Why Qatar Rail cancels $1.4 billion deal ?

Doha, Qatar – May 6th, 2016. Qatar Railways Company has terminated the contract of an international consortium that was building the stations of the Doha Metro project and appointed a new contractor to take its place. The company, better known as Qatar Rail, said in a statement that it has appointed Consolidated Contractors (CCC) to continue with the project and will take over the contract from the joint venture comprising comprising South Korea’s Samsung C&T, Spanish contractor Obrascon Huarte Lain (OHL), and Qatar Building Company later this month.


Qatar Rail confirmed that it was “doing all it could” to minimise any delays and risks to this part of the Doha Metro project. “Work will continue on the major stations project sites as planned and discussions are underway with the subcontractors to ensure continuity,” the statement said without giving a reason for the contract termination.

Qatar Rail added that it “will take every step to protect its rights and believes that its decision was made on solid contractual grounds”.
The contract involves the construction of Msheireb and Education City stations on the Doha Metro. Qatar Rail recently announced that its tunneling activity was around 90 percent complete and that the overall Doha Metro project was nearing 40 percent completion.

The $1.4 billion design-and-build contract for the Msheireb and Education City stations was first announced in June 2013 and is part of the $36 billion Doha Metro project. Samsung C&T held a 50 percent stake in the consortium, OHL 30 percent and Qatar Building 20 percent. The first phase of the Doha Metro project is expected to be completed in the fourth quarter of 2019, while completion of the Lusail Tram is set for 2020.

By 2030, all the three networks – Doha Metro, Lusail Tram and the long-distance rail, which will link Qatar with the GCC Rail network – are expected to be completed. Qatar Rail said it expects to offer 600,000 passenger trips per day by 2021. By then, 37 metro stations are expected to be ready, with an average journey time of three minutes between stations.

Sources: Caye Global Ltd (Media), Reuters, ArabianBusiness, GT.