Meed | Risks remain for GCC railway project

Risks remain for GCC railway project

28 August 2023

When the GCC secretariat agreed to restart the GCC Railway Project in 2021, it set the tone for one of the region’s most ambitious transnational projects.

The endeavour aims to connect the six Gulf nations with a sprawling railway network that will be a game-changer for the region’s infrastructure. The potential to boost trade, connectivity and regional economic development is enormous.

But risks and challenges also lie ahead, including cost overruns and technical risks related to the project design, engineering and complexity that must be assessed, managed and monitored to ensure the project’s successful delivery.

Political risks

Political factors play a significant role in the development and operation of the GCC railway. Given that the network will traverse multiple geographies, one of its biggest tests is manoeuvring through the regional political landscape.

First and foremost among political considerations is the level of cooperation and diplomatic relations between the member states. The railway’s seamless operation relies on harmonised regulations, standard operating procedures and open communication between nations, as well as geopolitical stability.

In this respect, the Al-Alu agreement of 2021 is key, as it laid the strong foundations for a more robust mechanism to ensure better cooperation between the GCC countries.

“The Qatar blockade was a big challenge to manage and the GCC countries have seen the consequences of the situation,” Alexandre Busson (right), director of rail, Hill International, tells MEED.

“They realised that there was no benefit in it for the region. So the Al-Ula declaration is really important.”

But while the agreement mitigates the political risk related to the GCC railway project to some extent, the potential for geopolitical tensions or disputes between the involved states remains and could impede the project’s progress by delaying decisions, complicating negotiations and disrupting work.

The GCC countries' wide-ranging economic interests and priorities could also impact their commitment to the railway project. Member states will need to consider their existing investments in other forms of transportation infrastructure, such as ports and highways. Balancing these interests requires careful negotiations and alignment of economic visions.

PPP contracts are more complex to negotiate and manage. But it [will be] very interesting to see how it goes because a successful PPP project could lead to the opening up of the market
Alexandre Busson, Hill International

Financial risks

The enormity of the GCC Railway Project becomes apparent when considering the huge costs involved. Laying tracks spanning six countries and crossing diverse terrains and urban areas, building stations, installing signalling systems and ensuring the safety of the network demands billions of dollars’ worth of investment.

With the financial stability of GCC nations closely tied to the global oil market, fluctuations in oil prices could significantly impact the ability and political will of governments to allocate funds to the GCC Railway Project.

“When GCC countries budget for infrastructure projects, they are very conservative with regards to the oil price in their budget,” says Busson. “And in terms of projects financing, they realise [the need] to diversify the economy and not be too dependent on oil prices.”

Nevertheless, economic diversification plans mean each GCC nation faces its own set of budget constraints and priorities. Regional governments must juggle allocating limited funds to sectors such as healthcare, education, defence and infrastructure. The GCC Railway Project’s financial demands could strain these budgets, potentially diverting resources away from critical sectors.

To bridge the financial gap, governments are likely to explore a combination of public financing and private investment. Public-private partnerships (PPPs) have attracted interest from large-scale infrastructure projects in the region and the GCC railway will be no different. Luring private investors, however, requires a stable and attractive investment environment, coupled with clear revenue-generation models and risk-sharing agreements.

“The PPP model is quite new in the GCC. Even more so in transport,” says Busson. “Those kinds of contracts are more complex to negotiate and manage. But it [will be] very interesting to see how it goes because a successful PPP project could lead to the opening up of the market.”

You need to look at the consortium members and say, do we have the right balance within that particular consortium to be able to manage this project
Christopher Harding, Hill International

Technical risks

The technical risks of rail systems running across international borders are well documented. Examples include the Tan-Zam railway between Tanzania and Zambia and the rail link connecting Spain and France, where the adoption of different gauges meant construction was fraught with technical difficulties when joining the networks to each other.

