Korean firms favored to win UAE rail project

Two Korean-led consortia satisfy bid qualifications for $20b railroad plan


Two consortia including Korean enterprises passed the pre-qualification criteria for a $20 billion railway project in the United Arab Emirates, raising hopes for the country’s first-ever railway construction export, state-run Korea Trade-Investment Promotion Agency said Friday.

The list of firms involved in the bid includes builders GS Engineering & Construction Co. and Samsung Construction & Trading Corp., as well as three medium-sized parts suppliers, according to KOTRA.

The UAE is planning to build a 264-kilometer freight train line which connects Ruwais, Habshan and Shah by 2013, Abu Dhabi’s state-owned Union Railway Co. said. The route will transport granulated sulfur from Shah’s “sour gas,” a type of natural gas, in the desert to Ruwais on the coast.

“The Korean firms participating in the bid were able to pass the pre-qualification criteria thanks to strategic alliance with appropriate foreign partners, despite their lack of overseas railway-building experience,” Dubai KOTRA Business Center officials said.

The KOTRA’s regional unit has also been making continuous efforts to bolster its local networks to raise awareness of Korean firms there, Oh Eung-chun, president of KOTRA’s Middle East and North Africa unit said.

The company invited Union Railway chairman Nasser Ahmed Al Sowaidi to Seoul last May and encouraged Korean firms’ participation in the bid by holding briefing sessions here.

The official bidding for the railway project will be held in the second quarter of this year, with Korean firms being strong contenders, KOTRA said.

“Price competitiveness will likely be the most important factor, but Korean firms have a good chance of winning the bid as doubts have been raised regarding the safety of cheap Chinese contractors like China Railway,” KOTRA officials said.

“However, Korean firms not having an experience of constructing such a long railway overseas still remains a major shortcoming.”

Following the completion of the freight line, which is referred to as the first phase, the Arab nation is expected to launch an estimated $11 billion project to create a nationwide railway network which incorporates 1,200 kilometers of freight and passenger lines.

The order for the second phase project will be placed in 2012, KOTRA officials said. The construction is expected to take seven to eight years to complete.

The UAE’s ambitious railway network will eventually feed into the Gulf Cooperation Council regional railway, according to Union Railway.

The GCC is investing $30 billion to build a pan-Arab railway network by 2017. The regional railway is expected to be around 2,200 kilometers long, covering the coast of the Gulf and extending from Oman to Kuwait, passing through the UAE, Qatar and Saudi Arabia.

The UAE is expecting that the planned railway will be to able to cut the country’s carbon emissions by as much as 15-20 percent by reducing the number of trucks, thus enabling the oil-rich nation to prepare for the post-oil era.

By Koh Young-aah (youngaah@heraldcorp.com)