Saudi Arabia to spend $800 mln on land for Riyadh metro

RIYADH Sun Aug 4, 2013 5:29am EDT

RIYADH Aug 4 (Reuters) - Saudi Arabia plans to spend about 3 billion riyals ($800 million) acquiring land in Riyadh to build the capital's first metro rail system, the official in charge of the project told Reuters.

"This is already budgeted and we are talking about 3 billion riyals compensation for the land to be acquired," said Ibrahim Bin 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 $22.5 billion in contracts to three foreign-led consortia for the design and construction of the system. The project will involve six rail lines extending 176 kilometres (110 miles) 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.

Al Sultan 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, Al Sultan 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, Al Sultan said without elaborating on financing options.

The project will require tens of 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 its large population of foreign workers in an effort to reduce unemployment among Saudi citizens.

Al Sultan said that in the construction phase, Saudi citizens would participate via management and other positions, but operating the metro would be more important in terms of creating jobs for Saudis. Up to 90 percent of the people running the metro will be Saudi nationals, he said.

Before construction starts there will be eight months for government agencies to coordinate on obtaining the necessary foreign workers, he added.

The project will have priority in obtaining visas for workers, but exceptions to Saudi Arabia's system of corporate quotas for foreign workers will not be made, Al Sultan said.

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Comments (2)
NKIM wrote:
Wonder if the king researched this better than his last expensive boondoggle to fool the people into thinking he still cares about them! He spent millions upon millions to build the mid easts largest manmade lake for a park in the middle of Riyadh complete with 60 boats great for a city where NO ONE knows how to swim! That didn’t go well at all. Again mega millions was spent putting traffic cams all over riyadh but guess no one tested to find out how they would hold up in the 120+ degree daily heat and the incessant blowing sand, they didn’t last a month! Lets see how rails and etc last in that kind of heat and sand! Not to mention who’s going to ride the train? Saudi women can’t travel alone, most of the 3rd world workers make so little has to make it unaffordable to them, teen age males are banned from nearly everything c/o their incessant hassling of women.And few western foreignors are going to ride around alone or in small groups.

Aug 05, 2013 4:20am EDT  --  Report as abuse
NKIM wrote:
I see the cost of land for this will be $800 mill. Not sure why unless it’s the usual end run by the king, riyadh has empty land all thru it and around it! The last time the locals demanded their own land the king gave them empty lots with NOTHING attached up to it or streets laid out, when the locals found they couldn’t afford to build on unimproved lots, they wound up sellin the lots at rock bottom prices to buyers who just happened to be friends or relatives of the royals! Shortly thereafter the lots were all improved with streets laid out and electricity connected up for street lights and etc. Makes quite a spectacle at night from the air, it looks like and amusement park with acres and acres of lights and streets to nowhere!!!

Aug 05, 2013 4:30am EDT  --  Report as abuse
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