Saudi gives Spanish firms more time to finish high-speed railway

[MADRID] Saudi Arabia has given a Spanish consortium charged with building a high-speed railway linking Mecca and Medina an extra 14 months to complete the project, Spain's government said Tuesday.

Public works minister Ana Pastor announced the extension of the deadline to complete the railway, which has run into technical difficulties, during a visit to a public works project in eastern Spain, a spokesman for her ministry said.

She also said Saudi Arabia, which is facing a budget squeeze due to low oil prices, had agreed to settle its arrears in payments to the consortium "as soon as possible", the spokesman added.

Spanish firms that are part of the consortium had complained of delays of several months in getting payment.

The high-speed railway linking Mecca and Medina was due to be completed in January 2017.

The extension will push the opening of the railways to the first quarter of 2018, said a spokesman for Spanish state-run train operator Renfe, one of the leading firms in the consortium.

Renfe head Pablo Vasquez, who also heads the consortium, recently returned from a visit to Saudi Arabia.

Saudi Arabia in 2011 awarded the contract worth 6.7 billion euros (S$10.4 billion) to the consortium of 12 Spanish companies and two Saudi firms for the project which aims to improve transport connections between Islam's holiest cities during the annual hajj pilgrimage.

The contract - one of the biggest Spanish firms have ever undertaken abroad - is for laying the 444 kilometres (275 miles) of track between Mecca and Medina as well as maintaining the line for 12 years.

But the project has run into challenges that have added to its costs, leading to disagreements among members of the consortium over who is responsible for resolving them.

The rail line crosses the Arabian Desert, where sandstorms are frequent and large dunes can suddenly form, which has added to the challenge of completing the project.

The leading firms in the consortium - Renfe, train maker Talgo, and state track operator Adif - have extensive experience with Spain's own high-speed network, the world's second largest after China's.

AFP