Middle Eastern rail gets on track to steam ahead

Across the MENA region there are plans for thousands of kilometres of new rail infrastructure and the growing interest of international companies suggests an approaching gold rush of sorts, but funding such projects could still prove to be an uphill battle.

In Morocco, urban planners are working to connect Rabat and Sale with a 31-station tram network that should open by the end of this year. Abdelhak Senna / AFP

At first glance two rail projects, one in Iran and the other in Jordan, have little in common. The Islamic republic wants to put an end to the madness that takes place at rush hour in Tehran by creating 430km of metro track and 60km of tram rails. Jordan, by contrast, has planned a nationwide freight network totalling 942km and anticipates brisk business carrying consumer goods to Iraq from its port in Aqaba and phosphates from its mines in Shidiyya.

The projects have one thing in common: the immediate hurdle is raising capital. Dr Mohammed Montazeri, the deputy managing director of the Tehran Urban and Suburban Railway, says only seven of the 12 planned lines had so far been approved, primarily due to a lack of financing for the US$18.5 billion (Dh67.95bn) project. Jordan's rail plans are expected to cost much less, at $3.09bn, but Alaa Batayneh, Jordan's minister of transport, says that similarly, funding is the chief concern.

"Of course, financing is the biggest issue right now for a project this size and especially for a country like Jordan," he said during a visit to Abu Dhabi last week. The cost of Jordan's rail project is equivalent to about 10 per cent of the country's estimated GDP of $30bn. The two countries' experiences represent both the challenges and the opportunities with rail across the MENA region. Dubai's metro system is widely seen as a pioneer, the first rail project in the region in 20 years. But increasingly, across not only the Gulf but in the Maghreb region, too, rail is in fashion.

In the Gulf alone, there are $95bn worth of rail schemes at the planning stage or under way, according to a study from MEED, the magazine publisher and conference company. The UAE's plans for an $11bn, 1,500km freight and passenger network are well documented as are the projects designed to link the six member states of the GCC by rail by 2017. Other projects around the region, however, are less well known. These include metro or tram systems planned for Algiers, Tripoli and Casablanca; the rehabilitation of six railway lines in Iraq covering more than 1,200km; and, in Saudi Arabia, a 1,486km north-to-south freight railway, connecting phosphate and bauxite mines in the north-west of the country with processing centres 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. A confluence of projects is creating a "critical mass" of work, he says. "That gives a company like ourselves a real opportunity to establish a longer-term plan rather than just fly in and fly out."

The level of interest among international rail companies suggests a gold rush of sorts, as many firms seek opportunities abroad as spending in their home markets slows. Already, the range of winning contractors throughout the MENA region reads like a list of delegates at a UN summit, including companies from Germany, France, Turkey, China, Russia, India and Hungary. Despite the opportunities, experts predict huge challenges ahead before the plans can come to fruition. Already, many ambitious projects have been slow to get off the ground.

One reason, says Dr Ulrich Koegler, a partner with Booz & Company, is that governments have been unwilling or unable to finance the huge projects themselves and some are pushing to get public-private-partnership (PPP) schemes recognised and accepted by investors and contractors. "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," he says. "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."

Cultural sensitivities regarding public transport in the Middle East are also a concern. In a survey conducted by consultants working for Abu Dhabi's Department of Transport, many Emirati respondents worried about having to mix the sexes in a public carriage. "There appears to be a pronounced fear, on the part of young Arab women in particular, of crime and low-level harassment being perpetrated against women, on crowded buses by male labourers," the consultants concluded.