ZAWYA of October 30th, 2017 published this piece of information on the GCC rail network development completion postponement in the countries and its current progress status. The planned network per the local media was already hampered by not only financial difficulties as State budgets were tightened because of low oil prices but to also technical and bureaucratic obstacles prior to the 5 months old political crisis within the Gulf countries.
Train tracks. The planned 2,100 km (1,300 mile) passenger and cargo network connecting the six Gulf Cooperation Council (GCC) states was pushed back at least three years to 2021.
Alexander Cornwell, Reuters News
DUBAI – The United Arab Emirates (UAE) infrastructure minister said on Monday he expected a delayed rail project connecting nations across the Gulf to be operational by 2021, despite a regional political crisis that has divided some countries involved. The UAE, Saudi Arabia, and Bahrain cut ties with Qatar, including transport links, in June, accusing their neighbour of backing terrorism, a charge Doha denies. Two other Gulf Arab states, Kuwait and Oman, have remained neutral. Infrastructure Development Minister Abdullah Belhaif al-Nuaimi told Reuters that Gulf nations involved in the railway project were still aiming to complete the network by 2021.
“That is still the date,” he said. The planned 2,100 km (1,300 mile) passenger and cargo network connecting the six Gulf Cooperation Council (GCC) states was pushed back at least three years to 2021 before the political crisis erupted.
The UAE suspended construction of its portion of the network in 2016, while Oman said it would shift its focus to building its domestic network. “It’s going forward. We still have small hiccups here and there but the project, hopefully, is going forward,” Al-Nuaimi said without giving details on whether construction has resumed. Several projects across the region have been put on hold as Gulf oil producers struggle with low crude prices and rising budget deficits. The UAE network will span the country’s seven emirates from the Gulf of Oman to the Saudi and Omani borders. It would connect to Qatar through Saudi Arabia’s network. (Editing by Edmund Blair) ((Alexander.Cornwell@thomsonreuters.com;))
The sudden irruption of what was to be called the Qatar crisis has had through the literal blockade of all movements between 4 members of the GCC countries and Egypt of populations as well as goods and services by air, land and sea to and from Qatar the effect of silencing the media that posed question marks on future GCC projects.
This crisis shows yet another difficult challenge all GCC inter-countries projects have to overcome. From a long list of projects, the first one that comes to mind is the now well-known Railway network system that is these days being finalised. This was conceived in the first place as off the need for a safer and cheaper way to move freight and people across the Gulf countries for it has always been maintained that a regional railway line would facilitate tighter economic and political integration. That was as it were the design intent whereas in reality and as revealed by this crisis, all is now a matter of the GCC railway project not being high on the list of priorities as noted by many international media. Despite that, Qatar’s railway internal loop would not prevent the rest of the line from Kuwait to Oman to proceed as scheduled. Qatar Railways is also proceeding with its lot unshaken but logistically affected with its reception of its first train reception surprisingly ahead schedule. Connection of Qatar though to the rest GCC would perhaps be put on the back burner until the crisis is over. On June 15, 2017, AMEinfo wrote on the future of GCC projects as being hampered generally. We republish excerpts of this article as a refresher for all intents and purposes.
The Qatar issue has put a couple of question marks on projects within GCC countries, such as value added tax (VAT), the WorldExpo2020 in Dubai, the World Cup 2022 in Qatar and the GCC Railway.
VAT may hit first as the deadline to start a 5 per cent consumption tax in the Gulf countries is from January 1, 2018, and final policy guidelines were supposed to be issued in June.
The GCC Railway is another important project for the region as the 2177km rail network will connect all Gulf countries. The deadline was 2018, but there is no update regarding the completion of the project.
World Expo2020 in Dubai may also be impacted should the crisis prolong. This is because companies from Qatar will not be able to participate in the trade fair billed as the biggest such event to happen in the MENA region. An Expo 2020 Dubai team had travelled to Qatar last month as part of its ‘GCC Roadshow’ to urge businesses and SMEs in the tiny peninsular country to work directly with the Expo to create partnerships and to establish a lasting presence in the UAE.
