March 11, 2015

2015: a key year for Oman Rail

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Oman Rail is set to make huge strides on its inaugural railway project in 2015 as its first civil works contracts are awarded and construction gets underway. Kevin Smith reports from Muscat on progress so far.

IN a nondescript office building a short hop from Muscat's iconic Opera House, officials at Oman Rail are busy working to get the country's inaugural railway project up and running.

Oman Rail, which was founded in June 2014, says that its plans for a 2135km railway network will transform the country, and IRJ's visit to Muscat takes place just a few days before technical bids for the first phase civil works contract are submitted.

Contracts are expected to be awarded by the middle of the year, and while extensive deliberation and analysis is set to take place over the next few months, this is just the beginning. Rows of empty desks ready for the next batch of employees hint at the rapid expansion that will take place here as the project takes shape, with operations expected to begin by the end of 2018.

Like the other start-up railways in the Middle East, expatriate railway professionals with decades of experience on some of the world's most prestigious undertakings are helping to shape the project in Oman. Mr Michael Darby, Oman Rail's chief operating officer, is one such railwayman who has worked extensively in North America and Australia. He describes his job and building railways as "something he likes to do." However, he is clear on where he sees his, and Oman Rail's, long-term future.

"The idea is that the guy who follows me will be Omani," Darby says. "I'm not going to be here forever, the railway is."

Indeed "Omanisation" is a key focus for the project. Already 40 graduate Omani engineers from various fields including civil, mechanical and electrical engineering have been recruited from 1600 applicants who applied for the positions. They are all on a four-year programme, which involves training in a range of areas essential to a railway's development including track and architectural design, communications systems, and station, tunnel and bridge construction.

"In September we took them all to InnoTrans in Berlin and this was a great experience for them to see the railway industry up close," Darby says.

OmanOmanisation is not limited to skills and recruitment. Oman has ambitions to establish its own domestic railway industry, which encourages the growth of domestic-based small and medium enterprises (SMEs) that "doesn't reinvent the wheel" but complements Oman's existing strengths. As a result 10% of the value of each contract awarded for the project must go to Omani companies under an in-country value (ICV) development initiative.

Work is already underway to register domestic companies so they can integrate into the supply chain and according to Oman Rail's CEO Mr Abdulrahman Al-Hatmi the railway will facilitate the diversification of the Omani economy away from the traditional oil and gas sectors. The railway is also set to enhance the country's logistical flexibility.

"We are going to change the life of almost anyone who has anything to do with Oman," Al-Hatmi says. "We will make everything you buy and sell in the supermarket cheaper. In terms of natural resources, we will even make building a house cheaper. This is why we are reorganising and revolutionising the logistical supply chain in Oman."

Due to its advantageous geographical position at the southeast corner of the Arabian Peninsula, Oman is marketing itself as the gateway to the Gulf Cooperation Council (GCC) region. It is located on two major international shipping routes which are within two weeks of some of the world's major ports, and has direct trade routes to the rest of the GCC, India and Africa. Critically Oman has three deepwater ports - Salalah, Al Duqm, and Sohar - and the railway is set to play a major role in their continuing development.

"The network is designed as a logistics centre by connecting Oman's ports with the rest of the GCC as well as our own mining and commercial hubs," Al-Hatmi says.

First phase

The 207km first phase of the project will link Buraimi on the UAE border with Sohar, and with construction due to be completed by the end of 2018, it will fulfil Oman's obligation to link with the GCC network. The double-track, standard-gauge line will mimic the rest of the GCC's network by adopting 32.4km axleloads and a loading gauge sufficient to accommodate double-stack container trains. The line will utilise ERTMS Level 2, and while it will initially only accommodate diesel traction, it will be built with a view to future electrification.

Technical bids for the civil works contract were submitted to Oman Rail on January 18, with 18 bidders prequalified, although not all were expected to submit a final technical bid. Financial bids were due on March 1 and Oman Rail expects to announce a winner "by the middle of the year."

The winning bidder will deliver a substantial package of works encompassing rail design, engineering, supply, construction, installation and commissioning. However, cost is not the determining factor in their bids.

"We have a device in tenders to give credit to the highest proposals on SMEs, with the bidders that do so having a better chance of getting the contract," Al-Hatmi says. "This will provide us with proposals to develop the industry in Oman, or improve the level of Omani manufacturers which already have certain capabilities, for example in producing signalling and telecoms systems. These guarantees will ensure our domestic programme is implemented."

