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Economics & Development | Global Arab Network
Abu Dhabi: Rail network to streamline logistics and increase development in UAE
Global Arab Network - - Sarah Khan
Friday, 16 December 2011 08:49
Abu_Dhabi_Rail_network__UAE
Global Arab Network - Abu Dhabi will soon be connected to the other emirates of the UAE and to the wider region by a broad-gauge rail network that will streamline logistics, boost exports and increase industrial development, Global Arab Network reports according to OBG.

On November 15, Richard Bowker, the CEO of Etihad Rail – the state-owned company tasked with developing the UAE’s mainline rail network – announced it would soon call for tenders for the second stage of the $11bn project.

The contracting process for phase two would begin in a matter of weeks, with contracts being awarded by the second quarter or third quarter of next year, Bowker told media at a conference in Abu Dhabi.

“This stage is bigger than the first in scale and scope and will connect ports with industrial and urban centres,” he said.

That would put the cost of the project’s second phase well over $900m, the price tag for the initial stage, which consisted of track construction and associated infrastructure connecting the cities of Habshan, Shah and Ruwais in Abu Dhabi’s western region.

The link between Habshan and Ruwais is scheduled to be completed by 2013, with the Habshan-Shah line to finish the following year. In late October, Etihad Rail signed a contract with the UAE division of Mumbai-based Dodsal Engineering and Construction and Italian firms Saipem and Tecnimont for the first stage of the project.

The tender for the second stage will be to construct the rest of the line through Abu Dhabi, including logistics centres in and around the capital, as well as the extension of the network to neighbouring Dubai. The third and final stage involves pushing the line into the remaining northern emirates and building connections with yet to be constructed rail grids in Saudi Arabia and Oman.

In total, the network will consist of more than 1200 km of track and provide heavy cargo shifting capacity to access ports on both the Arabian Gulf and the Gulf of Oman and thence to the Indian Ocean, a significant advantage should there be any disruption to shipping traffic in the Strait of Hormuz. When completed, the dual-track network will be able to handle an estimated 50m tonnes of freight annually.

Though the first train will not pull out before 2013, Etihad Rail has already signed up several major clients, having struck agreements with cement producer Arkan and Etihad Steel, along with the Abu Dhabi National Oil Company (ADNOC), which intends to use the line to haul sulphur, a by-product of its operations.

Customers’ increasing interest in freight haulage services helps prove the project’s viability, suggested Bowker. “Etihad is now moving from a single-customer railroad to a rail network with multiple customers,” he said.

Etihad has already placed orders for locomotives from the US and 240 Chinese-built wagons to carry ADNOC’s sulphur. The firm estimates it will carry up to 22,000 tonnes of granulated sulphur a day from Shah and Habshan to the port of Ruwais for export.

While the project will benefit all of the UAE’s states, the emirate of Abu Dhabi looks to gain the most from the national rail grid, in the beginning at least. Not only will the first and most of the second segments of the line be built within the emirate, but all of the clients linked to the development so far are Abu Dhabi firms. The emirate will also benefit when the network is linked to the wider GCC rail system in both Saudi Arabia and Oman.

While heavily dependent on hydrocarbons, Abu Dhabi has been actively diversifying its economy, including investing in chemicals and manufacturing. Rail is one of the best methods to move both raw materials and finished products from these industries.

As such, it is not surprising that Etihad Rail is 70% owned by the government of Abu Dhabi, with the remaining 30% controlled by the UAE’s federal government, of which the emirate is the largest single contributor of funds.

Parts of the Etihad network, especially those to be laid down in Abu Dhabi, will offer challenges to engineers, due to shifting sands and extreme heat. However, officials are confident these can be overcome, and that the emirate is on track to further boost its economy. (OBG)

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