Rail on track

Jordan is moving ahead with its railway development plans … as soon as it can get the cash

“Time is very limited for us,” says Laith Dababneh, Director, Multi Transport Department for Jordan’s Ministry of Transport, on finding investors for Jordan’s rail projects. By mid-2012, Aqaba Development Corporation will have moved Aqaba Port’s phosphate terminal 18 kilometres from its current place, which means the railway which transfers phosphate from the El Abiad, Hassa and Shediah mines to the port (a distance between 140 and 290 kilometres) will also have to move.

“If we do not connect the railway to the new port, we will have 300 trucks entering Aqaba every day only for phosphates,” says Dababneh. When the port reaches its full capacity, this could reach up to 600 trucks, he adds.

The country has finalised its study to upgrade its current narrow gauge network to a standard gauge connecting its main cities. A North-South track would run from the Syrian border through Mafraq, Zarqa, Amman and Aqaba; and an East-West route would go from Irbid to Mafraq, Zarqa and the Iraqi border, with a branch to the Saudi border. Dababneh says the project will cost US$6 billion, including US$4 billion for construction and US$2 billion for rolling stock. He says the project will offer a 15 per cent economic rate of return, for example, in the jobs it provides and trade it encourages.

The financial rate of return for investors, he says, is between 12 and 16 per cent. “There should be a government subsidy for these projects,” he says. “Part of this subsidy is the cost of the land.”

“If the government will subsidise, we will not need to have a yearly revenue guarantee for investors,” he adds.

Dababneh says the government has purchased the land, and is looking to employ a transaction advisor to help it with a public-private partnership and build-operate-transfer tender. To speed up this process, he says the government will soon award a tender for preliminary design, environmental impact analysis and geotechnical studies for the project. This part could take between 10 and 12 months, he says. “We expect an investment tender in the second half of 2009.”