Back on track: Preview of Middle East Rail 2017 - Zawya Projects

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Back on track: Preview of Middle East Rail 2017

Back on track: Preview of Middle East Rail 2017 Photo Credit:Reuters/Faisal Al Nasser
Low oil prices have failed to derail the region’s rail transport ambitions
07 March 2017

By Megha Merani

The need to accelerate economic growth in the face of lower oil revenues will drive the Gulf Arab region’s rail transport ambitions despite delays in project awards, a senior United Arab Emirates official said ahead of a regional railway transportation industry conference.

The 11th edition of Middle East Rail, which opens in Dubai on Tuesday, will showcase project opportunities in the Middle East and North Africa region, and for the first time, in Central Asia and Indian Subcontinent.

“Even if the oil prices are fluctuating, the amount of projects we are talking about at the railway summit is huge,” Dr Abdulla S Al Katheeri, director-general, of the Federal Transport Authority (FTA) - Land and Maritime said at a pre-event press conference last week.

According to Katheeri, the total value of rail projects across the GCC stood at approximately $240 billion (880.8 billion dirhams) and the sector holds significant potential to drive employment and economic growth.

“This industry is coming to the area and we would like this project not just as rail tracks and a locomotive - it is an opportunity for a lot of social benefits and employment,” he said.

“There will be a lot of industry built around this. The rail business has been around before more than 200 years so definitely it will accommodate and absorb a lot of people,” he added.

Rail projects such as the pan-region GCC Rail, Saudi Arabia’s Makkah Metro and the UAE’s prestigious national project Etihad Rail have been stalled by reduced government spending over low oil revenues over the last two years. 

Project pipeline

According to Terrapinn Middle East, organizers of the Middle East Rail event, only $69 billion out of the $240 billion worth of rail projects in the GCC are currently under construction.

However, Saudi Arabia and the UAE lead the Gulf region in terms of overall expenditure, the Terrapin report said, with Saudi accounting for the highest rail construction project value of 50 percent as of January 2017, followed by the UAE and Qatar at 18 and 17 percent respectively.

Some of the key projects expected to be awarded in Saudi Arabia this year are the Zulfi - Al Majmaah Passenger Railway, North-South Rail and Makkah Metro. 

In January this year, consultants Faithful+Gould told Zawya Projects that the total value of project awards forecast in Saudi Arabia for 2017 could rise from $27 billion to $32 billion, if the Makkah Metro project, which was expected to be awarded in 2016, goes through this year.

The $30 billion UAE railway network investments could include Abu Dhabi Metro and Light Rail, skyTran Yas Island, the next stages of Etihad Rail , Dubai Metro Route 2020 and the new stages of the Al-Sufouh Tram, Terrapin report said. 

2021 timeline for GCC Rail

The likelihood of constructing the 2,100-km GCC Rail network by 2021 will be discussed at a meeting of GCC regional ministers in April, Reuters reported last week. The regional bloc last year reached an agreement in principle to delay the 2018 completion date until 2021, the report said.

Katheeri said he is optimistic that 2021 timeline for the $200 billion project could be met.

“There is a big coordination at the ministerial level to achieve this project timeline,” he said. “For us, I think we (the UAE) are (at an) advanced (stage) than the rest of the GCC but everyone is on the same page... so I think it’s very promising.”

The Reuters report said Oman has shifted concentration to building a domestic network linking the ports of Salalah, Sohar and Duqm while Bahrain said it would not be connecting to Saudi Arabia until at least 2023.

UAE federal rail network

Following an investment review, Etihad Rail has suspended the tendering process for the second stage of the project, the company said in a statement issued in January 2016. The company said it is reviewing options for the timing and delivery of the phase, which was expected to connect the UAE to Saudi Arabia and Oman and other areas within the UAE.

“The status of Etihad Rail is a concern of Etihad Rail’s border committees,” Katheeri said. “Now they are studying their options.”

He added that the network design might change before the project starts again.

“Maybe there is some change in some routes. If there are some new routes, it may be redesigned,” he said.

Prospects for equipment suppliers

The global rail equipment market is expected to grow by three percent annually in until 2021, Terrapin stated citing the sixth edition of World Rail Market report, produced by consultant Roland Berger and international railway industry body UNIFE.

“Despite some setbacks and the economic complexities seen in the past year, the rail market is picking up speed in the Middle East and North Africa,” Helmut Scholze, partner at Roland Berger said in the statement.

“The UAE and Iran will be the key growth markets, while Saudi Arabia will stay moderately flat at its current high volume.”

Middle East Rail 2017 will be held on March 7 and 8 at the Dubai International Convention and Exhibition Centre. It will also feature a dedicated Career Zone, where graduates can learn about career prospects within the industry.

© Zawya Projects News 2017