meed-logo

line1 line2 line3
SIGN IN / REGISTER

Risks remain for GCC railway project

28 August 2023

 

Register for MEED's guest programme 

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.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11099328/main.jpg
Yasir Iqbal

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Libya and Tunisia reschedule joint oil and gas licensing round

    19 August 2026

    The Libyan-Tunisian Joint Oil Exploration, Exploitation and Petroleum Services Company (Joint Oil) has rescheduled its planned licensing round for offshore exploration and development projects in a zone spanning the waters of both countries.

    The bidding process is now due to open on 7 September 2026, with bid submissions due by 8 January 2027.

    Previously, in May, Joint Oil said it planned to open the bid round on 1 August 2026.

    The upcoming round will offer two oil and gas packages. The first is an exploration package across the 3,000-square-kilometre Joint Oil Block, in water depths of 80-120 metres.

    Significant data are available on the geology of this area, including 6,500km of 2D and 1,900 square kilometres of 3D seismic data. Data also exists from a run of legacy wells dating to 1976.

    The second package covers development of the Zarat discovery specifically. This is a gas-condensate reservoir straddling the boundary between Tunisia’s national acreage and the jointly-held Joint Oil Block.

    Joint Oil is equally owned by Tunisia’s national oil company, ETAP, and OLA Energy Holdings, a subsidiary of the Libya Africa Investment Portfolio (LAIP).

    LAIP is a subsidiary of Libya’s sovereign wealth institution, the Libya Investment Authority.

    Joint Oil was established under a bilateral agreement between Libya and Tunisia in 1988 to explore and develop hydrocarbons in offshore areas shared by the two countries.

    The key dates from the new schedule for the licensing round are:

    • 7 September 2026: Bid round opens; qualified offshore operators can apply for access to the Virtual Data Room
    • 9 September 2026: Joint Oil presents the opportunity at the MMEA Scout Group meeting in London
    • 29-30 September 2026: Joint Oil presents at the World Energy Summit in London
    • 31 December 2026: Bid round closes
    • 8 January 2027: Bid submissions due
    • 26 February 2027: Winning bidders notified
    • 30 April 2027: Formal awards expected

    Texas-based Moyes & Co is acting as a strategic adviser on the licensing round.

    Houston-headquartered Marathon discovered the Zarat field in 1992. It is estimated to hold around 0.4 trillion cubic feet of recoverable gas and 50 million barrels of liquids.

    A previous development project concept centred on a mobile production unit, worth around $1bn, tied back to the nearby Miskar platform.

    Despite this, the field has remained undeveloped for over three decades.

    One of the key challenges to developing the reserve is its high carbon dioxide content.

    Joint Oil has run bid rounds for the acreage before without success, including as recently as late 2023.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18861047/main.jpg
    Wil Crisp
  • UAE cuts trade and financial links with Iran

    19 August 2026

    Register for MEED’s 14-day trial access 

    The UAE has halted all trade, commercial exchanges and financial transactions with Iran until further notice, the Ministry of Foreign Affairs said on 19 August.

    The suspension has been imposed in light of escalations that undermine regional and international peace and security, the ministry said. It did not specify a timeframe for any resumption.

    The ministry rejected allegations regarding the status of the economic relationship between the UAE and Iran, and restated the UAE's commitment to dialogue, cooperation and regional integration as means of advancing peace, stability and prosperity in the region.

    It said the UAE remains committed to safeguarding the integrity of the financial system, in line with international law and global standards.

    The suspension covers the full range of commercial and financial links between the two countries. The UAE has historically been one of Iran's most significant trading partners, with much of the relationship built on re-export trade routed through Dubai to Iranian ports across the Gulf.

    The ministry statement did not detail the mechanism for enforcing the halt, the sectors affected, or arrangements for existing contracts and in-transit cargo.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18857953/main0856.jpg
    Colin Foreman
  • Abu Dhabi begins Dar Al-Funoon Saadiyat construction

    19 August 2026

     

    Register for MEED’s 14-day trial access 

    Abu Dhabi-based piling contractor APCC Piling & Marine Contracting has started the enabling works on Dar Al-Funoon, a cultural development near the Saadiyat Cultural District.

    The project, commissioned by the Department of Culture & Tourism – Abu Dhabi, was designed by the late Canadian-American architect Frank Gehry.

    The venue is scheduled to open in 2030.

    MEED understands that the main contract bids are under evaluation and the project is slated for award soon.

    The complex will feature a multipurpose hall with more than 2,000 seats, a 3,500-seat open-air amphitheatre, a 400-seat studio theatre and a 250-seat jazz venue, bringing total capacity to more than 6,000 across its performance spaces.

    The venue will host leading international productions, delivering high-quality cultural experiences for audiences locally, regionally and globally.

    Upon completion, it will become one of the region’s largest performing arts venues.

    The project was announced by Sheikh Khaled Bin Mohamed Bin Zayed Al-Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council in June, as MEED reported.

