Saudi and Bahrain plan new road and rail causeway

Saudi Arabia and Bahrain plan to build a new road and rail causeway between the two countries to ease congestion on the existing link and will seek funding from the private sector, a document about the project showed.

Gulf Arab states including Saudi Arabia have historically financed infrastructure projects but while they still help with the cost of some, the oil price slump has forced them to slash spending and to consider bringing in private investment.

The King Hamad Causeway is expected to cost $4bn to $5bn, according to sources who attended an industry consultation event in Manama, and the two nations hope private firms and the state can share the costs, risks and profits.

Read: Bahrain, Saudi kings agree to study for new causeway

The meeting in Manama was attended by officials from the transportation ministries in the two countries and more than 150 companies that are expected to build the project using the public private partnership (PPP) model.

The existing 25km (16 mile) King Fahd causeway between the two countries has been open since 1986 and had average daily traffic of 31,000 passengers in 2016. But that is expected to double by 2030, the document distributed at the meeting showed.

Besides a new four-lane road causeway running parallel to the existing one, there will be a new 70km railway connecting a passenger terminal in Salmabad and freight facilities at Khalifa bin Salman port in Bahrain to the Saudi railway system.

Eight million passengers per year are expected to use the rail link by 2050 and some 600,000 containers and 13 million tonnes of bulk freight are expected to be transported by the railway, which could be developed under a design, build transfer, or design, build, maintain and transfer basis.

While the project’s technical details were clearly described in the document, key details of the PPP structure were still preliminary, said one of the sources.

The project is expected to be owned by the private sector through a new company with a 25-30-year PPP arrangement.

Private sector developers, co-investors, contractors and lenders should express their interest in the project by June 29, the document said. Advisers will be appointed in the first quarter of 2018 and pre-qualification requests are due to be issued in the second quarter of next year.