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GCC Metro Plans: Ambitious investment plans for metro rail sector [free access]

November 1, 2009

The mass-transit sector is fast becoming one of the biggest investment destinations in the Arabian Gulf region as the governments begin to direct their attention towards developing this previously neglected area. Subsidised fuel and low vehicle tax have made Gulf residents heavily dependent on motoring. Moreover, with Gulf countries witnessing annual population growths of 5-8 per cent, urban areas are facing increasing congestion. This is forcing governments to invest in improving public transport infrastructure. Almost every member country of the Gulf Cooperation Council (GCC) has announced plans for massive spending in this sector, with rail projects accounting for a major chunk. The GCC region is projected to invest more than USD100 billion over the next decade in rail projects.

Within the rail segment, metro rail projects are being touted as a big investment opportunity. GCC countries are now motivated to build metro rail networks not only to cope with their rapidly growing urban populations and increasingly congested roads but also to help sustain their economic development. Metro projects are expected to spur the ailing construction sector in the GCC region as demand accelerates for overbridges, roads, flyovers, interchanges and parking complexes that feed into the metro system. The real estate sector will benefit from an increase in prices for projects close to metro lines. Metro projects will also drive down energy requirements for the transport sector and reduce environmental pollution.

To reap the benefits of a metro, a pipeline of major projects is slated to be developed over the next five to ten years in the GCC region.

 

United Arab Emirates (UAE)

 

Leading the way as always is the United Arab Emirates (UAE) with its new Dubai metro system. This is the first urban rail system in the GCC region and once complete will be the longest fully automated metro network in the world.

 

The Dubai metro project is being built in two stages. In stage one, two lines (the Red Line and Green Line) are being built. Construction on the first stage began in 2005, with the first section of the Red Line becoming operational in September 2009. 

 

The Red Line is 52.1 km in length (4.7 km underground) and has 29 stations. Of these, only 10 have been completed and opened to public.  The Green Line is 22.5 km in length (7.9 km underground) with 20 stations. The remaining stations on the Red Line will open in stages by spring 2010 and the Green Line will be operational by summer 2010. In full operation, the Red and Green Lines of the Dubai metro are projected to carry about 1.2 million passengers on an average day and 355 million passengers a year, reducing road congestion by up to 17 per cent.

 

The contract to build the Red and Green Lines is with the Dubai Rapid Link (DURL) consortium which comprises Mitsubishi Heavy Industries (MHI), Mitsubishi Corporation, Obayashi Corporation, Kajima of Japan and Turkey's Yapi Merkezi Insaat ve Sanayi AS. These lines will be operated and maintained by the British firm Serco for a period of ten years.

 

Stage 1 of the metro (comprising the Red and Green Lines) was originally estimated to cost about USD4.2 billion. However, there have been massive cost overruns and the latest estimate of the cost stands at over USD7.6 billion. Dubai’s Road & Transport Authority (RTA) projects that the metro will generate revenues in excess of USD4.6 billion over the next ten years.

 

The second stage of the metro project includes two more lines (the Purple and Blue Lines). The Purple Line will run 49 km, with 8 stations and will be an express link between Dubai International Airport and Jebel Ali International Airport. Parsons Brinkerhoff is the design consultant of this line. The tender for the engineering, procurement and construction (EPC) contract for the line is expected to be conducted in the fourth quarter of 2009. The line is slated for completion in 2012-13. The Blue Line, which is still in the conceptual stages, will be built after the Purple Line and is expected to be 50 km in length. The tender for consultancy services for this line may be floated later this year or early next year depending upon the state of the global financial economy. Given funding constraints, it is being speculated that these two lines may be developed under a public-private partnership (PPP) model.

 

By 2020, RTA expects to have 318 km of metro lines in the Emirates and hopes that 30 per cent of the city’s population will use this mode of transport. To further reduce the city’s reliance on road transport, the RTA is considering building light-rail lines that will serve as feeders to the Dubai metro.

 

With little oil, Dubai has, over the last decade, invested in the best infrastructure in the Gulf to attract international investors. With the metro project, it has once again proven its aim to become a leading international city.

