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Saudi Arabia signs $3.77 billion contracts for railway projects

JEDDAH — As Saudi Arabia has been carrying out major railway projects it has so far signed contracts worth a total of $3.77 billion.

The latest agreement, amounting to $1.9 billion (included in the above figure) has been signed with a consortium of three international and national companies for the construction of the 1,765km north-south railway line to carry minerals and passengers.

Ibrahim Al Assaf, minister of finance and chairman of the Public Investment Fund (PIF), who signed the agreement in Riyadh on Tuesday, said that the project would be completed in 42 months.

He explained that the project was essential for the success of the Kingdom's ambitious programmes amounting to a total of $13 billion — $3.50 billion downstream oil and gas project, a multibillion fertiliser plant of the same value ($3.50 billion), and a $6 billion aluminum smelter to be developed in Ras Al Zour by Maaden (Saudi Arabian Mining Co.).

"The essential goal is to transport the two minerals — phosphate and bauxite — and passengers as well as facilitate the movement of traffic among the eastern, northern and central regions of the Kingdom," Al Assaf said and added that the project was expected to transport more than 4 million tonnes of commodities and two million passengers annually between cities located within the project area.

PIF has set up a holding company, Saudi Company for Railways (Saar), to implement the project. It will be funded on a 65:35 debt-to-equity ratio. Part of the equity will be funded through an initial public offering (IPO) expected later this year.

The railroad will transport raw materials — bauxite and phosphate — to Ras Al Zour. Maaden will be looking in 2007 to finance the phosphate plant, for which a contract was signed between Saudi Basic Industries Corp. and Maaden last month.

Tuesday's ceremony was attended by Mansour Al Maiman, secretary-general of PIF, and senior executives of the contracting firms Al-Rashed Co., Mitsui & Co. of Japan, Barclay Mowlem of Australia and Abdullah Al-Suwaikat, chairman of the Al Suwaikat Group of Companies, along with the group's Chinese partner.

Earlier, three contracts worth a total of $1.87 billion (included in S$3.77 billion) were signed. The first contract worth $613.33 million for the Ras Al Zour-Al Zubaira Mines sector was signed with a consortium consisting of the Binladen Group (in alliance with two German firms) and Mohammed Al Swailem Co. in partnership with a German firm. The agreement involves laying a 576 kms railroad in addition to bridges, flyovers and tunnels.

The second contract, worth $506.66 million, was bagged by Al Suwaikat Group of Companies and involves laying 440 km of railroad from Zubaira to Al Nafud Desert, besides constructing flyovers, tunnels and bridges.

The third contract, worth $746.66 million, was signed with Barclay Mowlem Co. of Australia in collaboration with Mitsui & Co. of Japan and Al Rashed Co. of Saudi Arabia to extend it from Al Nafud to Al Haditha, Hazm Al Jalamid and Al Basita. It will cover about 750 kms of railroad in addition to the construction of tunnels, flyovers and bridges.