Transport & Logistics Focus
Gargi AgarwalAssociate,Banking & Finance
Hussain OsmanAssociate,Innovation & Patents
As part of the Kingdom of Bahrain’s drive to diversify means of transportation and connectivity, the Government of Bahrain (“Government”) has vested the Ministry of Transportation and Telecommunications (“MTT”) with overseeing the installation of the island’s first urban metro transit system. With a budget of approximately US$2 billion, the Government has sought technical advisory and consultancy services in 2019, which in turn, appointed a consortium led by KPMG to usher the journey of interconnectivity.
The Bahrain metro is being implemented in four (4) phases. In Phase 1, the MTT plans to build a driverless, elevated 109km urban rail transit network in phases, with phase one comprising two (2) lines (red and blue) with an estimated length of 28.6km encompassing twenty (20) stations with two (2) interchanges. The red line will run from Seef, via Manama, to Bahrain International Airport’s new terminal, while the blue line will run from Juffair, via the Diplomatic Area, Manama, Al Farouq Junction and Salmaniya, to Isa Town Educational Area; the two (2) lines will connect the major residential areas, commercial areas and school districts in Bahrain. The Bahrain Metro is expected to accommodate an estimated 200,000 passengers per annum.
In 2018, the MTT appointed consulting, engineering and architectural firm IDOM for the design of Phase 1 of the metro project. Following the approval of the drawings, a spree of bids regarding route planning and associated constructions followed, and further to an unanticipated hiatus due to the global pandemic, a prequalification tender resulted in eleven (11) contenders expressing their interest to undertake the mammoth task of developing an efficient, automated and driverless metro-rail project:
China Harbour Engineering - Foreign Branch
China Railway Group
Orascom Construction
Alstom Transport
Taqi Mohammed Albahrana Trading
Hyundai Engineering & Construction
Aradous Energy Generations
Larsen & Toubro
Virtue Global Holding
Plenary Asia, and
CRRC Corporation Limited (Hong Kong).
The pre-qualification tender has been issued and closed in May 2022. The MTT is reviewing and evaluating all the received submissions.
Whilst Bahrain does not maintain a consolidated and comprehensive law or legislative regime relating to and regulating public private partnerships (“PPP”) tantamount to the laws enacted by some neighbouring jurisdictions in recent years (for example United Arab Emirates, State of Kuwait and Kingdom of Saudi Arabia), the Privatisation Policies and Controls Law expressly includes the transportation sector as part of a number of sectors which PPP projects are targeted towards. The Ministry of Finance and National Economy (“MOFNE”), in coordination with the Bahrain Economic Development Board (“EDB”), has been commissioned to prepare administrative and technical guidelines to govern public private initiatives.
Pursuant to Edict No. 30/2022, the Government of Bahrain promulgated a guidance document regulating public–private partnerships (“PPP Guide”). The PPP Guide aim to:
enable the state to implement and operate its public projects with high efficiency;
benefit from the capabilities and expertise of the private sector in providing the best services or supplying goods at the lowest costs;
reduce the financial burden on the state budget; and
enhance transparency and integrity in partnership procedures with the private sector.
The Guide applies to all projects in which there is a public-private partnership, excluding those projects where the private company is state-owned and or projects that are of a military or security nature. With a contract period of 35 years, the preferred private partner will work on the project on design, build, finance, operate, maintain, and transfer ("DBFOMT") basis. The private partner will obtain availability-based payments, performance-based deductions, and incentives while the government will bear the demand risk.
The Government will offer a pre-determined amount as a construction grant to the winning partner for financing a small portion of the capex. The Government has also purchased the sites required for the metro corridor and the associated depot centres.
With this state-of the art, fully automated, driverless metro system, MTT plans to develop an efficient public transport service in the Kingdom of Bahrain.
For further information, please contact Gargi Agarwal and Hussian Osman.
Published in November 2022
