MUSCAT // GCC states are considering setting up a joint company to build a railway costing more than US$14 billion (Dh51.4bn) linking the six oil producers. The 1,940-km railway would connect Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE, each of which would contribute a share of the start-up capital, the GCC said in a feasibility study. "It is proposed that the ownership and funding of the GCC railway be through a jointly owned railway company," read the study, which was due to be presented to Gulf finance ministers and foreign ministers at a meeting yesterday.
"The contribution of each member state to the overall project would be represented through their shareholding in the company," read the document. Diesel-powered trains operating at speeds of up to 200 kph would carry passengers and freight between the six countries, which are in the process of forming a regional economic bloc, including a common market, customs union and single currency. "The project will support other initiatives within the GCC member states towards customs and monetary union and trade facilitation," the document said.
"The project appears likely to be economically justified, with the economic rate of return of 13.5 per cent." Construction of the railway, which is envisaged to be operational by 2016, would cost around $11.2bn, with an additional $3.1bn in land costs, the study, which was concluded this month, showed. Shareholding in the Gulf railway company could be based on the construction cost in each member state. The World Bank advised on the study.
"By providing a new transport mode, it will provide improved logistics and lower transport costs." The study added that Gulf states would be required to contribute an additional $110 million a year up to 2045 for infrastructure. States in the world's biggest oil-exporting region have been booming on six years of high oil prices, which allowed them to funnel billions of dollars into infrastructure, industry and real estate.
The rapid tumble of oil prices below $50 a barrel is threatening to choke this boom and could force Gulf states to curtail spending. Gulf ministers are meeting this week to prepare the agenda for next month's Gulf leaders summit, scheduled for Dec 29-30. * Reuters