KSA Landbridge to link the Red Sea with Arabian Gulf

It will be the largest BOT rail project ever undertaken in the region, cutting across the peninsula

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By  Eudore Chand Published  February 12, 2005

The Saudi Railways Organisation (SRO) has finalised details of the Saudi Landbridge project, which proposes for the first time to link by rail the eastern and western coasts of the Gulf Cooperation Council’s largest member state. SRO is now looking for prospective investors and partners and is inviting private sector participation in the infrastructure project on the basis of a Build-Operate-Transfer (BOT) concession. The Saudi institution held a ‘Project Day’ in London earlier this month to brief investors and other potential private sector participants on the Saudi Landbridge project. Information was provided to shipping lines, port and rail operators, equipment suppliers and other potential bidders. Though no value has yet been attached to the project, top Saudi officials said that Landbridge will be one of the largest BOT projects ever undertaken in the Middle East. “It is a key initiative in the Railway Expansion Programme approved by the kingdom’s Supreme Economic Council,” said Dr Jobarah Al Suraisry, Saudi Minister of Transport and SRO chairman. “The project is part of the kingdom’s privatisation strategy, the objectives of which include generating economic benefits through effective private sector participation in the national economy, creating employment opportunities and rationalising public expenditure,” Dr Al Suraisry added. He pointed out that due to the complexity and multi-disciplinary aspects of the project, SRO anticipates that interested parties may wish to form consortia to bid for the project. Landbridge is the second large rail project within the GCC that has come off the drawing boards; Dubai is already well advanced on its multibillion-dollar Metro project, with the final submission of bids scheduled for 28th February. However, the scope of the Saudi project is much larger. “The Landbridge project will create a new dimension in land transport across the Saudi Arabian Peninsula, transforming the existing rail network into a world-class freight and passenger rail system,” said the kingdom’s Transport Minister. The Landbridge rail network will link Saudi Arabia’s three largest ports: the Jeddah Islamic Port in the west through to Riyadh’s Dry Port, and on to Dammam’s King Abdul Aziz Port in the east. “The interconnected railway tracks will allow large quantities of cargo to be transported across the country at competitive rates, resulting in considerable cost savings in the movement of goods to and from North America/Europe and the Gulf,” the minister said. “The east-west rail link will also facilitate the development of a safe, comfortable and fast overland passenger transport service.” The Landbridge project will involve the construction of a new 950 km railway line between Riyadh — the capital city of Saudi Arabia — and the Red Sea port of Jeddah. Additionally, it will create a new 115 km railway line between the industrial city of Jubail in the Eastern Province and the Gulf port of Dammam. The project also calls for the upgrade of the existing rail link between Riyadh and Dammam and the integration of the new lines with Jeddah Islamic Port, King Abdul Aziz Port in Dammam and Riyadh Dry Port. The minister said that the successful BOT bidder will design, finance, build and operate the Saudi Landbridge for a fixed period of time. The obligations of the selected consortia will include designing and constructing the rail network to meet the SRO specified criteria, and subsequently maintaining the network at required levels of operational efficiency. Project financing is expected to comprise investor equity and debt from the Saudi Arabian and international financial markets. The Kingdom of Saudi Arabia will provide the land required for the project and core assets of SRO will be transferred to the BOT concessionaire. UBS Investment Bank, Saudi Arabia’s National Commercial Bank and SNCF International of France, are providing financial and technical advisory services to the SRO for the project. Linklaters and the law office of Abdulaziz H Fahad, are providing legal advice. SRO president Khalid H. Al Yahya said that prospective bidders should carefully consider the skills and capabilities required to implement a project of this nature when forming their consortia. “The grand scale and complexity of the project and the exacting operational requirements mean that we would expect consortia to comprise an appropriate group of different disciplines,” he pointed out. A pre-qualification document describing the project in more detail will be published in two months’ time, he added. The SRO expects to announce the pre-qualification process in the second quarter of 2005. Invitations to bid will be issued shortly thereafter, most likely in the second half of 2005.

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