Saudi Arabia To Spend $800m On Land For Riyadh Metro

Saudi Arabia plans to spend about SAR3 billion ($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 SAR3 billion 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 SAR200 billion 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 per cent 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.