China Railway Construction Corp said on Monday it expected to lose about 4.15 billion yuan ($623.3 million) on a new Saudi Arabian railway for Muslim pilgrims.

Costs on the A1-Mashaaer Al-Mugadassah metro light rail project (Makkah Light Rail project), which is scheduled to start operation on November 13, would exceed the company's estimate, it said in a statement.   

The loss 'is expected to have a material impact on the company's profits for the third quarter,' the statement said. The company will continue to negotiate with the owner on  compensation issues, it added.   

The company signed the contract for the project with the Saudi Ministry of Municipality and Rural Affairs in February 2009.

The EPC+O&M general contracting model envisaged the company undertaking the engineering, procurement, construction, and system (including vehicles) installations and testing as well as the three-year operation and maintenance commencing from November 13, 2010.
According to the construction term requirement, the project shall commence operation and achieve 35 per cent of the full transport capacity on November 13 and complete all testing and achieve 100 per cent capacity in May 2011.

The total contract value of the project was 6.650 billion Saudi Riyals ($1.77 billion).

The company said based on the exchange rate on September 30, 2010, the estimated total contract revenue of the project amounted to 12.070 billion yuan, and the estimated total costs for the contract were 16.069 billion yuan.

It said as of September 30, 79.5 per cent of the overall construction had been completed.