Regulatory Summit
The different contractual and legal
challenges arising from Rail and Metro
projects
Nabeel Ikram
9 May 2018
!
Procurement
Project structure – Making the whole system work
• Interfaces within the project
– Civil infrastructure
– Power supply
– Signalling
– Rolling stock
All things are generally new in
• External interfaces the Middle East which should
– New? Upgrade? Extension make things easier.
– Integration
– Land acquisition
This does not appear to be an
issue in the Middle East as all
lands are owned by the Rulers. Hogan Lovells | 3
Region at a glance
Country Rail market update
Bahrain There are currently no immediate upcoming rail projects in Bahrain. The light rail
scheme, King Fahd Causeway
rail link and the Qatar-Bahrain Causeway are in the pipeline.
Kuwait The Kuwait Authority for Partnership Projects is planning The Kuwait National Rail
Road System Project. The Rail Road system will serve freight and passengers and will
have a 120 km/hr regional lines speed and a 200 km/hr high speed.
The project will be implemented as a build, operate, and transfer (BOT) agreement.
The project is currently in the feasibility study phase.
Oman Oman is planning a new transport and logistics infrastructure by building a modern
railway network, which will have both passenger and freight lines. The Project had
been suspended but Oman Rail have recently tendered for consultancy services to
pick up from the previous feasibility study and design work that was conducted and to
introduce revisions to suit the new strategy to build a domestic rail network.
Qatar There are three key projects which make up the Qatar rail market: the Doha Metro,
the Lusail Light Rail Transit
(LRT) network, and the Long Distance Passenger and Freight network, which will be
connected to the wider GCC rail network.
Hogan Lovells | 4
Saudi Arabia The Saudi Railway Master Plan 2010 - 2040 supports the long term development of a
future passenger and freight transport network for the Kingdom of Saudi Arabia. The
development strategy for the railway network extension considers 19 individual
railway lines, with a total length of approximately 9,900 km. The rail market has
various projects underway or in the pipeline, although some of these have been
stalled or put on hold.
UAE The main rail project in the UAE is the Etihad Rail network – a 1,200 km railway
network to link the principal centres of population and industry of the UAE, as well as
to form a vital part of the wider Gulf Cooperation Council (GCC) railway network that
will connect the UAE with Saudi Arabia, Qatar, Oman, Bahrain and Kuwait. The Etihad
Rail network was to be delivered in three stages, however only stage 1 is fully
functional while the tender process for stage 2 has been suspended while they review
the most appropriate options for the timing and delivery of this phase of the project.
The RTA in Dubai have also unveiled updated plans to their masterplan (which
includes plans to extend the metro for EXPO 2020), as well as plans to move forward
with phases 2 & 3 of the Dubai tram.
GCC railway The GCC railway is a planned railway to connect the GCC member states of the
Arabian Gulf. It will be a 2,177-km regional network, when fully operational. The
project has met hurdles on account of challenges with the financing of the project,
and lack of alignment of the interests of the six states involved. However, Gulf leaders
have agreed to a new ‘ceiling’ of 2021 for the project’s completion.
Hogan Lovells | 5
Case Study: Doha
• Government funding;
and
• Local and international
lenders (Qatar
Development Bank,
Barwa Bank, First Gulf
Bank of Abu Dhabi and
Qatar International
Islamic Bank)
6
Case Study: The London Underground PPP
• The background
– Historic under-investment and poor management
– Severe funding constraints
Hogan Lovells | 7
The London Underground PPP
• The chosen route: PPP
• The commercial structure:
– Before: a single company
– After: LUL + 3 infrastructure companies or “Infracos”
Hogan Lovells | 8
London Underground PPP – Contract Structure
AMBAC
CIT
Amey Bechtel Jarvis Insurance Policy
Amey/Jarvis Bechtel
Intercreditor
Shareholder Agre ement
Agreements
Opex Capex
Bank
Common
Lenders
Tubelines (Holdings)
Limited ("TLH") Terms EIB
Agreement
Secondment
Agreements
Comfort Letter
JNP Infraco
Put Option Department
for Transport
Service Con tract
Major Enhancement Agreement
Statutory Safety Agreement
Arbiter Co - ordination Agreements with
other Infracos
Central
Government LUL T fL Funding Plan
Hogan Lovells | 9
Doha Metro, long distance rail and Lusail Tram– Contract
Structure
Owner
Qatar
Rail
Regulator Operator
10
Challenges and constraints
• The size of the deal Qatar Rail- challenges
• Technical issues and Constraints
Hogan Lovells | 11
Why did it come to an end?
• Metronet
– Tensions with LUL/TfL
– Procurement strategy
– Extraordinary periodic review
– Administration
– Transfer to TfL
• Tube Lines
– Tensions with LUL/TfL
– Periodic review
– Loss of political support
Hogan Lovells | 12
!
Regulatory
The regulatory regime
• Safety Approval (usually government agency)
– Approach to certification
– Objectivity and transparency of regulator and tests applied
– Commitment and resources to carry out tests on time
Hogan Lovells | 14
!
Construction
Ground conditions
• Extent to which the route is at surface level, in tunnels, elevated
• Urban areas
• Surveys
Hogan Lovells | 16
Other risks
• Commissioning and completion
Hogan Lovells | 17
Case Study: the Connect Project
18
Causes of Delay
• Fluor responsible for EPC
• LUL responsible for enabling work and approvals
Hogan Lovells | 19
Proving Delay
• Each station etc could be worked on and progressed independently and
distinct from any other eg if it was not possible to work at Westminster,
the contractor could move to Oxford Circus.
• Each location on the network formed part of one or more "rings". Each
line had more than one ring, and the rings formed part of one or more
lines.
Hogan Lovells | 20
A fluid and artificial critical path
• For the project
Radio network could not be commissioned until the transmission network had been
commissioned
• To each milestone
Could not commission a line until all the rings on that line were commissioned
Since each line consisted of more than one ring, the critical path might track back to
commissioning of any of those rings
To commission the rings, needed to have completed the work at all the locations relevant
to that ring
Hogan Lovells | 21
Methods used
• Both sides attempted a windows analysis
BUT:
Disagreed over the identification of the critical path in each programme
Disagreed over the identify of critical locations
Disagreed over the activities which caused critical delay at locations
Disagreed over how to measure any delay found
24