Jeddah

SAUDI-SPANISH TRAIN
PROJECT COMPANY
Jeddah, XXXXXXX XXth, 2024

To: Saudi Railway Company (SAR)
P.O. Box 64447
Riyadh 11536
Kingdom of Saudi Arabia
Attention: Eng. Rayan Alharbi

Vice President of the HHR and Al Mashaaer
Copy to: Eng. Kaid Al Harbi

Procurement and Contracts Manager (SAR)
Eng. Mohammed Fallatah

HHR Phase 2 (SAR)
Mr. Ahmed Bouaid

Government Rolling Stock Representative/ DB E&C - System Manager
Fahad Jamalaldeen
DAR Acting Project Manager
Subject: HHR-Phase 2. Service Variation Request. Costs Incurred by Remedial

Work - MB2 Area due to P1P1 Outstanding and Latent Defects.
Ref. 2024XXXX_SAR_X
Dear Sir,
We are writing to you in connection with the Contract for Phase 2 Haramain High Speed Rail
Project (the “Contract”) entered into between the Ministry of Finance and the Ministry of
Transportation of the Government of the Kingdom of Saudi Arabia (the “Government” or the
“Client”) and Al Shoula Consortium (the “Consortium” or “ASC”) -the entire rights and
obligations of the latter having been transferred to the Saudi Spanish Train Project Co. (the
"SSTPC" or the "Project SPV") through the Assignment Agreement dated 25 th March 2021 and
notified to the Government by letter of 30th March 2021.
We are writing to you with regard to the previously denounced poor performance of the P1P1
civil works; mainly shortcomings in the drainage works, slope instability for cut areas (loose
material), uncontrolled flood of rainwater and topography changes, inter alia. Specifically, we
refer to the P1P1 Contractor outstanding defects in the snag list issued in the Handover
Certificates for areas 4 and 5 (the "Defects").
The Defects status and P1P1’s failure to close them have been subsequently and repeatedly
notified and denounced by SSTPC in extensive correspondence 1, supported with sufficient
evidence and photographic reports. All the above, for the purposes of Clause 8 of the Master
Agreement in a timely manner.
1
See letters with references: 20140422_SRO_4, 20140717_SRO_20, 20180719_SRO_8, 20191029_SRO_1,
20181108_SRO_3, 20200206_SRO_2, 20200722_SRO_2, 20200922_SRO_1, 20180719_SRO_7.
SAUDI-SPANISH TRAIN
PROJECT COMPANY
On 28th October 2023 there was an occurrence of heavy rainfall, after which SSTPC conducted
inspections2 to the numerous severe damages in HHR assets 3 (the “Damages”), which revealed
that the Damages were a consequence of the aforementioned P1P1 Defects in civil works and of
the existence of P1P1 latent defects4, primarily concerning their works on drainage and slope
stability for cut areas (loose material), among others.
We hereby recall that the possibility for P1P1 to carry out the relevant remedial works pursuant
to Clause 4.2 of the Operation & Maintenance Package Conditions (the “O&M PC”) has been
exhausted, as noted in our letter ref. 20210720_SAR_3, and therefore, pursuant to Clauses 4.3
and 8.2 of the same, SSTPC is entitled to perform the necessary remedial works due to any such
P1P1 defect and to claim the costs incurred in the form of a Service Variation. Under these
circumstances, SSTPC has taken action and performed from October 2023 until March 2024 the
relevant remedial works to resolve the Damages in the Maintenance Base 2 area under several
Work Orders as detailed in Attachment 1.
In addition to this, it is worth noting that in connection with the referred rainfall event,
subsequent Damages, and during the performance of the remedial works -in coordination with
security and traffic areas- TSR were required to be imposed. SSTPC hereby rejects any impacts
on operation and service performance, and more specifically on KPI, stemming from the
Defects and affiliated remedial works.
Therefore, for the purposes of clause 4.3 of the O&M PC and pursuant to clauses 8.1.5 and 8.2
of the same, we hereby submit our Service Variation 5 for the performed remedial work and the
cost incurred by SSTPC, including the following information, in accordance with the provisions
of Clause 8.2.2 of the O&M PC:
(i) confirmation that the activities requested do not include obligations, duties and
services already within the Consortium's scope of work under these Operation &
Maintenance Package Conditions and/or any approved document produced in
accordance therewith (refer to Section 2 of the Attachment 1 for detailed
justification);
(ii) full details of the intended manner of implementing the Service Variation and the
impact of implementing the same on Passenger Services (refer to Section 3 of the
Attachment 1 for detailed justification);
(iii) full details, if applicable, of the time the SSTPC reasonably considers will be taken
to implement the Service Variation and the impact, if any, on the time for
performance of any other obligation to be performed by the SSTPC (refer to
Section 4 of the Attachment 1);
(iv) accurate costing of the increase of the Service Charge that will result from
implementing the Service Variation (refer to Section 5 of the Attachment 1 for the
cost breakdown); and
2
Please be referred to Incident Report No. 57594.
3
Included damage to fences, drainage channels, embankments and sinkholes, etc.
4
See Clause 8.1.4 in the Master Agreement, whereby we “shall not be responsible for latent defects which could not
have been detected by the tests and inspections referred to in Clauses 2.7.4 and 8.1.2[…]”
5
Please be referred to Attachment 1 with the SV Report and its three annexes.
SAUDI-SPANISH TRAIN
PROJECT COMPANY
(v) confirmation that it is able and qualified to implement the Service Variation and
that doing so will not impair its ability to perform its other duties and obligations
under the Contract.
In light of the above, we hereby urge the Government to respond pursuant to clause 8.2.3 of the
O&M PC and confirm the approval of the Service Variation request in writing to the SSTPC in
the form of a variation order so that SSTPC may recover the cost it has incurred and is entitled
to claim.
SSTPC declines all responsibilities and liabilities for any adverse consequences, losses,
damages or additional costs that have arisen and may arise in connection with defective P1
works, which are not attributable to SSTPC, and reserves all its rights, including, without
limitation, the right to claim the commercial revenues losses and any negative impact that this
situation may have on the Project.
All SSTPC’s rights are reserved.
Yours faithfully,
Jorge Pérez García

SSTPC Executive Director &
Representative for HHR O&M

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SAUDI-SPANISH TRAIN

Jeddah, XXXXXXX XXth, 2024

Attention: Eng. Rayan Alharbi

Copy to: Eng. Kaid Al Harbi

Eng. Mohammed Fallatah

Mr. Ahmed Bouaid

Subject: HHR-Phase 2. Service Variation Request. Costs Incurred by Remedial

Jorge Pérez García

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