Shifting Gears

CW looks at the transport sector

International deal agreements have been the pick of a difficult environment for the sector.
International deal agreements have been the pick of a difficult environment for the sector.

The transport sector has been typical of the heavy recent involvement of government and state-owned institutions in projects, including international link-ups, as private funding resources dwindle.

Qatar produced a key example last week. Public transport firm Mowasalat is close to finalising a deal with the Eritrean government to provide complete transport solutions, according to chairman Jassim Saif Al Sulaiti. In February Eritrean president Isaias Afwerki visited Mowasalat’s office.

Like Eritrea, Saudi Arabia has also been looking abroad for the right project partners. Last week, Saudi Arabian Railway (SAR) signed a US $74 million (SR278 million) agreement with India’s state-owned Rites Limited to run a major mineral railway linking the northern Jelamaid region with Ras Azzour near the industrial port city of Jubail.

This comes two months after SAR shook hands with NEC Portugal - a subsidiary of one of the telecommunications and electronics giants - to supply GSM-R Cab Radios to allow communication between train drivers and the operations control centres.

At the same time the Riyadh-based institution became the sole operator of the $7 billion Saudi Landbridge development, a cargo and passenger railway that will link Jeddah on the Red Sea coast, and the ports of Dammam and Jubail on the Gulf coast, to ship onwards to the UAE, Iran, Kuwait and other destinations in the Gulf region. It will also be used to transport passengers between Jeddah and Riyadh.

The private sector in the UAE has had few deals come to fruition in the last year. Mr Govia of Emirates Buildmat told CW: “The government in the UAE accepts there is a problem of funding for roads and bridges. Other jobs funded by privately-invested project are going on, but at a slower pace.”

As transport-related projects are feeling the squeeze, so too is transporting the materials for the projects, or those hiring such a service. Sharjah, last week, confused the haulage industry with announcements of new road tolls in May – potentially enforcing charges of up to $82. A cancelled press conference accounted for the gap in details.

The toll – announced by the Sharjah Department of Public Works - will hit all lorries passing between Fujairah and Dubai on Al Dhaid Road and aims to create a revenue stream for the maintenance of the roads impacted by heavy vehicles heading to Dubai.

Paul Austin-Price, senior business development manager at trailer manufacturer Gorica, said: “You can be sure that if a transport company incurs an extra toll cost it will be passed on to its customers.”

He was skeptical about the visibility of such maintenance funding. “With the sort of money coming from transport companies in costs in the past – [you have to ask:] where’s that money gone?”

Towering over all projects in the region is the Al Maktoum International Airport, the brainchild of Dubai Airports that on paper will be the world’s biggest passenger and cargo hub – forecasted to be worth around $8 billion. CEO Paul Griffin told a newswire in February that expansion plans for Dubai International Airport would run into “millions of dirhams.”

Construction delays pushed the first stage of completion to June this year. Al Naboodah Contracting Company is contracted to build the first runway.

The big tender in Saudi Arabia - that closes in the next few weeks - is the second phase of the Haramain High Speed Rail Project that will link Madinah and Makkah via Jeddah. The project was spurred on by a study by the Ministry of Hajj, that found the number of pilgrims to Makkah would grow by three million and the number of Umrah performers to more than 11 million over the next 25 years. The annual increase is expected to be 1.4% for pilgrims and 3.14% for Umrah performers.

The first phase of the electric high speed passenger line link – which will eventually have a top speed of 360 km/hr - will be completed in two parts. The first consists of the civil works, including viaducts and retaining walls, subways, shafts, tunnels and embankments.

Part two includes construction of the five passenger stations linking Makkah Central, Jeddah Central and Jeddah Airport, King Abdullah Economic City in Rabigh and Knowledge Economic City in Madinah.

The second phase sees the designers drafted in along with construction, operation and maintenance of the track, installing signalling and telecommunication systems, rolling stock, power supply and catenaries.

Alstom are among the bidders to provide the rolling stock, and Saudi Bin Ladin Group (SBG) is also believed to be in the mix. Ahmed Anees of SBG called it “an important project”.

In Kuwait, work began on the $96 million construction of the road intersection in Al Fahaheel at the beginning of 2010, won by Combined Group Company for Trading and Contracting.

The work includes establishment, creation, and maintenance of the intersections on main roads (Road Fahaheel Highway to Southern Alsobaheya and Mangaf).

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