“Inaccurate or complex specifications sometimes lead to extra efforts [needing] to be put into the interface management and getting interface agreements between the contractors,” explains Christopher Harding (right), a senior project management professional currently working on the Cairo Metro project for US-based consultant Hill International.

“That leads to claims from contractors and hence may lead to cost overruns.”

The complexity of the GCC Railway Project raises the stakes when it comes to technical risks. Meticulous planning and implementation will be required to ensure seamless connectivity across deserts, mountains and coastal areas, while the need for bridges, tunnels and viaducts to overcome geographical obstacles demands robust engineering solutions.

Addressing these engineering risks requires a comprehensive understanding of the local environment, as well as innovative and consistent engineering techniques.

“There needs to be a common policy on the control systems for each country and how they talk to each other,” says Harding.

The involvement of multiple contractors will bring contractor-related risks too. Coordination between these entities will be key, as delays in one segment could cascade through the entire network, causing misalignments and operational bottlenecks.

“You need to look at the consortium members and say, do we have the right balance within that particular consortium to be able to manage this project,” says Harding.

Another significant challenge will be maintaining uniform quality standards across the contractors working on the GCC Railway Project to prevent differing construction techniques, materials and safety practices from potentially compromising the railway’s overall integrity and efficiency.

“The rules around aspects like recruitment localisation, In-country Value (ICV), In-Kingdom Total Value Add (IKTVA) and regional headquarters requirement could be a challenge for new companies,” adds Busson.

The establishment of the GCC Railway Authority to oversee the overall implementation of the project will go some way towards resolving the technical issues outlined here. The authority is tasked with ensuring common standards and specifications, and supervising the railway’s interoperability and regional integration.

For the project to succeed, the authority must develop robust risk management strategies, effective communication channels among contractors, stringent quality control measures and transparent procurement processes.

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Yasir Iqbal

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Abu Dhabi mends fences with Riyadh
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Ongoing political turmoil in the region may be prompting Abu Dhabi to review its approach to key diplomatic issues, not least its relations with its larger neighbour, Saudi Arabia.

In late September, UAE Vice-President Sheikh Mansour Bin Zayed Al-Nahyan travelled to Riyadh for talks with Crown Prince Mohammed Bin Salman and Defence Minister Prince Khalid Bin Salman. Such visits may have been commonplace in the past, but over the past year they have been relatively rare, given the friction between the two Gulf powers over issues such as the conflict zones of Yemen and Sudan, relations with Israel and economic rivalry.

At the start of the year, the UAE retreated from Yemen under pressure from Riyadh, after the UAE-backed Southern Transitional Council made rapid territorial gains at the expense of Saudi-backed groups and advanced close to the kingdom’s southern border.

Since then, against the backdrop of the Iran war, relations have shown further signs of strain, with cross-border financial transactions reportedly being blocked or delayed.

However, there have been intermittent attempts to present a more collegial relationship, such as in July, when a photo emerged on social media of Sheikh Mansour and Prince Khalid posing with their arms around each other, reportedly while on holiday in Europe.

Yemen dynamics

Gains by another group in Yemen may lie behind the latest rapprochement between Riyadh and Abu Dhabi. The visit by Sheikh Mansour on 29 September came in the wake of significant advances by the Houthis, who had recently captured Mokha port and strategically significant areas of land overlooking the Bab El-Mandeb Strait – heightening their ability to menace passing ships.

Saudi Arabia has been leaning on its allies – particularly Pakistan and Turkiye – to support its campaign against the Houthis. It is unclear whether the UAE would be willing to get involved militarily in Yemen again, or whether Riyadh would be happy for it to do so, but it could still be a useful ally in the fight. Analysts have noted that UAE-backed forces have, over the years, had a far greater record than anyone else of scoring battleground victories against the Houthis.

It is also notable that Mansour’s delegation to Riyadh included several senior security officials, including Ali Bin Hammad Al-Shamsi, secretary general of the Supreme Council for National Security; Ali Saeed Matar Al-Neyadi, chairman of the National Emergency, Crisis and Disaster Management Authority; and Nasser Humaid Al-Nuaimi, secretary general of the Tawazun Council for Defence Enablement.

