Spain's Talgo says $201m Saudi trains deal cancelled

Company does not give explanation for contract blow; share price tumbles 12% after announcement
Spain's Talgo says $201m Saudi trains deal cancelled
(AFP/Getty Images)
By Reuters
Wed 15 Jul 2015 06:24 PM

Talgo said on Wednesday Saudi Arabia had cancelled a contract for six high-speed trains, suggesting the Gulf state is scaling back some infrastructure projects in a climate of low oil prices.

The Spanish trainmaker won the $201 million contract in February, following on from a feasibility study into building a high-speed rail line between Riyadh and Dammam, capital of the country's oil-rich Eastern Province.

Talgo, whose share price tumbled 12 percent after its statement, gave no explanation for the cancellation, and Saudi officials responsible for the project could not be reached for comment.

The world's top oil exporter is spending tens of billions of dollars on upgrading its transport infrastructure as part of efforts to diversify the economy.

In September, Spanish transport consultancy Consultrans said it had won a contract for a 10-month feasibility study into the rail project. The high-speed link would cut the rail travel time between Riyadh and Dammam to under three hours from 4-1/2 hours.

In May, the government in Riyadh awarded a $2.1 billion contract to operate a new bus system in the capital.

Talgo said on Wednesday the cancelled contract would not materially affect its financial projections for 2015 and 2016.

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