Business Sector

Saudi Arabia seeking alternative transportation

Marmore Team

28 April 2016


Expenditure on the transportation sector in Saudi Arabia has primarily been focused on road networks. Larger land area and higher density of vehicles per Km are one of the important factors behind the increased investments in transport and infrastructure over the years.

Saudi Arabia stands first among the GCC nations, when compared on the grounds of investments made in road sector. Of all investments made in GCC in road projects, close to half of the investment share comes from Saudi Arabia followed by Kuwait and UAE.

Huge investments are being made into the sector both in maintenance and to cater to new demands. From 1990 to 2015, the total length of asphalted and paved agricultural roads implemented by Ministry of Transport has grown by a CAGR of 10%. In 2015, total length of asphalted roads stood at 134,498 Kms, which forms more than half of the total road network in Saudi Arabia.

The budget for 2016 has allocated a sum of USD 6.45bn for Infrastructure and Transportation sector, a decrease of 63% from previous year. Oil price decline has forced the government to cut down spending on key infrastructure projects marking a biggest shakeup in the economic policy of the country.

According to the report, Railways never really made inroads in the GCC; in fact, most countries do not even have railway networks. However, the region’s growing population is increasing the demand for transport infrastructure. Moreover, congestion on roads and increasing trade has spurred a demand for an alternative. Saudi Arabia aims to change it by constructing a vast array of railway station at important cities – Riyadh, Makkah, Medina and Jeddah. Some large railway projects that are being planned or executed in Saudi Arabia are the Land Bridge, the Haramain High Speed Rail Project, ADA – Riyadh Light Rail Transit (Riyadh Metro), MOT-Jeddah Metro: Orange & Blue Line, Medina Municipality – Medina Monorail, SAR – Minerals Railway.

Railway network in the Kingdom of Saudi Arabia extends for a total length of 1,412 Kms and it links Eastern Province and Riyadh. Riyadh is home to 40% of the country’s population and 50% of the economic activity. The trains carry annually more than million passengers each year and 300,000+ containers. Majority of the containers are directed to Riyadh Province through Dammam Port. Passengers carried by Saudi’s railways reached 1 Mn in 2015 increasing at a CAGR of 4.82%. Passenger numbers are expected to go up on completion of the Haramain High Speed Rail (HHSR).

The challenge for railways in the region is to attract patrons. The culture of travelling in train is something that is relatively new to the region unlike in the EU or Asia. Shifting citizens to travel by trains is essential for the government’s long term plans of shifting away from oil-based economy. With oil prices already forcing Saudi government to cut down on its expenses it might also be a good time for laying the foundation for acceptance of large-scale public transport among the citizens.

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