18 November 2002
Lloyd's List International
© 2002 of Lloyd's of London Press Limited

Ambitious rail projects target both freight and passenger demand

Unusually for a desert nation, Saudi Arabia is looking to expand its ageing, Ottoman Empire-built railway infrastructure, with ambitious plans to extend its small rail network to carry freight and passengers between the kingdom's largest cities.

A well-used train network links the capital,Riyadh, with Dammam on the east coast.

At present a third of the Port of Dammam's container traffic travels to and from Riyadh by rail. Now government-owned Saudi Railways has completed feasibility studies on plans to extend this network, building a new, 950 km rail link between desert-bound Riyadh and Jeddah on the west coast.

"Transit container traffic for the Gulf region, an estimated 3.8m tonnes by 2015, and domestic container traffic, about 3.5m tonnes a year by 2015, are the anchor traffic for the east-west line," Saudi Railways says.

"It can cut the time it takes to ship containers around the Arabian peninsula by sea by eight to 10 days."

Saudi newspapers have valued the cost of the east-west rail link at $1.7bn. But this is only the first phase of an ambitious plan to expand the kingdom's rail network to move goods and passengers across the country by rail from the Red Sea to the Arabian Gulf.

The second phase of expansion comprises a 115 km rail link between Dammam and the industrial city of Jubail.

"Jubail is home to many industries that generate an estimated 3m tonnes of cargo a year," Saudi Railways says. "The new connection is necessary to capture this traffic."

A third new railway, the 570 km Mecca-Jeddah-Medina-Yanbu line, is planned to carry passengers between the great cities of Saudi Red Sea coast. In its first year Saudi Railways expects the rail link to carry 3.5m passengers, mostly pilgrims travelling to the holy cities of Mecca and Medina.

Hajj traffic alone is expected to generate 2m passengers in the six-week peak

pilgrimage season. Overall, the line's passenger traffic is expected to increase

by 10% a year.

"The Supreme Economic Council has approved these projects on a build-operate-transfer basis," Saudi Railways says.

"Selection of investors will be through international open bidding. Feasibility studies show that cargo lines have great potential to attract private investment. However, passenger services will need support from the government." Although Saudi Railways has opened the first phase of expansion to international tender, deadlines for the planned expansion are sketchy and some observers remain cynical.

In 2000 Japanese financiers rejected a Saudi request to finance a $2bn rail link to transport bulk cargoes from the kingdom's northern phosphate mines to the Eastern Province.

Saudi Arabia retaliated by refusing to renew a Japanese-held oil drilling concession.

"The question of rail expansion is given a new lease of life whenever the price of oil goes up and the Saudis have a surplus of cash," says an industry source who asked not to be named.

"The Saudi rail extension between Riyadh and Jeddah has been under discussion for 10 years.

"This would be a massive project due to the distance between the two cities and the terrain on which it must be built.

"Should they decide to go forward I suspect it would be a 10-to 15-year project. However, it would certainly open the central Saudi market for block train container.