In addition to civil works, bidding is underway for the systems contract. Five consortia led by Alstom, Ansaldo STS, Bombardier, Siemens and Thales were selected as prequalified bidders in 2014, and the winner is expected to deliver ETCS Level 2 and associated systems for train detection, switch control, broken rail detection, level crossings and hot box detection along with centralised traffic control and an operations control centre. The contract is expected to be awarded by the end of the year and also includes a telecoms element. This encompasses delivery of a related telecoms and core communications network as well as passenger information systems.

Major transformation

Developing the first phase of the railway network will prove a further boost to the port of Sohar, which is going through a major transformation. It is now one of the world's largest port and freezone developments thanks to a $US 15bn investment over the last decade. The relocation and expansion of Oman International Terminal and the transfer of all of Muscat's commercial port activities to Sohar in August 2014 has increased capacity to 1.5 million TEU per year.

As a result the port is expected to handle 300 vessels in 2015. And with further multi-billion dollar investments in agricultural storage, a sugar refinery, and petrochemical facilities as well as an expansion of its freight terminal now underway, logistical activities are set to continue to increase. Indeed the port's TEU capacity is expected to rise to 9 million in the long-term.

This will be further underpinned by a land reclamation project which will commence soon, while the port authority is preparing for the addition of the railway link by proposing to construct a large shunting yard and logistics facility to handle future railfreight shipments.

Discussions on the structure for this are continuing with the railway's project management consultant set to play a critical role in the design of the facility. Bids for this contract were received in March 2014, and following months of delays, the $US 149m contract was finally awarded to the Spanish-based Tecnicas Reunidas consortium on February 11.

The consortium, which overcame competition from Parsons International and the lowest-priced bid for the contract from a group led by Dohwa Engineering, Korea, will now proceed to review the contract process, extend contract management, and provide project management services for the Sohar - Buraimi section. The consortium will also carry out construction supervision and be responsible for testing and commissioning. It will also oversee the procurement of rolling stock and coordinate with the government to select an operator for the first phase of the network. This contract, which includes maintenance, will be awarded in the first half of the year.

In addition, the consortium will review the complete network design, which Italian State Railways (FS) subsidiary Italferr is currently carrying out under a $US 37m design consultancy contract awarded in August 2013. Work, which began in January 2014, involves detailed alignment and infrastructure design and developing specifications for rolling stock and other systems. Italferr says it is on course for completion by January 2016.

The civil works contractor will face a number of challenges during the construction phase, specifically relating to topography which differs significantly from other GCC countries. For example the first phase of the project will require construction of

5km of tunnel and 35 bridges and will feature several steep gradients. Overall the entire network will require 35km of tunnels, 132km of bridges and 245 overbridges or underpasses. Suppliers are also anticipated to provide 12,000km of rail, 23 million m3 of ballast and sub-ballast, 10 million concrete sleepers, and 41 million fasteners along with 8000 wagons and 300 locomotives.

While the civil construction bids for phase 1 are currently undergoing close assessment, attention is already shifting to phase 2, which encompasses a 240km link from Hafeet via Ibri to a new economic zone in the Al Dhahirah Governorate economic zone, in the northwest of the Sultanate.

The second phase will be delivered in two stages; stage one encompasses the 114km section from a junction with phase one at Hafeet to Ibri, and stage two is a 126km link from Ibri to the new economic zone.

In future phases beyond Al Dhahirah the alignment will traverse the vast desert expanses of central Oman via Ghabah to Haima, with a branch veering south towards the port at Al Duqm, and eventually reaching the Yemeni border at Mazyounah with another branch to the port at Salalah.

In the long-term a south - north line from Amal via Al Duqm to Muscat and Sohar is envisaged to complete the network.

Depending on funding, contracts for subsequent phases could be launched in very quick succession. Indeed Al-Hatmi says he expects that two further tenders for construction of 500km of railway will be issued in 2015. Work will also start on building Oman Rail's own centre of railway engineering excellence this year, which further underlines its commitment to developing in-house railway expertise.

Bonanza

Oman Rail clearly has a lot on its plate in the next few months and it has not been helped by the uncertainty in global markets following the recent fall in oil prices. This resulted in an extension to accepting bids for the phase one civil works contract as costs were revised, placing greater pressure on the project.

Despite the obvious challenges, the rail project offers a potential bonanza for suppliers around the world. The implementation deadlines might be strict, but this is not putting all the big companies off, which is great news for their prospective domestic private partners and Oman's future development.

"The project has recorded substantial progress over the past 18 months, but we're just getting started." Al-Hatmi says.

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