Abu Dhabi: Rail link to Dubai under tender

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Source:  www.oxfordbusinessgroup.com

Railway developments are moving forward in Abu Dhabi, with the first phase of an expansive national project expected to be completed this year. A national network will decrease the emirate’s dependence on increasingly busy highways, and could be a boon to GDP growth. However, delays in scheduled passenger services will keep commuters on the highways for the next several years.

Abu Dhabi came one step closer to extending its railways across the UAE in March, when Etihad Rail, a government-backed entity charged with developing a $10.89bn rail network across the country, secured $1.28bn of project financing from a group of local and international banks.

Work is already underway to complete the first of the project’s three stages, a freight line running from the port of Ruwais to Habshan and Shah, which will enhance transport of oil and gas resources to ports on the Arabian Gulf coast. Phase one is expected to wrap up in 2014, with phase two, connecting Abu Dhabi to Dubai, currently in the tendering process.

Once finished, the 1200-km project will stretch from Al Ghweifat on the Saudi border to Ruwais, Liwa, Shah, Dubai, Al Ain, Fujairah, Ras Al Khaimah and Khor Fakkan. Eight of the 13 main transport centres along the network will be located in Abu Dhabi.

The project offers lucrative rewards for the UAE, as the country increasingly looks to shift its focus away from internal consumption of hydrocarbons and towards further exportation of oil and gas. According to Etihad Rail officials, the project is expected to add Dh3.5bn ($952.65m) to GDP by 2030.

“The global crisis highlighted a need for economic diversification and the development of non-oil sectors to fully achieve sustainable economic growth. Realising the vital role that the freight sector plays in achieving this goal, the government of Abu Dhabi has focused its efforts on improving the overall performance of the sector,” Abdulla Rashed Khalaf Al Otaiba, the chairman of the Department of Transport, told OBG.

The private sector is also set to benefit from the deal. Etihad Rail has already signed memoranda of understanding with 14 companies, including Sharjah Cement, Centre of Waste Management in Abu Dhabi, DHL and Emirates Steel, to transport their materials across the UAE once phase two is complete. Chinese telecoms giant Huawei has also signed a contract to provide information and communications technology solutions for Etihad Rail’s trains and operations.

Getting passengers on board Abu Dhabi’s trains may pose a challenge, however. Automobiles are still the primary form of passenger transport, as fuel remains relatively inexpensive and long commutes are common. However, as population growth and economic expansion put more pressure on the emirate’s highways, public transportation has become vital to development and economic diversification.

Abu Dhabi’s Surface Transport Master Plan (STMP) was released in 2009, and focuses on building a public transport network and increased investment in road, rail, air and sea links. One important element of the STMP is the development of a metro and light rail system, with the target of building a high-speed regional rail network linking urban Abu Dhabi with Dubai and Sharjah. More info