Saudi Arabia Awards $22.5bn Contracts To Build Riyadh Metro

The Saudi Arabian government awarded $22.5 billion in contracts to three foreign-led consortia on Sunday for the design and construction of the first metro rail system in the capital Riyadh.

The project, which will involve six rail lines extending 176 kilometres (110 miles) and carrying electric, driverless trains, is the world’s largest public transport system currently under development, Saudi officials said.

U.S. construction giant Bechtel Corp heads a group which won a $9.45 billion contract to build two lines, the government announced. Its partners include Germany’s Siemens Aktiengesellschaft and U.S.-based AECOM.

A consortium led by Spain’s Fomento de Construcciones y Contratas, and including France’s Alstom Transport and South Korea’s Samsung C&T Corp, won a $7.82 billion contract for three lines.

Italy’s Ansaldo STS headed a group that won a $5.21 billion order. Its partners include Canadian firm Bombardier and India’s Larsen & Toubro.

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.

The project “will be a major driver of employment and economic development,” said Ibrahim Bin Muhammad Al Sultan, head of the government body overseeing the project. “It will also help to reduce traffic congestion and improve air quality.”

Flush with cash after more than two years of high oil prices, Saudi Arabia is pumping billions of dollars into infrastructure projects designed to improve living standards and ease social discontent in the wake of the 2011 uprisings elsewhere in the Arab world.

Last August the government approved a $16.5 billion plan to modernise the transport system in the holy city of Mecca, including creating a bus network and a metro system.

It is also building several other rail systems, including a 2,750 km line running from Riyadh to near the northern border with Jordan.

Saudi officials said Riyadh’s population was projected to grow from six million to over eight million in the next 10 years, making the metro vital to ease congestion and pollution in the capital’s streets.

In addition to raising living standards, the government says it wants to upgrade the country’s infrastructure to help the economy diversify beyond oil, making it less vulnerable to any future plunge of global oil prices.

The contracts may provide a welcome financial boost to some Western construction companies struggling with slow economic growth in their home markets and state austerity policies in debt-choked Europe. Company spokesmen were not immediately available to comment.