Saudi Railways Organization invites bidders to Landbridge project
The Saudi Railways Organization (SRO) has held a Project Day to brief investors and other potential private sector participants in the Saudi Landbridge, the first ever rail link between the Red Sea and the Arabian Gulf.
The SRO is inviting private sector participation in the infrastructure project on the basis of a Build Operate Transfer (BOT) concession.
At the briefing conference, information about the Landbridge was provided to shipping lines, port and rail operators, equipment suppliers and other potential bidders for the project.
Dr. Jobarah Al-Suraisry, the Saudi Minister of Transport and Chairman of the SRO’s Board of Directors, who chaired the Project Day, said “Landbridge will be one of the largest BOT projects ever undertaken in the Middle East and is a key initiative in the Railway Expansion Program approved by the Kingdom’s Supreme Economic Council.
“The project is part of the Kingdom of Saudi Arabia’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 said.
“Due to the complexity and multi-disciplinary aspects of the project, we anticipate that interested parties will wish to form consortia to bid for the project,” he said. “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,” he said.
“The Landbridge rail network will link Saudi Arabia’s three largest ports: from Jeddah Islamic Port in the west, annually handling 2.4 million twenty-foot equivalent units (TEUs), through Riyadh’s Dry port, 0.25 million TEUs, to Dammam’s King Abdul Aziz Port, 0.75 million TEUs, in the east,” he said.
“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,” he said.
“The east-west rail link will also facilitate the development of a safe, comfortable, and fast overland passenger transport service.”
The 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
• The construction of a new 115 km railway line between the industrial city of Jubail in the Eastern Province and the Gulf port of Dammam
• The upgrade of the existing rail link between Riyadh and Dammam
• Integration of the new lines with Jeddah Islamic Port, King Abdul Aziz Port, Dammam and Riyadh Dry Port
The successful BOT tenderer 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’s 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 bank markets. The land required for the projects will be provided by the Kingdom of Saudi Arabia and core assets of the SRO will be transferred to the BOT concessionaire.
UBS Investment Bank, Saudi’s The National Commercial Bank (NCB) and SNCF International of France are providing financial and technical advisory services to the SRO for the project. Linklaters, together with the law office of Abdulaziz H Fahad, are providing legal advice.
SRO’s President Khalid H. Alyahya said “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.
“The Project Day has provided interested parties with the opportunity to establish contacts and discuss the possibility of co-operative partnerships,” he said. “A pre-qualification document describing the project in more detail will be published in about two month’s time,” he said.
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.