result of the terrain, which has more mountains and valleys than surrounding countries.
He added, however, that it had to ensure that its costs were kept in check in order for it to remain competitive in the long term against alternatives such as moving freight by road or sea.
“We need to develop this in the best way possible and not waste any resources,” he said. “We also need to develop human resources and to ensure we have the skills required.”
Italferr’s Middle East manager Luca Beccastrini told CW that this is already in hand. Although the official signing ceremony for the contract only took place last Wednesday (5 February), ten Omanis had already left for Italy for a 40-day training project aimed at boosting their rail engineering knowledge.
He said that Italferr is currently at a “very intensive” phase of the design process, with engineers who had worked on high-speed projects in Italy transferring to this and the Saudi Landbridge
contract. Designs for the entire Oman network are being undertaken under a 25-month contract and are due to complete by January 2016.
“We have an important target to reach. We will do our best to respect it,” said Beccastrini.
Some 29 firms submitted bids to project manage the line in August 2013, including Aecom, Parsons, China CREC and Hill International.
The Ministry is expected to announce its decision soon and to appoint contractors later this year with a view to starting on site by Q4 2014.
A $10bn national railway network and a $7bn metro network for Kuwait city have been touted for some time – they were part of the Kuwait Development Plan initially passed by the country’s parliament in 2010 , but then the subject of a series of political machinations before finally being approved in 2013.
As a result, initial plans by the Transport Ministry to award Metro construction contracts by 2011, with a view to completing by 2016, have had to be redrawn.
Kuwait is aiming for its 511km rail network, which will link its ports and major airport with the wider GCC project, to be ready in time for the 2018 deadline, while the Metro is expected to finish by 2020.
“For us, this is a very new project. We are still in the final process of design,” Kuwait’s deputy transport minister Mansour Al Bader, told Middle East Rail.
“We just need to start the tendering process,” he added. “The budget and the allocations have already been made.”
It seems that 2013 was a year of two quite contrasting halves for Qatar Rail in 2013 – specifically for its huge Metro project.
Speaking at CW’s Leaders in Construction in April last year, Qatar Rail’s senior programme director Adrian Shaw set out a clear trajectory for contract awards, with the “imminent” awards for major civil construction packages to be followed within the same year by the appointment of companies providing rolling stock and an operations and maintenance deal being awarded so that the end-user could sit alongside contractors during the construction phase.
A major milestone was hit within the month when four consortia were appointed to build the Red Line North, Red Line South, Green Line and the Major Stations in deals worth a combined $8.2bn.
By June, a number of the consortiums which had bid for the Gold Line – the biggest and most complex of the initial contracts – were being told that they had been unsuccessful. However, the deal subsequently seemed to have stalled and no announcement about the winning consortium has been made since.
By the end of the year, Shaw and a number of other senior team members had departed and the shadow operator had not been appointed, either.
Firms in the market are eagerly awaiting the announcement of further deals, including the M&E package.
The Middle East CEO of Siemens’ infrastructure and cities division, Joerg Scheifler, said “significant progress” was made in 2013, with the majority of civil works packages not only being awarded but starting on site.
“The most interesting Metro topic for this year will be the finalizing of the M&E package for the Doha Metro. Under this package, the rolling stock, signalling and rail electrification systems will be awarded,” he said.
He also argued that the Metro is an integral part of the country’s 2030 National Vision.
“Even without the World Cup, it is vital to build such a rail transport system in order to cope with the increasing traffic activity on the roads. ,” he said.
M. Vasanth Kumar, Group CEO of Al Malki Holding, also said that signs of progress were evident.
“Any visitor to Doha now can easily notice grey coloured site hoardings and white sign boards erected at dozens of rail station sites, which is an indication that construction work has commenced, which is a very good sign indeed.”