Emirates' next ambition: Lay down railway in desert

Wed Jan 12, 2011 9:06am EST
 
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By Martina Fuchs

DUBAI (Reuters) - United Arab Emirates boasts the world's tallest building, a man-made island in the shape of a palm and is about to take its next ambitious step - linking cities by rail over the desert.

Already investing heavily in airlines and airports, as well as roads and public infrastructure, to attract and support growing commerce, the seven emirates are leaving nothing to chance as they bet on a freight and passenger network to help drive growth.

At stake for European and Chinese companies is a total $11 billion to be spent on the project, as UAE's Union Railway pushes to complete the rail system by 2017.

Even as the country struggles to regain its footing after the 2009 Dubai debt crisis and an exodus of investors, it is

betting that there will be enough economic activity to justify the rail system. To that end, it is starting with freight and adding passenger services.

Dubai is still building out a metro network launched in 2009 linking the emirates malls and business areas, but passenger volume is still sparse, bringing into question whether a national railway system will work in a country dominated by cars fueled with cheap gas.

China, which sees the Gulf as a key strategic region, appears to be in a good position to win contracts.

"If the decisions are made on price and basic quality of value for money criteria, I don't see how any foreign company could compete unless you get one of the European export-import banks to go in and try to match Chinese financing," said Bill McCahill, Vice Chairman for Pacific Epoch in Shanghai.   Continued...