Murray Hughes asked Eng Khaled Alyahya, President, Saudi Railways Organisation, about plans to expand the Saudi Arabian network that include transfer of SRO's core assets to the private sector

Hughes: Several major railway projects are being planned to expand Saudi Arabia's rather modest rail network, including what is now known as the Landbridge. Can you outline this scheme and say what it will achieve?

Alyahya: The Trans-Arabian Landbridge project entails the construction of about 950 km of new line from Riyadh to Jeddah, linking with the existing Dammam - Riyadh line, and so connecting the Arabian Gulf to the Red Sea. This line will be used primarily to carry container traffic between the port of Jeddah and Riyadh, the largest city and consumer centre in the Arabian Gulf. It will also handle traffic from Jeddah to the port of Dammam for onward shipment to Iran, Iraq, Kuwait, Qatar and Bahrain. Use of the Landbridge will offer a significant time saving of 8 to 10 days compared to shipping by sea around the Arabian Peninsula.

A 115 km line will also be constructed to link Dammam to the industrial city of Jubail; this will facilitate transport of industrial products from Jubail to other parts of the Kingdom. Once financial close has been achieved, we anticipate that construction of the Landbridge will take around five years.

The line will also be used to transport passengers between Jeddah and Dammam. Passenger trains are expected to run at more than 200 km/h, with freight trains operating at 80 km/h, but we remain optimistic that the latest technology will allow us to exceed these speeds. The likely rolling stock requirements for 2010 are 4000 freight wagons, 120 passenger cars, and 95 locomotives, of which 65 would be for hauling freight.

Hughes: For many years there have been proposals to build a line to carry pilgrims between Makkah and Madinah. What progress is being made with these plans?

Alyahya: The Makkah - Madinah rail link, known as the Western Railway, will connect the holy cities of Makkah and Madinah to the port city of Jeddah and the industrial city of Yanbu. New lines totalling 570 km will be built between Jeddah and Makkah, Jeddah and Madinah, and from Madinah to Yanbu.

Every year around seven million Umrah visitors and about two million Hajj pilgrims travel between Makkah and Madinah. This number is expected to grow, with a reduction in the seasonal peaks as a result of new rules governing Hajj and Umrah visits. The rail network will provide a safe, fast, reliable and comfortable mode of transport between the holy cities via Jeddah, and after five years of operation we envisage that it will be carrying 4·46 million passengers a year.

We have experienced substantial local and international interest from potential investors, equipment suppliers and civil contractors to undertake this project. Consequently, our approach will be to maximise opportunities for creativity and technological innovation of high speed mass rail transport. It is likely that there will be separate operators for the Makkah - Jeddah and Jeddah - Madinah lines.

Hughes: I understand that financial advisors for these projects have already been appointed. What steps will be taken next?

Alyahya: Our advisors will analyse various technological and commercial options as well as the structure of concessions that will be offered to the private sector on a build-operate-transfer basis. We believe that the Saudi Landbridge and the Western Railway will be tendered as separate concessions, as there is a fair degree of independence in their operations and they are both attractive as commercial proposals. We have already been approached by several international and national companies expressing strong interest in participating in our projects.

Owing to the multi-disciplinary nature of the projects, we expect that interested parties will wish to form consortia in the early stages in order to bid. Once various options for the concessions have been formulated, we will arrange project briefings to present the scope and structure of the proposed concessions to facilitate the formation of bidding consortia.

Over the next six to eight months, our financial and technical advisors will conduct a due diligence exercise and commence the transaction preparation phase. This includes the design of financial models, analysis of privatisation and concession models, development of the concession structure and regulatory regime, as well as the arrangements for transfer of SRO's assets.

The projects will then be marketed internationally to attract potential private and institutional investors. After shortlisting and bid evaluation, we will select a preferred bidder. Once the consortium has achieved financial closure, construction will get underway. We anticipate this will happen within two years.

Hughes: So SRO's core operations and technical assets will transfer to the new organisation. Can you explain how this will work in practice?

Alyahya: The existing network from Dammam to Riyadh will become part of the Saudi Landbridge, and we foresee that the core assets of SRO will be transferred to the operator or concessionaire of the new lines for the duration of the concession. SRO personnel will be included as part of this transfer. All options will need to be explored jointly by our advisors, other stakeholders and ourselves to ensure that we reach an acceptable arrangement.

Hughes: Major policy changes must therefore be in prospect as SRO prepares to move into the private sector. How is it handling such a fundamental change?

Alyahya: Our vision is clear. SRO will be privatised as part of the expansion project. Our drive for internal efficiency improvements is being taken very seriously in all key areas of our organisation. The goal is simply to be as attractive as possible to potential investors. We have achieved a lot in the past few years, and whilst there are plenty of challenges that lie ahead, I am confident that we are on track in achieving our target.

Hughes: I believe that SRO is acquiring a fleet of new passenger trains from South Korea. What can you tell me about your plans to enhance passenger services?

Alyahya: We have signed an agreement with Samsung Corp for the manufacture of 13 passenger cars and four generator and luggage cars. At the moment the supplier is starting to manufacture the bodyshells. We have insisted on the highest standards and specifications with regard to safety, materials and mechanical components. Bogies and brake systems are being manufactured in Germany, and our air-conditioning systems will be sourced from the USA. There will be 60 seats per car, with accommodation specified to Luxury class standards as the trains will run as a Premier class service superior to our existing first class.

In a drive to raise our customer service standards further, 49 of our existing passenger cars are being extensively refurbished as part of a fleet rehabilitation programme. This involves the upgrade of major components, including refitting with German bogies and braking systems to provide maximum comfort and safety.

