Runaway Train

Country-by-country summary
United Arab Emirates
Etihad Railway Project
Regardless of the plans of individual Emirates discussed
below, the UAE has one of the most ambitious transport
plans in the GCC region: the Etihad Railway Project. The
railway aims to link the seven Emirates of the UAE by rail,
initially for freight and then for passenger traffic services.
The project is being overseen by Etihad Rail Company PJSC
(Etihad Rail), a state-owned vehicle. Deutsche Bahn’s (DB)
rail freight operating arm, DB Schenker Rail, and Etihad Rail
have formed a joint venture company called Etihad Rail DB
Operations LLC which oversees the freight operations for
stage 1 of the railway. The joint venture currently manages
operations of the network with the intention that it will
later act as a consultant for the development of future
stages of the project.
Ashurst advised Etihad Rail throughout its procurement
of an operating partner, including on the development of
all project and corporate documentation, a role that was
recognised when the team won the award for Middle East
Transport, Energy and Infrastructure Team of the Year at the
Corporate Counsel Middle East Awards 2013.
The project is divided into three stages, with the aim of a
1,200 km network when finalised.
First stage
The first stage of the project was developed under a design
and build contract, and created a 266 km freight line linking
Abu Dhabi’s Shah sour gas field to Ruwais on the Arabian
Gulf coast. The line has, to date, transported over 4,000,000
tonnes of granulated sulphur to the port of Ruwais for
export. Services between Habshan and Ruwais have been
operational since 2013, with Shah to Habshan services
following in 2014. The civil and tracks work, worth USD898m,
were developed by a consortium led by Italy’s Saipem. The
other members of the consortium included Tecnimont and
the UAE’s Dodsal Engineering & Construction. 6
Second stage
The second stage was set to extend the railway to link
Ghweifat on the Saudi Arabian border (circa 137 km) to Al
Ain (circa 190 km) and the Jebel Ali Port in Dubai (circa 186
km), with branch lines to ICAD and Mussafah (circa 78 km).
Bids for the civil works packages for this second stage were
submitted in late 2012. However, to date there has been no
package awarded and the length of delay led to contractors
being asked to resubmit tenders in October 2015.
In January 2016, it was announced that the second stage
of the Etihad Rail project was on hold. With oil priced at
that time at around USD30 per barrel for the first time in
12 years, the appetite for the AED40bn project has been
compromised amid heavily reduced Government spending
in the UAE (down 21.6 per cent in the three months to
September 2015, relative to that period for 2014), at least
temporarily. However, the recent recovery in the oil price
bodes well for a refocus by governments on this stage
of the project and a push forward to deliver what will be
a state-of-the-art national rail network servicing all the
Emirates and cementing its place in a global freight and
commodity trade market.
Third stage
Stage 3 intends to complete the project by linking the
northern Emirates and the east coast. 7 To date there is no
formal announcement on this stage and given the delay
to stage 2 this would not be expected until that stage was
well under way.
12 Runaway train | January 2017