Huge Saudi metro projects aim to shift economy beyond oil

A US$22.5 billion plan to build Riyadh’s first metro rail system aims to achieve more than improving the quality of life in the congested Saudi capital: it is part of an ambitious effort to shift the country’s economy beyond oil.

The government awarded contracts for the system to three foreign-led consortia on Sunday. Six rail lines carrying electric, driverless trains and extending 176 kilometres (110 miles) are to be completed by 2019.

Similar projects are underway in other top Saudi cities; last August the government approved a US$16.5 billion plan to modernise the transport system in Mecca, including construction of a metro, and Jeddah is preparing plans to build a metro that would cost around US$9.3 billion.

The projects are part of an effort to improve social welfare for millions of poorer Saudis in the wake of the 2011 Arab Spring uprisings in the region. Saudi Arabia escaped serious unrest, but it aims to ensure social peace by ramping up spending on hospitals, schools and other infrastructure.

In the longer term, the world’s top oil exporter is trying to diversify its economy away from oil, to reduce its vulnerability to the next big drop in global energy prices.

The metro systems could aid that drive by changing the way Saudi cities operate, helping them develop easily accessible commercial and light industrial districts which house companies outside the oil sector, while stimulating real estate projects and other investment along the rail lines.