The interiors, including those of our dining cars, are being completely refitted with attractive panelling, carpets, windows, curtains, lighting and the latest European-designed seats with courtesy tables. We are installing new toilets and sanitation systems, new air-conditioning units, completely rewired electrical systems and high-technology fire detection systems from a South African company. All components have been specified to the highest levels of safety with special regard to usage of fire retardant materials. We expect the refurbishment programme to be completed in the next two or three months.

Hughes: What are the main government policies that are driving the development of SRO, and what other investment plans do you have?

Alyahya: SRO remains focused on achieving two broad objectives in the short term. First is the implementation of the network expansion project. The second is to strive for further improvement of internal efficiency, through applying best practice in modern railway management and prudent investment in technology.

In an effort to improve safety and make better use of our existing infrastructure, we are installing a new signalling and telecommunications system. This includes the construction of an optic fibre backbone between Dammam and Riyadh, which is due to commence within the next few weeks.

We intend to purchase eight diesel locomotives as part of our motive power replacement programme and tenders for these are at present being evaluated. We will very shortly be placing an order for 200 special container wagons, which will enable us to transport double-stacked containers to meet increased market demand. Our stations at Dammam, Hofuf and Riyadh will undergo extensive renovation in the coming year.

Hughes: Do you think it likely that international links will be built from Saudi Arabia to neighbouring countries?

Alyahya: As far as international rail links from Saudi Arabia to neighbouring countries are concerned, this will depend greatly on the speed with which our neighbours develop their own rail networks. There have been talks recently with other Gulf Co-operation Council states showing renewed interest in developing their national networks, and I am hopeful that in the near future we will see a Trans-Gulf Railway Network evolving. n

TABLE: Table I. Traffic forecasts for the Saudi Landbridge

2009 2010 2014 2015 2020 2025 2030

Freight million tonnes - 13·4 - 18·0 22·4 26·2 31·5

Passengers million 0·90 - 1·15 - - 1·25 -

TABLE: Table II. Traffic carried by SRO, 1995 to 2003

1995 2000 2002 2003

Tonnes 000 1495 1623 1635 1894

Tonne-km million 687·00 822·03 772·06 880·13

Passenger journeys 000 462 854 714 913

Passenger-km million 164·47 287·74 239·40 293·83

CAPTION: SRO has completed a locomotive rehabilitation programme with motive power appearing in a fresh livery

CAPTION: The current rolling stock refurbishment programme includes SRO's dining cars

CAPTION: Passengers in both first and second class will benefit from a refurbishment programme covering 49 existing vehicles

CAPTION: The Saudi Landbridge has the potential to alter transport strategy in the Middle East with containers being shipped from Jeddah to Riyadh and Jubail

Further details of the Saudi Landbridge and Makkah - Madinah Railway projects can be found at www.saudirailexpansion.com

'We anticipate that construction of the Riyadh - Jeddah Landbridge Railway will get underway within the next two years.'

Eng Khaled Alyahya

President, Saudi Railways Organisation

Private sector to take Saudi projects forward

Expansion of Saudi Arabia's modest rail network is moving closer with the appointment of financial advisers to oversee the development of two major projects. The future East-West Railway will see new lines added to the existing Dammam - Riyadh route to form a landbridge between Jeddah and Jubail. The planned Western Railway will offer services for pilgrims and other passengers on a line to be built from Makkah to Jeddah and Madinah with a branch to Yanbu. Private investors will be invited to construct and operate both lines.

Le secteur privé va mener à bien les projets saoudiens

L'expansion du modeste réseau ferroviaire d'Arabie saoudite se rapproche de la concrétisation après la nomination de conseillers financiers chargés de superviser le développement de deux projets principaux. Le futur East-West Railway consistera à ajouter des nouvelles lignes à Damman - Riyadh qui existe déjà pour former un pont terrestre entre Jeddah et Jubail. Le Western Railway projeté offrira des services pour les pélerins et autres voyageurs sur une ligne à construire de Makkah à Jeddah et Madinah avec un embranchement vers Yanbu. Les investisseurs privés seront invités à construire et à exploiter les deux lignes

Private Kreise bringen Saudi-Projekte weiter

Die Erweiterung von Saudi Arabiens bescheidenem Bahnnetz kommt weiter mit der Berufung von Finanzberatern zur Überwachung der Entwicklung von zwei wichtigen Projekten. Die künftige Ost-West-Bahn sieht neue Strecken, welche an die bestehende Damman - Riad-Linie angebunden werden und eine Landbrücke zwischen Jeddah und Jubail bilden. Die geplante Westbahn soll Pilgern und anderen Reisenden auf einer Linie dienen, welche von Mekka aus nach Jeddah und Medina mit einer Stichlinie nach Yanbu gebaut werden soll. Private Investoren werden eingeladen, beide Strecken zu bauen und zu betreiben

El sector privado avanzar? los proyectos saudíes

La expansión de la modesta red ferroviaria de Arabia Saudita est? m? s cerca gracias al nombramiento de los consejeros financieros que han de controlar el desarrollo de dos grandes proyectos. El futuro East-West Railway ver? nuevas líneas conectadas a la línea Dammam - Riyadh ya existente para formar un puente terrestre entre Jeddah y Jubail. El proyectado Western Railway ofrecer? servicios a peregrinos y otros pasajeros en una línea que se construir? de Makkah a Yeddah y a Medina con un ramal a Yanbu. Se invitar? a inversores privados para que construyan y operen ambas líneas

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