Saudi Arabia to spend US$800m on land for Riyadh metro

RIYADH: Saudi Arabia plans to spend about 3 billion riyals (RM2.6 billion) acquiring land in Riyadh to build the capital’s first metro rail system, the official in charge of the project said.

“This is already budgeted and we are talking about 3 billion riyals compensation for the land to be acquired,” said Ibrahim Muhammad Al Sultan, president of the Arriyadh Development Authority, the state body handling the project.

“The land is already chosen and the teams already started the process three months ago.”

Last week the government awarded US$22.5 billion (RM73.35 billion) in contracts to three foreign-led consortia for the design and construction of the system. The project will involve six rail lines extending 176km and carrying electric, driverless trains.

Design work will start immediately and construction will begin in the first quarter of 2014, the government said. The project is expected to be completed in 2019.

Ibrahim said land would be acquired for the metro in 35 locations but he did not expect the purchases to disrupt Riyadh’s real estate market.

“We are keeping the process of acquiring all land needed for the project to a minimum, so that it will not affect the huge market of Riyadh,” he said.

Saudi officials have said the project is the world’s largest public transport system currently under development.

Asked how the Riyadh metro would be financed, and whether the authority might issue sukuk (Islamic bonds) to fund it, Ibrahim noted that when King Abdullah announced the government’s budget surplus last year, he allocated 200 billion riyals of it for public transport systems in general.

This amount is already available at the central bank, Ibrahim said without elaborating on financing options. The project will require thousands of workers, private sector companies have estimated. Assembling this labour force to complete the project on time may be a challenge, because the country has been tightening controls on  foreign workers. — Reuters

This article first appeared in The Edge Financial Daily, on August 5, 2013.


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