Saudi Arabia to Invest SR 365 Billion in Railways by 2040

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One of the new Makkah Metro trains being shunted at Arafat Depot, Saudi Arabia.
One of the new Makkah Metro trains being shunted at Arafat Depot, Saudi Arabia. Photo: Almac

Saudi Arabia is planning to invest heavily in its railway  infrastructure, with about SR 365 billion ($99.4 billion), by the year 2040. In the coming years, the government plans to launch a number of initiatives in this sector, according to The National Commercial Bank’s (NCB) latest research, reported Arab News. The present value of projects executed is estimated at SR 50 billion ($13.6 billion).

The Transport and Communication (T&C) sector grew at 9% in 2011, the nominal GDP was valued at SR 69.8 billion ($19 billion), which accounts for 3.23% of total nominal GDP.

 Regulatory bodies

The Saudi Railway Organization (SRO) and Saudi Railway Company (SAR) are the two government-owned entities to oversee and manage the railway system. SRO supervises the railway system that connects Riyadh with Dammam and SAR manages the implementation and operation of North-South project. SRO is also responsible to improve operational standards and quality of materials and equipments. Saudi Railway Regulatory Commission provides guidelines for railway regulation systems. The Commission is also responsible for ensuring safety measures, efficient operations, and issues railway licenses and safety certifications.

Funding

The government encouraged privatization by inviting national and foreign investments in the railway sector. The Public Investment Fund played an active role in funding and development of railway projects.

Projects

The North-South railway considers the largest freight rail project, 2,750 km long, and valued at an estimated SR 20 billion ($5.44 billion). The project is of strategic importance in terms of freight exports to the Gulf. The Landbridge project is another important freight line valued at SR 26.6 billion ($7.24 billion). The line links the port cities of Jeddah, Dammam and Jubail, passing through Riyadh. The Haramain High Speed rail project, valued at SR 51.5 billion ($14.03 billion) and owned by SRO, is built to transport pilgrims. The Riyadh Light rail, owned by Arriyadh Development Authority and valued at 9.3 billion, is expected to be completed by 2018. The Jeddah metro is another planned project valued at SR 35 billion ($9.5 billion).

Challenges

Most of the projects face challenges in terms of qualified contractors and the lack of adequate rail financing. Sand is another issue, as the arid landscape makes tracks susceptible to becoming buried. This increases the chances of accidents. However, SRO ensures safety with the help of modern technologies like integrated signals and communication systems.

Several projects worth SR 93 billion ($25.3 billion) will be awarded in 2013 and 2014. The number of railway passengers is expected to reach 3.37 million passengers by 2014. In terms of freight, about 15 million tons of goods and materials is expected to be transported through the railways by 2014.

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