More certainly, Doha will face issues with FIFA World Cup 2022 as the Gulf country is investing billions of dollars in building stadia for the big football event.
Experts say the diplomatic rift could potentially cause delays to World Cup preparations.
“The country is heavily reliant on imported goods, but the disruption of land, air and sea trade routes would force Qatar to look for alternative trade routes for their goods, resulting in a spike in inflation,” a recent BMI Research report said.
Moreover, BMI notes, Qatar will continue to “face infrastructure delivery challenges, including the sourcing of labour and materials, and local logistics that impact the pace of construction and development”.
Qatar faces economic issues
The immediate consequences of the crisis on Qatar are huge. Some 37 million passengers cross through Doha each year. But Qatar Airways now has to fly through Iranian, Iraqi and Turkish airspace to reach Europe. Half of the food in Qatar comes via Saudi Arabia through Qatar’s only land border. 600-800 trucks per day can no longer pass. The 19 flights per day between Doha and Dubai are called off.
Among other issues, the first impact was food shortage as the country was heavily dependent on imports, mainly from Saudi Arabia through land routes. To rescue Qatar, Iran has started sending cargo planes of food to the country that includes 100 tonnes of fruit and vegetables every day. Qatar has been in talks with Iran and Turkey to secure food and water supplies.
Trade will suffer the biggest impact in the prevailing situation. Qatar’s trade with Gulf nations reached $11 billion in 2016, constituting 86 per cent of Qatar’s trade with Arab countries and 12 per cent of its international trade. The UAE, Saudi Arabia and Bahrain account for 85 per cent of Qatar’s trade with the Gulf, while Kuwait and Oman account for only 15 per cent. Qatar’s export sector in particular will suffer the biggest losses as the GCC constitutes 80 per cent of Qatar’s exports to Arab countries.
The MENA is made of Oil and Gas (O&G) big exporting countries such as the GCC, non O&G exporters of the Mashrek and the small to medium exporters of the Maghreb. Development of infrastructure has generally had a late start in all countries of the MENA until a decade ago where it is frantically gaining ground. Especially in the GCC, where point in case, is the UAE, from roads, Railways to airports, to telecommunications, it has become home to world class facilities that have supported economic growth. Bridging global infrastructure gaps is one of the numerous handicaps that the MENA countries have first to live with and eventually cope with.
Here is a very short summary of the Status of the GCC’s.
An official person of the UAE was quoted as saying :
“If you want to have a strong economy, you have to have strong infrastructure.”
In effect, the UAE’s extensive road network not only connects all seven emirates but also links the UAE with neighbouring Oman. Qatar and Saudi Arabia.
Railways up until September 9, 2009 were inexistent in the GCC.
Dubai Metro was inaugurated ion that date and is the first urban train network in the GCC. Doha and Riyadh will soon have a network of their own.
The Etihad Rail project is set to bring rail transport to the entire country spearheading the whole of the GCC in deploying a network from Kuwait City to Muscat with a couple of loops midway of the track. One is for Riyadh and the other for Doha via Manama.
Aviation was one of the earliest drivers of non-oil economic growth in the UAE. Today, the UAE is a global aviation hub. Doha, Riyadh, Bahrain and Kuwait
The UAE’s unique location has favoured maritime activity to be centred at Dubai. Port facilities all along the shores of the country, catering for general cargo, container shipping are of international standards.
The other countries of the MENA however are not in such luck but are not that behind the GCC. The proposed article published today by McKinsey and Company give a fairly good summary of todate infrastructure development worldwide. Here it is :
Bridging global infrastructure gaps
By Jonathan Woetzel, Nicklas Garemo, Jan Mischke, Martin Hjerpe, and Robert Palter
Global infrastructure systems are straining to meet demand, and the spending trajectory will lead to worsening gaps. But there are solutions to unlock financing and make the sector more productive.
