JEDDAH, 9 February — A Saudi company said it has reached an agreement with a state-owned Chinese firm to build a 3,000-kilometer railway line linking the east and west coasts of the Kingdom as part of a consortium that includes European and North American companies. The cost of the project is estimated at SR10 billion ($2.7 billion) including compensations to be paid for land appropriation.
Saleh Mutabbakani, general manager of LAM Co., said his company is negotiating a financing mechanism for the project with a banking consortium based in Bahrain. "We are now working to sign the final deal with a Bahrain-based group to secure Islamic financing for the project. This consortium is mainly concerned with financing infrastructure projects in the region," he told Arab News.
The railway line has been in the offing for years with the government saying the project is economically feasible. Minister of Communications Dr. Nasser Al-Salloum said government research into the plan has shown it to be economically feasible and that the private sector is encouraged to invest in it.
The project will be carried out entirely by the private sector on a build-operate-transfer (BOT) basis. It envisages adding 945 kilometers to link Riyadh in central Saudi Arabia with Jeddah on the Red Sea coast. This will complete the link between the eastern and western parts of the country through the existing 1,400 kilometers rail between Riyadh and Dammam.
Saudi Arabia is the only country in the Arabian Peninsula with a railway network. Mutabbakani said his company signed a memo of understanding with CCECC, a Chinese government-owned company that has built extensive railway networks in China and other parts of the world and is currently executing a project in the Libyan desert. He said the government is expected to announce its final decision on the project later in the year.
LAM Co. has already entered into agreements with three other companies from Canada, Germany and Austria. The Chinese firm is the main partner.
"Major construction companies in the Kingdom lack the necessary expertise in building railway projects, and this called for inviting foreign firms to do the work," Mutabbakani said.
LAM has been one of eight companies, including five Saudi firms, that qualified for a phosphate project in the northern part of the Kingdom that is expected to use the railway for transporting the product.
The government said it was seeking to develop the mining sector as the second most important source of income after oil and gas. Future investments in energy — estimated at $500 billion over the next 10 to 20 years — would boost the construction and service sectors which would have to depend on railway transport.
In its first part the project calls for a line running from east to west to link Jubail, Dammam, Riyadh, Madinah, Makkah and Jeddah. It will be used for the transport of goods from Jeddah Islamic Port across the Kingdom to the eastern coast and from there across the Arabian Gulf to Iran, India and Pakistan. The second line will run from northwestern Saudi Arabia and connect with the main line and with an international railway line to Europe.
Dr. Al-Salloum has said he was personally pinning great hopes on the project which would greatly benefit the national economy. The project is expected to increase cargo shipments by 19.5 percent to around 30 million tons and transport more than 20 million passengers annually.
Over the past years Malaysian firms have approached the ministry with proposals to build a $1.2 billion railway line to ferry pilgrims during Haj. The Malaysians said the 400 km railway will link Makkah and Madinah and the Haj sites at Mina and Arafat to serve the estimated two million pilgrims making Haj every year. Pilgrims now depend on road transport where thousands of vehicles are involved.
