Saudis seek foreign involvement in railway
Occupying more than two million square kilometers, Saudi Arabia is a vast country where great distances stretch between the major cities. An ambitious multi-billion-dollar plan, drawn up by the Saudi transport ministry, aims to bring destinations closer by transforming the railway network into the backbone of the kingdom’s transport system.
"The project will be announced soon, hopefully before the end of this year, and executive studies will commence immediately after that," stated Transport Minister Nasser Al-Sallum on Sunday, July 22, quoted by AFP.
Saudi railroads system, originally laid by the Ottomans to transport Muslim pilgrims to the holy sites in Mecca, remains today the only railway in the Arabian Peninsula. The latest development scheme attempts not only to supply the growing demand for pilgrim transportation during Haj and Umra seasons, but also to facilitate transport to the kingdom’s untapped mining areas.
The expansion plan calls for three major projects. The first, building a 1,200-kilometer railroad to transport phosphates from the Al-Jalamid area in the north and the central Al-Zubairah area, to Jubail Industrial City. It would serve Al-Qasim and the Central Province areas as well. The second phase aims to connect Jubail Industrial City to the existing railroad, extending from Dammam to Riyadh. Stretching over 130 kilometers, this connection is designed to transport 25,000 metric tons of goods annually.
The last project planned, is a railroad linking the Islamic Port in Jeddah on the Red Sea to King Abdulaziz Port on the Arabian Gulf city of Dammam, via Riyadh. The idea is that transporting goods through this land bridge to other Gulf States, would take less time than shipping them around the Arabian Peninsula. This 950-kilometer link between Saudi Arabia's largest ports, is expected to boost cargo transport by 19.5 percent to 30 million tons a year, according to the Saudi Al-Iqtissadiya business daily. The project will also transport 23 million passengers a year.
Other railway lines will connect several loops linking Jubail industrial city and King Fahd international airport where massive urbanization and settlement are planned, according to the official Saudi Press Agency, SPA.
These major network expansion projects, estimated to cost a total of $4.5 billion, will take five years to construct, Abdullah Al-Muqbel, undersecretary at the communications ministry, recently told the Jeddah-based Saudi Gazette. However he did not give a date for the start of work.
A study on SRO's three proposed projects, conducted by the World Bank (WB) and the Saudi Investment Bank in 2000, has concluded that the project was financially and economically feasible for the kingdom, according to Transportation Minister Sallum. In line with what Salloum referred to as “the government commitment to handing over the ownership and management of services and infrastructure to the private sector,” the WB’s feasibility study also paves the way for the privatization of the Kingdom's railway system. According to the minister, who is also the chairman of the board of the Saudi Railways Organization (SRO), a sub-committee on the railway privatization would be created soon to go into the details of the privatization process.
Oil-rich Saudi Arabia has invited the private sector to construct the railways, but the authorities are still evaluating options to award the projects, with the BOT (Build, Operate and Transfer) model being favored. SRO is looking for a strategic partner who would not only bring expertise in construction, but would also provide financial support to these projects. Several foreign and local firms are bidding for the projects to expand the Saudi railways.
A Saudi delegation, headed by SRO general manager Khalid Al-Yahya, arrived in Islamabad in April 2001 to look into the possibility of establishing cooperation in the railway sector, reported PakNews. “The visit of the SRO head to Pakistan is in line with the development thrust of the company to attract foreign companies with expertise to participate and support the expansion of the kingdom's railway systems,” an SRO statement followed.
Saudis also sought German involvement in the project. In May 2000, Germany has decided to take part in the railway expansion project. The director general of the German transport ministry, Michael Harting, informed Al-Yahya of Berlin's willingness during a meeting in Dammam, SPA reported.
But the Saudis’ first choice, when it came to investing in the multi-billion-dollar national scheme, was Japan. When Japan's Arabian Oil Company (AOC) turned down a Saudi request to finance the $2.4 billion construction of a rail link between the phosphate mines in the north and industrial centers the in east, Saudi officials refused to renew a 40-year-old Japanese oil-drilling concession.
This swelling feud threatened to tarnish the strategic relations between Japan and Saudi Arabia. The two countries have 37 joint ventures in which $4.9 billion are invested. Two-way trade amounted to $10.2 billion in 1999, with the balance heavily in favor of oil supplier Saudi Arabia.
Additionally, Japan has demonstrated the most conciliatory line during recent rounds of talks on Saudi Arabia's WTO accession, as opposed the firm position taken by American and EU negotiating teams, which demand that Riyadh remove trade barriers and reduce the scope of subsidies enjoyed by petrochemical producers. ― (MENA Report)
© 2001 Mena Report (www.menareport.com)
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