Bloomberg News

Al Shoula-Led Group Wins Saudi Contract for Haramain Railway

October 26, 2011

(Adds OHL contract value in fourth paragraph, Alstom comment in ninth paragraph.)

Oct. 26 (Bloomberg) -- Saudi Arabia, the Arab world’s biggest economy, awarded a contract for the second phase of its high-speed Haramain rail project to a Saudi-Spanish alliance led by Al Shoula Group.

The contract for the 450-kilometer (280-mile) line linking Mecca with Medina involves supplying 35 trains and operating the line for 12 years, the Saudi Railways Organization said in a statement on its website today. The contract also includes construction of rail lines and installation of signaling and telecommunications systems, the state-owned rail body said.

Saudi Arabia is laying 2,400 miles of rail lines, about enough to stretch across the continental U.S., in a push to improve freight and passenger transportation. The construction is part of a $385 billion plan to develop transportation, housing and education that was announced by King Abdullah’s cabinet in August last year.

The Spanish companies in the group include Madrid-based Obrascon Huarte Lain SA for civil works and Renfe Operadora SC as project manager, Al Shoula said in a statement. Invensys Plc, the British maker of railway software, won a 420 million-pound ($668 million) contract to provide signaling and train control systems for the high-speed line, the London-based company said in statement today. OHL’s part of the contract is valued at 590 million euros ($816 million), according to a company regulatory filing.

Lawrence of Arabia

“Construction will take three years,” Osama Salama, director of finance at Al Shoula Group, said in a phone interview. “The trip between Mecca and Jeddah will take maximum half an hour, while a nonstop trip from Medina to Mecca will take around two hours.”

Muslim pilgrims could travel by rail to Medina about a century ago on a line that stretched from the Syrian capital to Islam’s second-holiest city. T.E. Lawrence, the British military strategist depicted in the film “Lawrence of Arabia,” led an Arab revolt that destroyed most of the line between 1917 and 1918.

The Haramain line, on which trains will travel at speeds as high as 360 kilometers per hour, will pass through Jeddah on the Red Sea Coast, according to the Saudi Railways Organization.

The kingdom’s Public Investment Fund will provide interest- free loans to speed up railway work on the line, the state-owned Saudi Press Agency said last year.

Rail, Road, Air

Saudi Arabia, the birthplace of Islam, wants to develop its rail network, roads and airports as it tries to meet the rising number of Muslim pilgrims visiting the country. About 1.8 million people from abroad made the annual Hajj pilgrimage to Mecca last year, the Saudi Press Agency reported.

A partnership of companies including France’s railway operator SNCF, French train-maker Alstom SA and the Riyadh-based Al Rajhi Group, “regrets that it wasn’t chosen but underlines that its bid prices were at the lowest level that the group could propose within its financial guidelines,” Alstom said in an e-mailed statement today.

Alstom rose 0.9 percent to 27.27 euros at the close in Paris. The shares have fallen 24 percent this year.

Groups led by Saudi Binladin Group and Saudi Oger Ltd. won contracts earlier this year for the construction of four passenger stations on the Haramain line, according a statement on the website of the Saudi Railways Organization. Saudi Arabia in March 2009 signed a 6.8 billion-riyal ($1.8 billion) contract with a group of companies led by Al-Rajhi Group to help build the line.

-- With assistance from Sabine Pirone in London, Francois de Beaupuy in Paris and Emma Ross-Thomas in Madrid. Editors: Niamh Ring, John Lear

-0- Oct/26/2011 17:57 GMT

To contact the reporters on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net; Glen Carey in Dubai at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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