By Mohammad Al Asoomi, Special to Gulf News www.gulfnews.com
With the recent launch of the Dubai Metro and plans to set up Abu Dhabi and Etihad trains, the UAE and the rest of the Gulf region have stepped into a new unique era of development that signals their determination to develop their basic infrastructures and sustain their current economic growth rates.
Before the Metro became operational, rail transport – the cheapest way to travel – was not part of the Gulf Cooperation Council’s (GCC) infrastructure development plans. The only rail project the region foresaw was the link between Dammam and Riyadh in Saudi Arabia.
However, the Metro and the Etihad Train represent a high-tech, fully automated rapid transit system in the Gulf region where the Metro is considered one of the most advanced urban rail systems in the world.
The Metro has become operational and will be followed by two projects -the Abu Dhabi train and the $7 billion (Dh25.7 billion) Etihad Train – which will link the country’s cities, ports and airports within an integrated rail network in a few years to come.
These developments are likely to push GCC countries into rapidly embarking on rail networks to create regional links. The GCC rail network has become a highly important issue for the six Gulf nations in their quest to develop infrastructure.
What makes one wonder about the UAE’s three rail projects is the speed of decision-making and implementation of the projects, particularly in the light of the scale of these projects.
Although these projects were approved in the wake of a deep global financial downturn, the implementation process was carried out as planned in line with specified time frames.
This has helped to clear obscurity and ambiguity over the UAE’s financial and economic situation as speculated upon by some foreign media outlets.
On the other side, there is no positive sign about the proposed GCC rail project that is supposed to link all GCC states from Kuwait to Muscat via Saudi Arabia, Bahrain, Qatar and the UAE. So whether this project will even take off remains questionable given that it was announced 10 years ago.
Lately, it has been revealed that the primary designs of the project are about to be signed but there are obstacles and different viewpoints about the ways and sources of finance. The project cost is estimated at $25 billion (Dh91.95 billion), and is set to be completed by 2017.
Through a quick review of the details announced by the GCC’s General Secretariat, it seems that things are not going as planned. There is confusion over each country’s contribution to the project according to its geographic area.
Basically, this is a financial issue related to a vital project that is important for all GCC countries. Thus contribution rates must be specified according to financial criteria.
Therefore, the GCC’s General Secretariat needs to define its financial criteria as a framework for the successful implementation of the rail system.
Under the criteria, each Gulf state will contribute to setting up the GCC rail system according to its contribution rate to the Gross Domestic Product (GDP) of all GCC countries.
For example, if the total GDP of GCC countries is estimated at $1 trillion and a Gulf country’s GDP is $100 billion, then that country’s contribution rate would be 10 per cent.
This simply means that the country whose contribution to the GCC’s total GDP is 10 per cent would be required to contribute $3 billion to the $30 billion rail project. The same applies to all GCC members.
I believe such calculations are fair enough for all GCC countries because each country will benefit from this project according to the size of its economy. For instance, Qatar’s GDP is twice that of Oman, whose area is 26 times the area of Qatar.
In addition, while the Metro and the proposed Abu Dhabi train are operated by electric power and equipped with advanced systems, the planned GCC railway is designed to be run on diesel – one of the most dangerous sources of environmental pollution.
This requires GCC countries to consider issues relating to the environment, modernity and technology while addressing the implementation of the GCC train project.
They can benefit from the experiences of the Metro and the Etihad Train in terms of primary studies and the speed of implementing the project.
Dr Mohammad Al Asoomi is a UAE-based economic expert.