ABU DHABI (Zawya Dow Jones)–The United Arab Emirates’ 1500 kilometer planned rail network linking the country’s seven sheikhdoms will cost up to 40 billion U.A.E dirhams ($10.89 billion) with the contract for the first phase of the project likely to be awarded by the end of the year, the chief executive of government-owned Union Railway said Monday.
“We think that the cost will be in the order of AED30-40 billion,” Richard Bowker told reporters on the sidelines of a logistics forum in Abu Dhabi.
The network will include a freight and passenger rail line extending from the emirate of Abu Dhabi’s Western region through Dubai, Sharjah, Umm Al Quwain, Fujairah, Ras Al Khaimah and Ajman. Union Railway is also looking into the feasibility of building a high-speed passenger rail between Abu Dhabi and Dubai, Bowker said, but plans are in the very early stages. The entire project is expected to take 7 years to complete, Bowker said.
“That’s in the very early stages of feasibility,” said Bowker, the former head of U.K.-base rail and bus operator National Express Group plc.
The first phase of the project will be a 270 kilometer freight rail line linking Abu Dhabi’s Shah sour gas field to Ruwais on the Persian Gulf coast.
ConocoPhillips (COP) and Abu Dhabi National Oil signed a joint venture agreement in July 2009 to develop the Shah sour gas project, seen as a key step for Conoco to establish a bigger presence in the energy-rich Middle East.
Union Railway will hold an outreach session for companies interested in bidding for the first contract on March 24 with the tendering process expected “in the latter part of year”, Bowker said.
“We aim to award the first contract by the end of 2010,” he said, adding that the sour gas rail– the U.A.E.’s first freight line–is expected to be completed by the end of 2013.
Bowker said Union Railway is looking at all financing options for the project and that a decision “will be made in due course.” He declined to comment on whether the oil-rich emirate of Abu Dhabi will foot most of the costs, saying: “I don’t want to be drawn on that. It’s a federal company and a federal project.”
Dubai opened the first phase of a 75-kilometer, mainly elevated, metro system to help stem the flow of vehicle traffic through the city state’s main business districts. The remainder is scheduled to open later this year. Earlier this year, Dubai’s Roads and Transport Authority was forced to issue a statement saying construction of the remainder of the light rail system was on track and that all financial commitments due to contractors on the project would be met following news reports that some companies hadn’t been paid.
Bowker said such reports are unlikely to impact international interest in Union Railway’s projects and that a lot of overseas companies are expected to bid for work.
“This entire rail world has been beating a path to our door,” he said. “We expect a high level of interest from everywhere.”
Union Railway was set up last July with AED1 billion in capital.
-By Stefania Bianchi, Dow Jones Newswires; +9714 446-1685; Stefania Bianchi@dowjones.com
Copyright (c) 2010 Dow Jones & Co.
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