The world today invests some $2.5 trillion a year on transportation, power, water, and telecommunications systems. Yet it’s not enough—and needs are only growing steeper. In a follow-up to its comprehensive 2013 report Infrastructure productivity: How to save $1 trillion a year, the McKinsey Global Institute finds that the world needs to invest an average of $3.3 trillion annually just to support currently expected rates of growth (exhibit). Emerging economies will account for some 60 percent of that need.
Despite glaring gaps and years of debate about the importance of shoring up backbone systems, infrastructure investment has actually declined as a share of GDP in 11 of the G20 economies since the global financial crisis. Cutbacks have occurred in the European Union, the United States, Russia, and Mexico. By contrast, Canada, Turkey, and South Africa increased investment.
If the current trajectory of underinvestment continues, the world will fall short by roughly 11 percent, or $350 billion a year. The size of the gap triples if the additional investment required to meet the new UN Sustainable Development Goals is included.
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Years of chronic underinvestment in critical areas such as transportation, water treatment, and power grids are now catching up with countries around the world. If these gaps continue to grow, they could erode future growth potential and productivity. It is therefore critical to get finance flowing into urgently needed projects.
A great deal of attention has focused on connecting institutional investors with projects that need their capital as well as creating an expanded role for public-private partnerships. But the vast majority of infrastructure will likely continue to be financed by the public and corporate sectors.
Even in the face of fiscal concerns, there is substantial scope to increase public infrastructure investment. Governments can increase funding streams by raising user charges, capturing property value, or selling existing assets and recycling the proceeds for new infrastructure. In addition, public accounting standards could be brought in line with corporate accounting so infrastructure assets are depreciated over their life cycle rather than immediately adding to deficits during construction. This change could reduce pro-cyclical public investment behavior.
Corporate finance makes up about three-quarters of private finance. Unleashing investment in privatized sectors requires regulatory certainty and the ability to charge prices that produce an acceptable risk-adjusted return, as well as enablers like spectrum or land access, permits, and approvals.
$250 billion Gulf Rail project will go ahead said GCC secretary general at the Middle East Rail Conference at the 10th edition of the Middle East Rail exhibition.
The GCC railway project being built at a cost of $250 billion with the ultimate goal to connect the Gulf countries will go forward not as planned though but as announced back in February with 2018 completion unrealistically set.
The exhibition covered a space of 18,000m² with over 9,000 international visitors including 600 VIP government officials attending. It kicked off on Tuesday 8 March, and featured keynotes, panel discussions and research sharing. It also shed some light on project updates with key government departments, railway operators and construction companies exchanging views and on mutual concerns.
All concerns are mostly about governments spending in the GCC states being reduced because of the declining oil prices. But notwithstanding that, a UAE official in his opening address in a conference at the exhibition said that Gulf the States must “ensure we have rail networks of high quality: reliable, safe and secure — and enhance road services as well.”
“1,200 kilometres of railway will be established,” he said, adding that the GCC was committed to completing the project in accordance with international best practices.” Before adding “Some members have already completed their phases.”
Joerge Scheifler, Siemens’ senior executive vice-president for Middle East advised companies to be patient.
“In a few years we do see a shift away from individual transport to public transport,” said Scheifler, who unveiled Siemens’ Gulf-specification Hesan AlKhaleej high-speed intercity passenger train at the conference. “Dubai is a very good example of that. There are many other countries and cities in the region which try now to follow this project landscape; Metro Riyadh is in full swing, Doha is affording itself a metro, Kuwait is looking at a Metro and Abu Dhabi in the future might also have one.”
“This project landscape very clearly shows how this trend is now shifting towards a proper public transport, not only taxis and buses but also mass transport.”
While he declined to inform on any revised timescale for the Gulf Rail project nor speculate on a possible timeline for a recovery in oil prices, he said, “In our opinion the best medicine to counter that is to be patient, hang in there, don’t apply a hit-and-run policy. We are very much sticking to that. Our local organisation is reflecting this: long-term commitment in almost all of the Gulf countries.”