The visit was a surprise, given the GCC states’ lack of unified action this year amid the crises in Yemen and Iran. Speaking at an event in Washington in mid-September, Bernard Haykel, professor of Near Eastern Studies at Princeton University, noted that: “Despite the fact that [the GCC states] all face a common threat in Iran and its proxies, you still don’t see real coordination between them. You still have these differences between the Saudis and the UAE, for instance; you have differences between the Qataris and the UAE. If anything would have united them, this would be it. And you don’t see that kind of unity.”

Writing for the Arab Gulf States Institute in early October, Kristian Coates Ulrichsen, a Baker Institute fellow for the Middle East at Rice University, said Mansour’s visit to Riyadh in late September was “likely meant to signal that the thaw [in bilateral relations] was real” and “designed to enable a more coordinated approach to managing the forces ranged against the Houthis in southern and central Yemen”.

Further signs of warming ties came on 8 October, when UAE Investment Minister Mohamed Hassan Alsuwaidi signed a memorandum of understanding with Saudi Industry and Mineral Resources Minister Prince Abdulaziz Bin Salman covering power grid interconnections, trade in electricity and freight rail connectivity.

On the same day, the Saudi ambassador to the UAE invited President Sheikh Mohamed Bin Zayed Al-Nahyan to attend a GCC-EU Summit in Saudi Arabia later in the month.

Sheikh Mansour was not the only senior Emirati on diplomatic manoeuvres in recent weeks. The day after the vice-president was in Riyadh, national security adviser Sheikh Tahnoun Bin Zayed Al-Nahyan was in Muscat for talks with Sultan Haitham Bin Tariq Al-Said.

Oman is a critical partner for the UAE in several areas. Omani ports have provided a trade lifeline for Emirati importers and exporters at a time when ports in Dubai and Abu Dhabi have been sidelined by Iran’s threats against shipping through the Strait of Hormuz. Muscat’s approach of maintaining dialogue with all actors means it is also able to mediate with both Iran and Yemen’s Houthis.

Strategic independence

The flurry of diplomatic activity may be a sign of closer coordination between the UAE and its neighbours on some critical issues, but that does not necessarily herald a sea change in its approach.

Speaking at the UN General Assembly in New York on 28 September, Minister of State Khalifa Shaheen Al-Marar reviewed the crises in Iran, Sudan, Gaza, Ukraine and elsewhere and said “the importance of developing and reforming regional and international multilateral institutions … remains paramount” – but while he name-checked the UN, he did not mention the GCC.

It is also notable that the UAE has not yet joined either of the two security initiatives launched by Saudi Arabia during the summer: a maritime defence alliance designed to protect shipping in the Red Sea, or a mutual defence pact that Riyadh signed with Turkiye and Pakistan.

In his speech to the UN, Al-Marar listed what he saw as the main pillars of the UAE’s national strength: “strategic independence” was the first item in his list.

https://image.digitalinsightresearch.in/uploads/NewsArticle/20435670/main.gif

Dominic Dudley
Abu Dhabi mends fences with Riyadh
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Ongoing political turmoil in the region may be prompting Abu Dhabi to review its approach to key diplomatic issues, not least its relations with its larger neighbour, Saudi Arabia.

In late September, UAE Vice-President Sheikh Mansour Bin Zayed Al-Nahyan travelled to Riyadh for talks with Crown Prince Mohammed Bin Salman and Defence Minister Prince Khalid Bin Salman. Such visits may have been commonplace in the past, but over the past year they have been relatively rare, given the friction between the two Gulf powers over issues such as the conflict zones of Yemen and Sudan, relations with Israel and economic rivalry.

At the start of the year, the UAE retreated from Yemen under pressure from Riyadh, after the UAE-backed Southern Transitional Council made rapid territorial gains at the expense of Saudi-backed groups and advanced close to the kingdom’s southern border.