 

Not far behind Dubai is the rich neighbouring emirate of Abu Dhabi with its ambitious plans for a 131-km metro network. This project is part of the Abu Dhabi Master Transport Plan 2030 which includes development of about 580 km of high-speed railway lines and about 350 km of light rail tram system.

 

The Abu Dhabi Executive Council (ADEC) is currently reviewing bids for the consultancy contract for the metro project. Six firms/consortia have been shortlisted. These include: the Adapt Consortium (Aecom, DB International, Parsons Brinkerhoff); Atkins/Bovis Lend Lease;  Dar al-Handasah, Egis, Gestisa, Inco Tifsa; Mott MacDonald, Parsons International, Halcrow; the Adim Consortium (Coteba, Khatib & Alaani, Oberymeyer, ILF Consulting Engineering, Hamburg Consult, Dornier); and Systra, Arup, Lowi and Foster & Partners. The consultancy contract is expected to be awarded before the end of 2009. Construction of the metro system is slated to begin in 2011 and completion is targeted for 2016.

 

The successful launch of the Dubai metro has triggered a wave of metro projects in other GCC countries as well.

 

Saudi Arabia 

 

The largest of the GCC members, Saudi Arabia is planning a metro network in the holy city of Mecca and in its capital Riyadh.

 

The Mecca metro, called the Al Mashaaer Al Mugaddassah Metro, will be an 18-km, elevated system and will service three main areas (Arafat, Muzdalifa and Mena), each with three substations. It is scheduled to be operational by November 2010, operating at 35 per cent capacity initially with automatic train protection to assist manual driving. The fully automated system is scheduled to be introduced in mid-2011. Once complete, the system will have the capacity to move 72,000 passengers per hour in each direction. The metro line is expected to reduce vehicular traffic by as much as 50 per cent. The line may be extended later to Al Haram and is the first of a proposed five-line network which will connect the area to Jeddah Airport and the planned national rail network.

 

China Railway Construction Corporation is building the Mecca metro network, estimated to cost USD1.8 billion. French company Thales has been awarded the contract to provide driverless train control and telecommunication systems.

 

An automatic light-metro within the Princess Noura Bint Abdulrahman women's university in Riyadh is planned to be operational by 2011. The Saudi Binladen Group is the general contractor for the project. Earlier this year, the company awarded a USD320 million contract to the Ansaldo STS/AnsaldoBreda consortium to design, build and commission the metro system.

 

Qatar 

 

Qatar has developed a massive plan to overhaul its railway network which includes proposals to build a metro system in the capital city of Doha.

 

Germany’s Deutsche Bahn has been appointed as the consultant for Qatar’s rail project and the government-owned Qatari Diar Real Estate Investment Company has been appointed to oversee the project.

 

The initial plan for the proposed railway network comprises five projects: an east coast freight and passenger line; a high-speed link via the planned 45 km Qatar-Bahrain Causeway bridge; a freight link connecting with the proposed 1,500 km GCC rail network; a 140 km light-rail network linking new developments north of Doha; and a Doha metro system consisting of six lines (based on the Qatar Transport Master Plan). At present, Qatar is preparing to launch tenders for segments of the proposed rail network.

 

Plans for the Doha metro network have been presented to the Qatar government. The construction contract could be awarded by the end of this year. Phase 1 of the three-phase metro project involves construction of five segments with a total length of 85 km, originally scheduled for a 2015 completion date. The three phases of the network total 140 km, and have a preliminary completion date of 2026.

 

Kuwait 

 

Kuwait recently commissioned a study to develop a master plan for a land-based transport system in the country. The study is being undertaken by a consortium of Atkins (UK), Parsons Brinckerhoff (US) and Gulf Consult (Kuwait).

 

Initially a USD7 billion metro project was conceived for Kuwait City by the Kuwait Overland Transport Union. The project, which had been planned independently of the government’s new study, must now be folded into the national transport strategy. The project is on hold as planners await the outcome of the master plan study. If the consultants recommend a metro system for Kuwait City, private investors may be roped in through the PPP model. Construction contracts for the metro lines will be awarded on a build-own-transfer (BOT) basis. The invitation to bid for construction contracts is expected to be issued in 2011 and completion of the project is currently scheduled for 2016.

