Has Rail Infrastructure Growth in the Middle East hit the Buffers?

Below, Ryan provides an overview on the current market situation for Rail Infrastructure in the Middle East.

The 2010 Vision

In 2010, Middle East Economic Digest (MEED) had estimated that transport projects across the Gulf Cooperation Council (GCC) would surpass $400bn with a huge shift towards rail; recognized as the sustainable solution to handle the urbanization of the fast developing nations. The ultimate vision was for a GCC Rail Network that would connect all six members of the GCC (UAE, Saudi Arabia, Qatar, Oman, Bahrain, and Kuwait).

There have been notable achievements since then, with the further development of the Dubai Metro (which has been operating since 2009), the Doha Metro (operating since May 2019) and the Haramain high-speed line in Saudi Arabia (operating since 2018).

Oil Prices and COVID Impact Regional Government Spending

Today though, many planned projects are delayed. Rail projects come at great cost and complexity. Governments must carefully consider feasibility plans and weigh up the urgency of a rail network, versus the further development of highways that can be delivered at a cheaper cost and with less complex engineering.

These decisions have become necessary due to the oil & gas slumps of recent years and of course COVID causing regional governments to question the affordability of rail infrastructure investment.

With these budget challenges, it is perhaps no surprise that the three nations with the higher GDPs have delivered rail and metro networks. For Qatar, delivering a top-class Metro system was paramount and had formed part of their winning pitch to host the World Cup. For the UAE, the Metro extension was also necessary for hosting Expo 2020. As the two biggest members of the GCC, it has fallen upon Saudi Arabia and UAE to drive forward the GCC National Rail Network.

Current Regional Rail Infrastructure

UAE - Dubai Metro Red and Green Lines plus tram and monorail system.

Saudi Arabia - Mecca Metro and the Saudi Railway Organization (SRO) operate a national rail network of approximately 1,380km.

Qatar - Opened in May 2019, the Doha Metro is a rapid transit system in Doha covering 76km and including 37 stations and three different lines. The network will be integral for daily commuters and for fans traveling between stadiums for the FIFA World Cup in 2022.

Additionally, the Education City People Mover System is an 11.5km Tram line has been in operation since 2019.

Rest of the GCC - Kuwait, Bahrain and Oman conducted feasibility studies for national rail networks that would form part of the GCC network. But, due to the low price of oil and minerals since 2015, this has led to several developments being put on hold.

Expected Projects

UAE - Route 2020 now open to passengers connects with the site for the Dubai Expo adding a further 15km to the Red Line.

Etihad Rail are in the construction stages of the national rail network that will cover the whole of the UAE (1,200km of rail) and also connect to Saudi Arabia, with further project in the pipeline to run up to the Oman border.

There are plans in the pipeline to extend the Dubai Metro with 4 further new lines.

Saudi Arabia – The highly anticipated Riyadh Metro is close to completion. Coming in at an estimated cost of $22 billion, six metro lines with a combined length of 176km with 85 stations is close to completion and opening is expected in mid-2021.

Mecca Metro contracts have yet to be awarded for further stations to extend the network.

The national rail network is being constructed to connect with UAE.

KSA and Bahrain will collaborate for The King Hamad Causeway, which is a 25km road and rail link connecting Dammam, KSA to Bahrain with work anticipated to begin in 2021.

Qatar – Blue line under construction, which will add a further 17.5km and 14 stations to the network. This is expected to be completed around 2025.

Lusail Light Rail Network is imminent, with a 19km line anticipated to open in 2021.

Rest of the GCC – Kuwait are holding feasibility studies for a 511km rail network, which will stretch between Kuwait City and the airport whilst also reaching the border of Saudi Arabia as part of the GCC network. 130km Metro system for Kuwait City has been previously been discussed.

As mentioned above, Bahrain and Saudi Arabia are combining to deliver the King Hamad Causeway. Bahrain has talked previously about a Metro project, which is currently on hold.

The first line in Oman will be a freight line between Mangi Al-Shuwaimeh and Al-Duqm, linking metal production fields with manufacturers and export sites. Then the rail network will be developed to connect to UAE. Both plans are currently on hold.

Social and Economic Development Plans recognize the need for rail networks across the region

Rail amongst the GCC nations is viewed as important to aid the wider social and economic development of the region. As well as Oil, the countries have rich minerals that are often transported from mines and quarries by heavy trucks causing increased traffic on the roads. Rail networks will connect ports and remove a significant number of trucks. Removing many trucks will also contribute to reducing the carbon footprint, which countries are committed to improving.

The King Hamad Causeway getting under way shortly gives hope of reviving the GCC Network and with the UAE and Saudi powering on with developing their national networks, the Regional Network is slowly coming to fruition. Also, UAE’s Etihad Rail and Saudi Arabia’s Saudi Railway Co have signed an agreement establishing a framework for the exchange of training, services, and knowledge. This collaboration further enhances the development of rail in the region and is a positive move for delivering success across the GCC.

There is potential for Qatar to look at pushing on with plans to complete their national rail network connecting to Saudi Arabia and the Qatar-Bahrain Causeway, a 40km road and rail link connecting the two countries. These were put on hold due to the Diplomatic crisis, but now with the relationships improving we could see the projects emerge soon.

Conclusion

The region’s six nations rely heavily on Oil and Gas exports. There are significant budget deficits, and consequently rail spending is not a priority. But the ongoing projects across the region are recognized by governments as important to supporting and developing their socio-economic environments.

Hence while the investment train in the region has slowed down and faces an uphill section of track to negotiate, it will continue to make gradual progress through this decade.

Are you interested in working in the Middle East infrastructure market?

For further information on the rail sector in the Middle East and current opportunities for roles that may interest you, please contact Ryan Griffiths (ryan.griffiths@trsstaffing.com) for a friendly and confidential chat.