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Business

Europe cashing in on Middle East's ambitious railway projects

DUBAI -- The Middle East is going on a railway-building spree, and the world's biggest makers want in.

     Railway car and facility providers from Europe, which have strong historical ties with the Middle East, are leading the race to capitalize on the boom. Chinese makers, including CSR, are also gradually gaining ground in the region, while Japanese companies continue to lag.

     At stake are contracts related to a raft of mammoth railway projects in the Middle East and North Africa estimated to be worth $300 billion in total.

International interest

Qatar, which is to host the 2022 FIFA World Cup, will soon select contractors for the Doha Metro project. Consisting of four lines, the metro will cover the Greater Doha area and constitute an important part of the country's efforts to develop an urban transport network ahead of the sporting event. A consortium of Japanese companies that includes trading giant Mitsubishi Corp. is competing for related contracts.

     In Saudi Arabia, urban railway projects are underway in Riyadh, the capital, and Mecca.

     Arab nations are also building intercity railways, such as a line between Riyadh and Dammam, a city along the Persian Gulf coast in Saudi Arabia, and another running from Qatar's capital to its border with Saudi Arabia.

     A railway will also be built on a planned second bridge between Bahrain and Saudi Arabia at a total cost of $5 billion.

     The region's market for railway equipment has been dominated by leading European makers of railway cars and facilities. These include Alstom of France and Siemens of Germany, each of which is leading a consortium that won contracts for separate lines of the Riyadh Metro.

     Alstom has become the largest railway contractor in the Middle East in terms of the total value of contracts for ongoing projects. Siemens is ranked second, excluding local businesses.

     In Persian Gulf nations, European consulting companies are often involved in railway projects from the planning stage, giving European contractors a competitive advantage.

     But Chinese players are starting to catch up, as their expanded operations have made them increasingly competitive in terms of price. CSR has bagged a contract to supply cars for the United Arab Emirates' Etihad Rail, and a major Chinese construction company has clinched a deal to build a monorail line in Mecca.

     Despite Japan's advanced railway technology, Japanese companies have so far failed to build a solid presence in the market. A contract for the Dubai Metro won by a consortium that includes Mitsubishi, Mitsubishi Heavy Industries, Obayashi and Kajima is one of the only high-profile victories for Japanese players in this region. Some analysts say this is because Japanese companies in this field tend to put greater priority on Asian markets, which are closer to home.

On track for growth

Ed James, a researcher for MEED, a Middle Eastern economic magazine, says countries in the Middle East and North Africa are keen to develop railway networks as their economies continue growing.

     The UAE has already started building a rail line that will traverse the country, and there is a plan to connect the long-distance rail lines of the six countries that make up the Gulf Cooperation Council.

     The GCC Railway Project calls for the construction of a rail network with a total length of 2,000km at an estimated cost of more than $100 billion.

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