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Oxford Business Group

Oxford Business Group

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A New Railway Could Transform Trade And Transport In The Gulf

  • Gulf countries have moved to revive the GCC Railway project.
  • The rail link would significantly improve connectivity and trade within the bloc.
  • Saudi Arabia, the UAE, and Qatar have all improved transport networks in recent years.

Following delays, the long-awaited GCC Railway looks likely to be revitalized, a move that could transform trade and connectivity across the Gulf. The project was given a significant boost in December last year when leaders of the six GCC countries approved the establishment of the GCC Railways Authority, the body that is expected to oversee the coordination of the project.

The decision marks a potentially significant development for rail infrastructure in the Gulf.

After being debated for decades, the GCC Railway project was initially approved by all six member states in 2009. However, fiscal pressures delayed plans. These were associated with the oil price drop of 2014 and, more recently, the Covid-19 pandemic and diplomatic tensions, which resulted in an economic blockade of Qatar by some of its regional counterparts from 2017 to 2021.

The proposed project aims to connect all six GCC countries via a 2177-km railway. Starting in Kuwait City in the north, the rail line will pass through the coastal cities of Jubail and Dammam in Saudi Arabia, before heading through Bahrain’s capital Manama and Doha, the capital of Qatar. The line would then cut back into Saudi Arabia before moving to the UAE, where it would pass through major cities Abu Dhabi, Dubai and Fujairah, before reaching its terminal station in Muscat, the capital of Oman.

Hopes of a resumption of the project were given a further boost in February when Qatari media reported that construction of the section connecting Qatar and Saudi Arabia would begin soon, with foundational groundwork such as engineering designs and a work plan already completed.

This comes as regional media reported in December last year that officials hoped the railway would be operational by 2025.

Greater connectivity and trade

The development of the railway would significantly improve regional connectivity by reducing transportation times and costs between major GCC cities and ports, improving trade flows across the bloc, and attracting investment.

Business figures in the Gulf have noted that the shorter travel times could help bolster the tourism and entertainment sector, an area that a number of Gulf countries are looking to grow in line with wider efforts to diversify their economies.

For example, as part of Vision 2030 Saudi Arabia hopes to increase tourism’s GDP contribution to more than 10% and aims to attract 100m visitors by the end of the decade, up from around 20.3m in 2019.

Furthermore, the construction of a GCC-wide railway bodes well for regional collaboration and would support plans for greater economic alignment within the bloc.

Indeed, the GCC has sought to accelerate the establishment of a joint Customs union and common market, ahead of the ultimate goal of establishing economic unity within the region.

Saudi Arabia pushes ahead

The development of a GCC Railway ties in with individual countries’ efforts to expand their local transport infrastructure. Amid plans to reduce emissions and improve connectivity, rail is seen as key to the future of transportation in Gulf states.

For example, despite having the region’s most extensive network, comprising 5000 km of track, Saudi Arabia has continued to update its rail infrastructure.

In March the fifth and final passenger stop on the Northern Train Network, Al Qurayyat station near the Jordanian border, was opened to the public. This upgrade allows passengers to travel the 1215-km stretch from the country’s north to the capital Riyadh in around 12 hours.

This came after the Haramain High-Speed Railway – a 450-km electric line that connects the country’s two holy sites of Makkah and Medina via Jeddah, with stops at King Abdulaziz International Airport and King Abdullah Economic City – was inaugurated in 2018.

Pre-pandemic estimates predicted that the line would transport 60m passengers per year, including 3m-4m to the Hajj and Umrah pilgrimages, which would significantly alleviate traffic on roads.

Elsewhere, the government is pursuing ambitious plans to further extend the country’s railway network, with the minister of investment and mineral resources, Khalid Al Falih, telling a business forum in January that the country planned to add another 8000 km of track to the network.

Another major development is the Saudi Landbridge Project, which aims to connect Jeddah, on the Red Sea, with the Gulf coast.

The UAE builds its network

Elsewhere, the UAE has also invested heavily in rail infrastructure.

In addition to emirate-specific developments like the Dubai Metro and Dubai Tram systems – which were launched in 2013 and 2014, respectively – there have also been UAE-wide projects in recent years.

In 2016 the country launched the first phase of its national rail network, a freight service linking gas fields in Shah in the south with Ruwais on the west coast. The second phase of the project, which includes a passenger service linking 11 cities, is now underway, with a line between Dubai and Abu Dhabi completed in March.

Under the UAE’s ambitious plans, trains traveling at speeds of up to 200 km per hour are expected to transport 36.5m people and millions of tonnes of freight every year. By taking cars and trucks off the country’s roads, it is also expected to reduce transport carbon emissions by 70-80%.

Once completed, train travel between Abu Dhabi and Dubai – the UAE’s two largest cities – is expected to take around 50 minutes, while the trip from Abu Dhabi to Fujairah is expected to be around one hour and 40 minutes – around half the time it takes by car.

Related: China’s COVID Lockdowns Force Aramco To Slash Oil Export Prices

In terms of the economic impact, Emirati officials say the Dh50bn ($13.6bn) spent on the project will generate around Dh200bn ($54.5bn) for the economy, and connecting regional and rural areas to larger cities will create significant economic opportunities in underdeveloped regions.

Qatar looks toward major events

Qatar has also worked to improve its public transport networks.

In 2019 the country launched the Doha Metro, a three-line, 37-station rapid transit system connecting the capital with its suburbs.

In January of this year, officials launched the first line of the Lusail Tram, a light rail system in Lusail, just north of Doha. Once fully operational, the system will consist of four lines and run through 25 stations.

Much of Qatar’s public transport expansion has been designed to cater to the 2022 FIFA World Cup. Indeed, the country has 26 transport projects in the pipeline, with 12 of these expected to be completed by the time the tournament kicks off in November.

Impetus for more rail development

Elsewhere in the region, there is hope that the revitalization of the GCC Railway will reignite other dormant domestic rail plans.

For example, the government of Oman has long had plans to construct its own national railway network, a proposed 2100-km link starting at the UAE border and passing through Sohar and Muscat in the north, before linking up with the key port towns of Duqm and Salalah on the east coast.

While tenders were issued in 2013, the project was suspended in 2016 as the country faced fiscal challenges associated with a drop in oil prices.

However, in recent years the country has made progress in terms of railway infrastructure, leading to hopes that the national project will be revived.

In July last year, the government unveiled plans to construct a Muscat metro that will connect the districts of Ruwi and Muttrah with Muscat International Airport and the coastal town of Al Seeb to the north.

Similarly, rail developments have faced delays in Kuwait, which had announced plans in 2009 to create a 160-km network that would be linked to the broader GCC Railway.

Although the project was put on hold in 2015, in January 2020 the country released plans for a 68-station rail system connecting Kuwait City with the country’s international airport, the main university, and residential and industrial areas.

By Oxford Business Group 

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