 

Bahrain 

 

Bahrain also has plans for a metro or light-rail transit system. An integrated public transport study is being conducted for the development of a rapid transit network in the country comprising a 29 km monorail line, a 21 km tram network, two light-rail transit lines/metro (32 km and 32.7 km) and two bus rapid transit routes (33 km and 36.5 km).

 

Part 1 of the study is over. Part 2, planned to begin in mid-2008 and be completed by end-2009, has been delayed because of the ongoing financial crisis. The study is now expected to be complete by September 2010. There may be delays but the country is determined to ease the increasing congestion.

 

Oman 

 

Oman is already working on a rail system plan for the country. In early 2009, a study was launched to analyse the feasibility of a rail system in the Batinah region. The authorities have been exploring the potential for an extension of the proposed Batinah rail system into the capital city of Muscat.

 

The shape of a rail system within Muscat city will depend largely on traffic impact studies currently being undertaken by French consultants Systra Consulting, together with their local partner the National Engineering Office. These studies will help determine whether Muscat should get a metro or a ground-level rail system, or a combination of both.

 

 

Although they have been late starters, the Gulf nations have begun taking serious steps in developing urban mass transit systems. So far, many governments in the region have been waiting to see the response to the Dubai metro. But with rising fuel costs and increasing congestion, a sense of urgency has crept in about developing modern mass transit projects, especially metro systems. While the GCC may not be the largest market for metro projects, it is currently the one with substantial growth potential. It is also likely that not all of the planned projects will survive, however, the governments are determined that a great many will.

 

There are several challenges in developing metro rail projects in the Gulf region. A pressing issue is the lack of established regulatory authorities to drive these complex projects. The UAE’s National Transport Authority for instance was set up only this year, while the metro project was planned a long time ago. With no previous experience in developing mass-transit projects, the planning process is often very slow.

 

Funding is a major concern. The current economic downturn and difficulty in sourcing long-term project finance have impacted the GCC metro projects. The UAE has so far been able to finance construction of its metro from its own coffers but others do not have the same flexibility and are likely to pursue the PPP route, which could lead to delays in realising projects. PPP deals often involve private contractors taking on some project risk by financing construction themselves before transferring it to government clients. Metros, in general, are not considered profit-making ventures and thus do not always attract private investors. Private developers are also concerned about taking on long-term partnerships with public entities.

 

Another challenge is in bringing a change in people’s lifestyle. Metros’ success depends on weaning GCC residents off their cars. Security and safety are other issues in promoting the use of public transport, and if not adequately addressed, could derail the best government efforts.

 

While it is too early to measure the full impact of the metro, the initial response to the Dubai metro can serve as a good indicator of GCC residents willingness to change the way they commute and to give public transport a chance.

GCC Rail Projects

 

 

Project

Country

Investment

Bahrain Rapid Transit System

Bahrain

USD8 billion

Kuwait National Rail

Kuwait

USD6.6 billion

Kuwait City Metro

Kuwait

USD7 billion

Muscat rail

Oman

not available

Doha Metro

Qatar

USD5 billion

Doha Rail

Qatar

USD1 billion

Saudi Landbridge

Saudi Arabia

USD6.6 billion

Mecca - Medina Rail Link

Saudi Arabia

USD6 billion

Mina Arafa Railway

Saudi Arabia

USD5.3 billion

North South Railway

Saudi Arabia

USD2 billion

Al Mashaaer Al Mugaddassah Metro (Mecca Metro)

Saudi Arabia

USD1.8 billion

Princess Noura University Monorail

Saudi Arabia

USD0.32 billion

Jeddah Monorail

Saudi Arabia

USD3.7 billion

Trans-Emirates Rail Network

UAE

USD3 billion

Abu Dhabi Metro

UAE

USD7 billion

Dubai Al Sufouh Tram

UAE

USD1 billion

Dubai Metro

UAE

USD7.5 billion

GCC Rail Network

Bahrain, Oman, Kuwait, Qatar, Saudi Arabia, UAE

USD25 billion

Source: GMT Research