Serco signs up for new line of business


By Angela Giuffrida

Nakheel has hired the services company Serco to take over operations of the Palm Jumeirah Monorail after cancelling a contract with the Singaporean rail company SMRT Engineering last month.

The driverless transit system cost $380 million to build. Randi Sokoloff / The National
The driverless transit system cost $380 million to build. Randi Sokoloff / The National

Serco, which operates and maintains Dubai Metro, took over the 5.5km line on Palm Jumeirah last Friday.

The driverless transit system, which cost US$380 million (Dh1.39 billion) to build, opened in May last year and runs along the “trunk” of the palm tree-shaped island.

“With the safety and comfort of monorail users as our priority, it was vital to select an operator with the appropriate experience, skill and scale,” said Ali Lootah, the chairman of Nakheel.

The developer, which is owned by Dubai World, declined to say why it cancelled its contract with SMRT Engineering, a unit of SMRT Corporation.

The contract, which was meant to run for six years, was signed in 2007 while the rail system was still being built.

The deal was worth about Dh300m, bringing SMRT Dh50m a year for the day-to-day operation of the monorail’s stations, ticketing and general maintenance.

SMRT told the Singapore stock exchange last month “Nakheel has exercised its contractual right of early termination”.

A spokesman for the company’s Dubai unit could not be reached for comment yesterday.

Nakheel declined to provide the value or the duration of the new deal with Serco, which is also the operator of London’s Docklands Light Railway.

Nakheel said the change would not disrupt the monorail service, which is the first of its kind in the Middle East.

The developer is in the process of restructuring $10.5bn owed to banks, contractors and service providers, with financial creditors thought to account for about $4bn of that total.

Trade creditors have already started to receive payments as part of the first phase of the plan.

With a fare of Dh25 for a round trip, the monorail has mainly served as a tourist attraction since opening eight months after Dubai was hit by the global financial crisis.

Passengers climb aboard at Gateway Towers at the entrance of the Palm for the 10-minute ride to the Atlantis, The Palm on the crest of the island.

The track has two stations in between – Trump Station and Palm Mall, previously called Village Centre – but the train does not stop at them.

Trump International Tower Hotel and the former Village Centre projects were put on hold at the end of 2008.

The system was also going to connect with Al Sufouh tram on Jumeirah Beach Road, but work on this project has been slow.