Fears for Saudi rail spending as $200m train contract cancelled

A decision by Saudi Arabia last week to cancel an order for six new trains has raised fears that the kingdom is scaling back its infrastructure spending because of lower oil revenues.

The decision concerns a $200m contract announced in February between Saudi Railways and Spanish train maker, Talgo. The deal was expected to be signed this month, but will not now go ahead.

The 200km/h, 13-car diesels had been expected to run on a medium-speed link that would connect Riyadh and the port of Dammam, on the border with Bahrain.

In September, Spanish transport consultancy Consultrans was awarded 10-month feasibility study into Riyadh Dammam link. It said a high-speed line would cut the travel time from 4.5 hours to fewer than three.

Saudi Railways said on its website that the order has been cancelled as part of a re-evaluation of its rolling stock requirements. It added that it thanked Talgo for its understanding and said it appreciated its role as supplier of 36 trainsets for the Haramain high-speed line in the west.

The news will concern other companies engaged in constructing Saudi Arabia’s high-speed rail network.

Talgo’s share price tumbled 12% after the statement, but the company said the cancellation would not significantly affect its financial projections for 2015 and 2016.

Photograph: The Talgo 350 trains that will operate in the west of Saudi Arabia. (Source: Peter Christener/Wikimedia Commons)

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