Greater Mideast is the hot spot for railway investment



In aim to curb traffic congestion, Iran is creating 430 km of track and 60 km of tram rails, while Jordan is planning to boost its trade with a nationwide freight networking reaching up to 942 km, the UAE-based The National reported on Wednesday.

Both projects face obstacles in raising capital, with Iran’s project falls short for it needs to raise $18.5 billion.

“It has approved only seen of the 12 planned lines,” said Dr Mohanned Montazeri, the deputy managing director of the Tehran Urban and Suburban Railway.

Despite Jordan’s project covering more distance and it costs much less at $3.09 billion, Jordan is still finding greater difficulties.

“Of course, financing is the biggest issue right now for a project this size and especially for a country like Jordan,” said Alaa Batayneh, Jordan’s minister of transport during a visit to Abu Dhabi.

Jordan’s rail project is equivalent to about 10 percent of the country’s estimated GDP of $30 billion, according to MEED, business intelligence for Middle East news and data analysis.

Lucrative region

MEED reported that in the GCC region alone, there are $95 billion of rail projects that both in the initial stage or underway.

Dubai’s metro which is considered as a pioneer rail project for the greater Mideast since 20 years, the UAE is planning for another $11 billion, 1,500 km freight and passenger network by 2017.

Metro or tram systems are planned for all of Algiers, Tripoli and Casablanca.

Iraq will also undergo a rehabilitation of six of its railway lines which will cover 1,200 km, and in Saudi Arabia, a 1,486 km north-to-south freight railway, connecting phosphate and bauxite mines in the north-west of the country with processing centers and ports along the gulf coast.

“It’s a region that is heating up,” says Wayne Donelly, the national strategic projects manager of Advance Rail Group, the new joint venture between John Holland of Australia and Al Habtoor Leighton Group, based in the UAE.

Sum of rail projects in the region is creating a “critical mass” of work, he said.

“That gives a company like ourselves a real opportunity to establish a longer-term plan rather than just fly in and fly out.”

Capital as challenge

Countries like Germany, France, Turkey, China, Russia, India and Hungary have all won some of the regions’ rail contracts as spending in their home markets are slowing.

But one of the challenges is governments unable to finance such grand projects, and thereby paving the way for public-private-partnership (PPP) model.

“PPPs normally have two benefits: you get a better quality of project or they are more on time; while on the other side, it is a vehicle to get private financing,” Dr Ulrich Koegler, a partner with Booz & Company.

“There are a lot of good reasons for PPPs, but I just don’t see too much movement at the moment because of their complexity,” he added.