    During a review of the plans, he was briefed on the architectural concept and the development and construction phases, as well as the venue’s advanced technical capabilities, which are being designed to meet the highest international standards for staging major global productions.

    The announcement is part of the ongoing development of Saadiyat Island, which already includes Louvre Abu Dhabi, Zayed National Museum, Natural History Museum Abu Dhabi, teamLab Phenomena Abu Dhabi and the upcoming Guggenheim Abu Dhabi.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18852155/main4145.jpg
    Yasir Iqbal
  • Contractor wins Dubai Canal drainage deal

    19 August 2026

     

    Register for MEED’s 14-day trial access 

    Local firm Detech Contracting has won an engineering, procurement and construction (EPC) contract to upgrade and rehabilitate the East Dubai Canal stormwater system.

    The project, known as TF-16-C1, is part of Dubai’s Tasreef strategic plan to improve the emirate’s stormwater network, increase flood protection and enhance the resilience of Dubai’s infrastructure.
     
    According to a source, Lebanon's Khatib & Alami has also been appointed as a consultant on the project.

    The works will focus on upgrading existing stormwater infrastructure to increase capacity and improve reliability during heavy rainfall.

    The scope includes upgrading the stormwater drainage system, laying pipelines and constructing manholes and gullies. It also includes the construction of pumping stations and diversion works, site clearance and other associated facilities.

    In February, MEED reported that the municipality had invited consultants to qualify for a contract to supervise three stormwater drainage projects (TF-16-C1, TF-15-C2 and TF-13-C1)

    China State Construction Engineering Corporation announced in July that it had won the EPC contract for the TF-15-C2 stormwater drainage network project located on Umm Suqeim Road in the Al-Barsha and Al-Quoz areas of Dubai.

    MEED understands contractor bids are still being evaluated for the TF-13-C1 project, which focuses on developing a drainage system for the Al-Marmum area.

    Detech has been awarded several packages under the Tasreef programme in the past 18 months.

    These include:

    • TF-16-C1: upgrading and rehabilitation of East Dubai Canal stormwater system
    • TF-15-C1: stormwater drainage system at Al-Wasl Road for communities west of Dubai Canal
    • TF-05-C1: stormwater drainage system in Jebel Ali 
    • TF-04: stormwater drainage system on Sheikh Mohammed Bin Zayed Road and Al-Yalayis Road
    • DS-419: Tasreef rainwater drainage network: West Deira stormwater system upgrade and rehabilitation 

    As MEED exclusively reported, the municipality recently issued a letter of award for the TF-15-C1 project, covering the construction of a stormwater drainage system on Al-Wasl Road and communities west of Dubai Canal.

    The project includes the construction of a gravity-based stormwater pipeline network with diameters of up to 3.5 metres. It is estimated to cost $100m.

    This week, Dubai Municipality also issued three tenders for stormwater and sewerage infrastructure projects serving Hind City, Dubailand and surrounding areas.

    The projects cover drainage networks for Hind 4, connections to the stormwater network in Dubailand and a stormwater trunk line serving Hind 3, Hind 4 and Umm Al-Daman.

    All three have bid submission deadlines of 10 September.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18850438/main.jpg
    Mark Dowdall
  • Maaden and Aramco sign deal to create joint venture

    18 August 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabian Mining Company (Maaden) and Saudi Aramco have signed a shareholders’ agreement to form a joint venture (JV). Maaden will hold a 51% stake in the JV, while Aramco will own the remaining 49%.

    Before signing the shareholders’ agreement, the two Saudi state-owned companies signed a non-binding heads of agreement in January 2025 aimed at establishing the JV.

    “Combining the strengths of two leaders in their respective fields, the JV will focus on copper and other minerals critical to the energy transition,” the two parties said in a joint statement.

    The JV will focus on exploration across Zone 4, also known as the Transition Zone, within the Arabian Platform in Saudi Arabia. Spanning approximately 182,000 square kilometres – nearly 10% of the kingdom’s total land area – the expected exploration area stretches along a 100-kilometre-wide corridor running parallel to the Arabian Shield.

    “It represents a major new opportunity for mineral discovery in the kingdom,” Maaden and Aramco said.

    Copper, which is increasingly significant for electric vehicles, power networks, energy storage and renewable energy systems, will be a main focus of the JV.

    Copper accounts for more than 20% of the $1.2tn mined-metals market. The copper market is currently valued at about $250bn and is projected to grow to more than $400bn by 2035.

    The JV will also explore for other energy transition minerals, including zinc, lead and rare earth elements, “that are expected to be crucial to industries of the future”.

    “Leveraging advanced computational algorithms, [artificial intelligence] AI, and high-performance computing, the JV intends to target areas most likely to contain copper and valuable minerals, accelerating the path from regional screening to target definition and discovery. This is expected to support long-term sector development, reinforce the kingdom’s role in the global minerals value chain, and help meet rising demand for transition minerals,” the partners said.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18833329/main.jpg
    Indrajit Sen