September 08, 2008

Saudi Arab to award Landbridge rail contract by June 2008

Reuters reported that Saudi Railways Organization announced that it would name the winner of its estimated USD 5 billion project to build a 1,100 kilometer railway track on 30 year build and operate basis across the Saudi desert linking the Gulf and Red Sea coasts by June 2008.

Mr Mohammad Afzal Khan advisor to the president of the Saudi Railways Organisation told newswire Reuters by telephone from Dammam that "We will know the winner by June.”

He added that "The group which asks for the minimum grant from the government and meets the financial models will be the preferred bidder."

Mr Khan declined to say how much the project would cost, but said the consortiums would have to put in 20% equity with the remainder coming from bank loans and the government grant.

Four groups of Saudi and international firms are vying for conytract.

1. Kuwaiti logistics firm Agility leads one consortium with US firms KBR, General Electric and Saudi Arabia's Al Rajhi Bank.

2. Saudi Binladin Group heads a group including Japan's Mitsui & Company, India's Ircon International, Germany's Siemens, Deutsche Bank and Deutsche Bahn, according to the SRO website.

3. Rajhi Investment leads the group with Mada Company for Industrial & Commercial Investment. Other members include Canada's SNC-Lavalin and Saudi Arabia's Samba Financial Group.

4. The fourth consortium, led by Saudi family owned business Al-Muhaidib & Sons, includes South Korea's Samsung Engineering & Construction and French bank BNP Paribas.

The so called Saudi Landbridge project includes a 950 kilometer line between the capital Riyadh and the Red Sea port of Jeddah, as well as a 115 kilometer link between the industrial city of Jubail and Dammam, the oil hub on the Gulf coast. The Landbridge is one of the projects Saudi Arabia is using to tap a regional economic boom powered by a quadrupling of oil prices in the past six years to develop infrastructure, tourism and industry.