Jordan’s railway plans gather momentum

A $5 billion railway plan to transform Jordan into a centre for regional trade and commerce received a major boost recently when the Islamic Development Bank (IDB) announced that it is in talks with global financial institutions to fund the mega-project. The IDB said last month that it was working with the World Bank and the European Investment Bank on the deal. Other sources have confirmed to media that the Agence Française de Développement, the Saudi Fund for Development, the Japan Bank for International Cooperation and Kfw (Germany’s state-owned development bank) also plan to participate. The planned railway is expected to have a major impact on the region, providing a cargo and ultimately a passenger link from Jordan to Lebanon, Syria, Iran, Turkey and Iraq, as well as Saudi Arabia and other Gulf Cooperation Council (GCC) countries. Stretching some 1,600 kilometres, the railway will link the Red Sea port of Aqaba with Syria via Amman, and Zarqa. It will also link the Saudi and Iraqi borders with Irbid in the north and the towns of Mafraq and Azraq in the north-east. Cargo train speed is expected to reach 120 kilometres per hour and 160 kilometres per hour for passenger trains. The country currently has about 507 kilometres of track, with the most important link between Damascus and Amman part of the 1300-kilometre Hejaz Railway, which was built by the Ottomans in the 1900s. “According to feasibility studies, once operational, the rail project will spur economic growth and job opportunities not only in Jordan but also neighbouring IDB member countries, including those in Asia and Europe,” said the IDB in a statement in May. Alongside the economic benefits of the rail link for the wider region, Jordan is eyeing advantages in its links with the GCC, an economic bloc to which it is currently applying for membership. Bilateral trade with the GCC runs into the billions of dollars per year (resulting in a trade deficit of $2.6 billion for Jordan last year), while visitors from Arab Gulf countries accounted for 28.2 per cent of tourist traffic in 2010, both areas that would likely receive a boost from the rail project. Citing the minister of transport, Mohannad Qudah, Bloomberg reported that the Kingdom is due to start the first bids for the project by the end of June, with Jordan set to provide JD370 million ($522 million) for the railway. The IDB has not said how much it would contribute to the project. International media has reported that plans for a key section of the track between Aqaba and Baghdad saw progress this month in the form of a memorandum of understanding on the project signed by Qudah and the Iraqi minister of transport, Hadi Al Ameri. “The accord is designed to boost bilateral integration and [enhance] safe and efficient transport with a view to increasing the flow of passengers and merchandise between the two countries,” Qudah said during the signing ceremony. Past plans for Jordan's regional rail link envisioned a build-transfer-operate model, with cargo traffic expected to include oil and minerals from Saudi Arabia and cement from Jordan to Iraq. Consultants interviewed by the Railway Gazette, an industry publication, estimated annual revenues would grow from JD229 million ($322.5 million) in 2015 to JD365 million ($514 million) in 2030 and over JD1.4 billion ($1.97 billion) in 2050. According to the Ministry of Transport, the first stage in the plan would be to replace the 1050-mm gauge Hejaz Railway link between the Syrian border and Zarqa that connects to Saudi Arabia. The second stage would add lines to Aqaba, replacing the current narrow-gauge phosphate line, and from Mafraq to Irbid, while also laying track east to the Iraqi border. The Jordanian initiative comes amid a prospective boom in the region's railway links, with more than 33,000 kilometres planned to be built in the Middle East and North Africa (MENA) and the region's mainline rail network set to almost double in size. Indeed, the “MENA Rail Report 2011”, released in May by the MEED magazine, found more than $250 billion of planned investment set out by governments and rail operators in the region. The report noted that the need for improved freight transport is playing a central role in many of the first schemes to move ahead because governments are seeking more efficient ways of connecting inland mines and petroleum production sites with ports. For Jordan, which relies heavily on its roads to transport the oil imports it relies on, a better-connected rail network that can relieve the pressure on its causeways and improve links with neighbours would certainly be a boon to the local economy. Oxford Business Group (OBG) is a highly acclaimed global publishing, research and consultancy firm, which published economic and political intelligence on the markets of Asia, Eastern Europe, the Middle East, and North and South Africa.