Since then, against the backdrop of the Iran war, relations have shown further signs of strain, with cross-border financial transactions reportedly being blocked or delayed.

However, there have been intermittent attempts to present a more collegial relationship, such as in July, when a photo emerged on social media of Sheikh Mansour and Prince Khalid posing with their arms around each other, reportedly while on holiday in Europe.

Yemen dynamics

Gains by another group in Yemen may lie behind the latest rapprochement between Riyadh and Abu Dhabi. The visit by Sheikh Mansour on 29 September came in the wake of significant advances by the Houthis, who had recently captured Mokha port and strategically significant areas of land overlooking the Bab El-Mandeb Strait – heightening their ability to menace passing ships.

Saudi Arabia has been leaning on its allies – particularly Pakistan and Turkiye – to support its campaign against the Houthis. It is unclear whether the UAE would be willing to get involved militarily in Yemen again, or whether Riyadh would be happy for it to do so, but it could still be a useful ally in the fight. Analysts have noted that UAE-backed forces have, over the years, had a far greater record than anyone else of scoring battleground victories against the Houthis.

It is also notable that Mansour’s delegation to Riyadh included several senior security officials, including Ali Bin Hammad Al-Shamsi, secretary general of the Supreme Council for National Security; Ali Saeed Matar Al-Neyadi, chairman of the National Emergency, Crisis and Disaster Management Authority; and Nasser Humaid Al-Nuaimi, secretary general of the Tawazun Council for Defence Enablement.

The visit was a surprise, given the GCC states’ lack of unified action this year amid the crises in Yemen and Iran. Speaking at an event in Washington in mid-September, Bernard Haykel, professor of Near Eastern Studies at Princeton University, noted that: “Despite the fact that [the GCC states] all face a common threat in Iran and its proxies, you still don’t see real coordination between them. You still have these differences between the Saudis and the UAE, for instance; you have differences between the Qataris and the UAE. If anything would have united them, this would be it. And you don’t see that kind of unity.”

Writing for the Arab Gulf States Institute in early October, Kristian Coates Ulrichsen, a Baker Institute fellow for the Middle East at Rice University, said Mansour’s visit to Riyadh in late September was “likely meant to signal that the thaw [in bilateral relations] was real” and “designed to enable a more coordinated approach to managing the forces ranged against the Houthis in southern and central Yemen”.

Further signs of warming ties came on 8 October, when UAE Investment Minister Mohamed Hassan Alsuwaidi signed a memorandum of understanding with Saudi Industry and Mineral Resources Minister Prince Abdulaziz Bin Salman covering power grid interconnections, trade in electricity and freight rail connectivity.

On the same day, the Saudi ambassador to the UAE invited President Sheikh Mohamed Bin Zayed Al-Nahyan to attend a GCC-EU Summit in Saudi Arabia later in the month.

Sheikh Mansour was not the only senior Emirati on diplomatic manoeuvres in recent weeks. The day after the vice-president was in Riyadh, national security adviser Sheikh Tahnoun Bin Zayed Al-Nahyan was in Muscat for talks with Sultan Haitham Bin Tariq Al-Said.

Oman is a critical partner for the UAE in several areas. Omani ports have provided a trade lifeline for Emirati importers and exporters at a time when ports in Dubai and Abu Dhabi have been sidelined by Iran’s threats against shipping through the Strait of Hormuz. Muscat’s approach of maintaining dialogue with all actors means it is also able to mediate with both Iran and Yemen’s Houthis.

Strategic independence

The flurry of diplomatic activity may be a sign of closer coordination between the UAE and its neighbours on some critical issues, but that does not necessarily herald a sea change in its approach.

Speaking at the UN General Assembly in New York on 28 September, Minister of State Khalifa Shaheen Al-Marar reviewed the crises in Iran, Sudan, Gaza, Ukraine and elsewhere and said “the importance of developing and reforming regional and international multilateral institutions … remains paramount” – but while he name-checked the UN, he did not mention the GCC.

