Etihad Rail has awarded a Dh3.3 billion (US$898 million) construction contract for the first phase of the country's railway project, opening the way for energy and industrial centres to be connected.
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A consortium made up of Italy's Saipem and Tecnimont and the UAE's Dodsal Engineering and Construction were awarded a contract for civil and track works for the first phase of the network, which is to link Habshan and Ruwais in the Western Region by 2013. It is then to connect Shah and Habshan by 2014.
"This milestone contract truly marks the start of the realisation of a national railway network on the ground and beyond the planning stages," said Richard Bowker, the chief executive of Etihad Rail, the master developer and operator of the project.
The start of construction on the 266km Western Region route was "imminent", he said.
Once finished, the Dh40bn, 1,200km network will connect urban and rural areas throughout the country. The rail system is to be one of the country's biggest infrastructure projects.
Government officials have positioned the railway as a major tool in transforming economic development and trade by cutting freight delivery times and reducing road congestion.
Yesterday's announcement follows the signing on Sunday of an agreement between Etihad Rail and Abu Dhabi National Oil Company (Adnoc) for the railway to transport up to 7 million tonnes of granulated sulphur annually. Plans are for the sulphur, a by-product of hydrocarbon processing, to be moved from the Shah gasfield to the Ruwais industrial cluster for export.
"With this key contract in place and with our signed agreement with Adnoc this week, our vision is becoming a reality and we're getting closer and closer to seeing the first trains run in 2013," said Mr Bowker. Etihad Rail, formerly known as Union Railway, has already signed a number of smaller contracts in connection with the project's first phase.
Last month, it awarded China South Locomotive & Rolling Stock a contract to supply 240 covered wagons to carry granulated sulphur.
The railway is expected significantly to cut pollution from lorries by reducing the use of such vehicles for industrial transport. It is estimated that one train can handle the freight load of 300 lorries.
The service is expected also to reduce road congestion and the need to build more motorways.
Etihad Rail has been whittling down tenders after a pre-qualification process that started in the fourth quarter of last year.
Tecnimont, an engineering company based in Milan, is already active in the UAE's industrial construction sector. It is helping to build Habshan 5, a large gas development project in the Western Region. And it was part of a joint venture that was awarded a contract in March to carry out civil works for Abu Dhabi Polymers Company, also known as Borouge.
Etihad Rail's focus has remained on freight lines after Mr Bowker said in March the company had suspended plans for a dedicated passenger link between Abu Dhabi and Dubai. But Etihad Rail plans eventually to include passenger services on its freight network, although the routes will run through the desert rather than along the coast.