Saudi Arabia Turns to Nightmare for Spanish Consortium

by Don Quijones • March 12, 2016

Taxpayer, get ready to open your wallet.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

When, in October 2011, the Saudi Railways Organization (SRO) announced its decision to award the bid to build a high-speed rail line between Medina and Mecca to a Saudi-Spanish consortium, it was like a dream come true for the Spanish infrastructure and rail companies involved. Decades of patient lobbying of the House of Saud by Spain’s former King Juan Carlos I had finally paid off.
Never before had Spanish companies won a tender for a project so big, so prestigious and so lucrative on the Arabian peninsula. The project’s total contract value is worth €6.74 billion. But the dream is already souring. What was originally meant to be a pioneering feat of engineering and the perfect global showcase for Spain’s mastery of high-speed rail infrastructure is now plagued by political intrigue, delays, and technical problems.
The biggest problem is something that can be found just about everywhere in Saudi Arabia: sand. Turns out, fast trains don’t work well when the rails are covered in sand, especially when large sections of track are built with ballasted track, the conventional (and cheapest) method for building rail lines, but which happens to be particularly susceptible to wear and tear and even track failure in desert areas.
Despite the construction of a 1.5 meter containment wall to keep the sand out, sand is still getting in, thanks mainly to the desert wind. In fact, in some places there’s so much sand that it’s almost impossible to see the tracks.
Naturally, none of the consortium partners wants to take responsibility for cleaning it up. After all, it would amount to a permanent and expensive undertaking that has not been budgeted for, in a project that expressly forbids cost overruns. According to the consortium member OHL – a Spanish construction company that is drowning in debt and has just been downgraded by Moody’s while it’s mired in a massive scandal in Mexico – its contractual obligations do not include keeping sand off the tracks.
To a certain extent you can understand the firm’s logic: it was hired to help build the infrastructure, not maintain it. That responsibility, argues OHL, ultimately belongs to Spain’s semi-publicly owned train manufacturer Talgo and its publicly owned rail operators RENFE and Adif, which were chosen to operate and maintain the system once it’s up and running.
The only way OHL will do the clean-up job is if it is paid more money to do so. For this and a number of other reasons, the consortium has finally done what Spain’s Ministry of Public Works dreaded the most: it has asked for more funds — an absolute minimum of €1.4 billion — from the Saudi government to cover its client’s — SRO’s — “unforeseeable demands,” such as keeping sand off the rail tracks.
REED MORE:http://wolfstreet.com/2016/03/12/saudi-arabia-nightmare-for-spanish-construction-consortium-ohl-talgo-renfe-adif/