It is also notable that the UAE has not yet joined either of the two security initiatives launched by Saudi Arabia during the summer: a maritime defence alliance designed to protect shipping in the Red Sea, or a mutual defence pact that Riyadh signed with Turkiye and Pakistan.

In his speech to the UN, Al-Marar listed what he saw as the main pillars of the UAE’s national strength: “strategic independence” was the first item in his list.

https://image.digitalinsightresearch.in/uploads/NewsArticle/20432716/main.gif

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ALSO READ: Adnoc signs energy agreements with Japan and South Korea

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https://image.digitalinsightresearch.in/uploads/NewsArticle/20421415/main4048.jpg

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Fibrex wins $217m Abu Dhabi Seamont residences contract

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Abu Dhabi-based contractor Fibrex Construction Group has won an AED800m ($217m) contract to build the Seamont Autograph Collection Residences project, located on Al-Reem Island in the UAE capital.

Abu Dhabi-based real estate developer Royal Development Holding, a subsidiary of Emirates Stallion Group, and local firm Saas Properties awarded the contract.

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READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:

> AGENDA: Oxagon takes centre stage at Neom

> MARKET FOCUS: Saudi projects hold steady

> INDUSTRY REPORT: MEED’s 2026 GCC power developer ranking

> POWER: AI is creating a grid capacity problem

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To see previous issues of MEED Business Review, please click here

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Yasir Iqbal

Dubai picks contractor for Al-Maktoum airport terminal

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Dubai Aviation Engineering Projects (DAEP) has selected a contractor for an estimated AED10bn ($2.7bn) substructure package for the West Terminal, as part of the first phase of the $35bn expansion of Al-Maktoum International airport.

A joint venture of Beijing-headquartered China Civil Engineering Construction Corporation (CCECC) and Abu Dhabi-based Tristar Engineering & Construction will execute the contract.

According to a description on DAEP’s website, the expanded airport’s West Terminal will be a seven-level facility spanning 800,000 square metres, with annual capacity for 45 million passengers.

The terminal will be the second of three planned terminals at Al-Maktoum International airport. It will connect to the airside via a 14-station automated people-mover (APM) system.

In July, MEED exclusively reported that DAEP had awarded an estimated $1.5bn contract to a joint venture of Japan’s Mitsubishi Corporation and Indian contractor Larsen & Toubro for the APM system.

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The latest awards form part of a wider programme of contracts recently signed by DAEP, covering enabling works, the second runway, initial structural foundations for passenger terminals and concourse substructures.

Upcoming awards

In June 2026, DAEP said it will award construction contracts worth over AED55bn ($15bn) for Al-Maktoum International airport by the end of the year.

At the time, DAEP said the planned awards included substructure works for the West Terminal, the fourth aircraft concourse and the baggage-handling system. The programme also included superstructure works for the West Terminal and the first, second and third aircraft concourses.

The packages are expected to include long-span structural frameworks for buildings covering about 1.5 million square metres, infrastructure works for the southern airfield area, and power-generation and district-cooling plants supporting the construction programme.

DAEP also plans to award façade and roofing packages in 2026.

The Dubai Government approved updated designs and timelines for its largest construction project in April 2024. In September 2024, MEED exclusively reported that a team comprising Austria’s Coop Himmelb(l)au and Lebanon’s Dar Al-Handasah had been confirmed as lead masterplanning and design consultants for the Al-Maktoum International airport expansion.

Construction of the airport is planned in three phases. Once complete, the airport will cover 70 square kilometres south of Dubai and include five parallel runways and 430 aircraft gates.

It will be five times the size of Dubai International airport and is planned to have a passenger-handling capacity of 260 million passengers a year – the largest in the world. For cargo, it is planned to have the capacity to handle 12 million tonnes a year.