Road work ahead: Keeping people and goods moving with upgrades and expansions

As a crucial transit country for regional vehicular traffic, the government is not neglecting the upgrade and expansion of the domestic road network, despite the high priority placed on the development of a national rail network. Although traffic volumes, particularly for trucks, may dip as a result of the rail expansion, roads are sure to remain a crucial component of the country’s transport infrastructure.

Road Reliance

The deputy chairman of the transport committee at the Jeddah Chamber of Commerce and Industry, Saeed Al Bassami, estimated that traffic with neighbouring countries is worth around SR5bn ($1.33bn) to the Saudi road transport sector. While Al Bassami suggests that the unrest of the Arab Spring has reduced this figure by around SR2bn ($533m), road transport remains crucial for the Kingdom. Saudis often prefer to travel by car, particularly given the low cost of petrol.

Accordingly, the government has remained committed to bolstering the road segment and has allocated significant capital to the task. In early 2012 the minister of transport, Jabara Al Seraisry, announced that the government had set aside SR10.77bn ($2.87bn) for 284 road projects in 2012; this was for the construction of 4154 km of highways, secondary and branch roads, as well as for the design and study of a further 2139 km of roads.

Given that the Kingdom had a total of around 51,000 km of roads in 2010, according to a report entitled “Prioritisation of National Road Projects in Saudi Arabia: Framework and Implementation”, this new spending drive is expected to have a significant effect on the network’s size. The projects will be spread throughout the country, with 814 km of new roads set to be built in the Riyadh region, 432 km of new roads in the Makkah region, 372 km of new roads in the Medina region, 216 km of roads in the Qassim area and 432 km of new roads in Asir.

Getting Connected

As well as inter-city connectivity, ongoing projects are also facilitating the improved flow of traffic within the Kingdom’s urban areas. For example, in May of 2012, the Saudi Binladin Group was awarded two contracts worth a total of SR1.9bn ($507m) for the completion of the second ring road and the third phase of the third ring road in Makkah. The local construction giant will have around two and a half years to complete work on both projects, which include new bridges, tunnels and road extensions.

Perhaps the most important project slated for the coming years is the Saudi-Egypt causeway, a project that has recently been revived. Construction on the 50-km bridge is expected to begin in mid-2013 and cost approximately SR11.25bn ($3bn). The project should reduce travel times between the two countries to just 20 minutes and in all likelihood increase the number of Egyptians and Saudis visiting one another’s countries each year from the current figures of 1.5m and 750,000, respectively.

Room For Service Operators

Indeed, the upgrade of the road network is piquing the interest of potential service operators, hoping to take advantage of an increase in volumes. According to Al Watan newspaper, a new firm created through a partnership between existing public transportation companies is looking to develop a franchise for mass public transport services.

Al Bassami told the paper that the new company will have a total paid-up capital of SR2bn ($533.2m) and create some 35,000 jobs. The company plans to become publicly listed once it has gained a foothold in the market, according to Al Bassami. Such a move could bring additional competition for the Saudi Public Transport Company, the leading provider of domestic and international road passenger services, which has transported more than 2bn passengers since its establishment in 1979.

Although the road sector may be less glamorous than rail and air, it will nonetheless be central to the flow of goods and people in the years to come.

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The Report: Saudi Arabia 2013

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