Analysis: Dubai Metro may be another unfinished work

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By Hugh Tomlinson www.business.timesonline.co.uk

Dubai’s Roads & Transport Authority (RTA) enforced a strict media blackout ahead of the Dubai Metro opening in September last year. Contractors were threatened with disciplinary action for speaking to the press.

Ahead of the launch, contractors acceded to the client’s wishes, cancelling staff leave and working round the clock to open at least some of Dubai’s flagship transport scheme on time.

With the project running billions over budget and those companies still unpaid however, it appears that patience has run out. As reports of non-payment have leaked out, the RTA has again sought to muzzle its contractors but with the authority unwilling or unable to cough up, direct action is being taken.

The Japanese-led consortium building the metro could down tools today, leaving the project another of Dubai’s great unfinished wonders.

Only a third of the metro’s 29 stations are currently in service. The rest were due to open within weeks and an entire second line is scheduled to launch later this year. These deadlines are now sliding backwards.

Other foreign contractors, including Systra and Thales, the French groups, and Parsons Brinckerhoff, the US consultant, are also understood to be waiting for payment. Staff numbers on the project are being scaled back.

There have even been suggestions that the RTA would ask contractors to fund the work themselves, but costs have spiralled and companies have no guarantee they will be reimbursed by the government.

The original 2005 budget for the first two lines was $4.2 billion. Current estimates for the cost of the work stand at $7.6 billion. The RTA has said that it hopes to recoup half its costs on the metro within five years but admits that the project may never return a profit.