Amman to invite companies to prequalify for railway during 2010

19 May 2010

Jordan’s freight railway network will be used to transport cargo to Europe

Amman is expected to invite companies to prequalify for the contract to build the first phase of Jordan’s $3.4bn national cargo railway network by the end of 2010.

The JD738m first phase will consist of a 255-km track that will connect Syria to Saudi Arabia via the Jordanian city of Zarqa.

The railway will link Jordan with Saudi Arabia and also Syria and will be used to transport goods, especially crude oil up to Europe. Passenger services may be an option in the future but are not currently feasible.

If construction starts as expected in 2011, the first phase of the project will be completed by 2014 and the second phase will be completed by 2015.

The railway will be executed in at least three phases. The JD1.39bn second phase will be 399-km in length and will link the major cities and ports in Jordan, including Amman, Aqaba, Zarqa, Mafraq and Irbid.

The third phase will cost JD273m and will extend to the Iraqi border through Mafraq.

France’s BNP Paribas led the design and feasibility study for the 1,080-kilometre rail network. The study recommends that the project be carried out on a build-operate-transfer basis (MEED 10:7:09).

Jordan is also expected to invite companies to bid for the contract to operate the railway for a 35-year period in the third quarter of 2010.

“A dual structure echoing partially that in [the] UK and France with a state-owned infrastructure company (Infraco) financing and owning the railway infrastructure and a railway operating company who will pay an access fee to the Infraco. There will be one company selected by international tender to that effect,” Herve de Villechabrolle, vice president of BNP Paribas corporate finance, tells MEED.

The operating company will also have access to ancillary revenues, such as management of logistics areas and multimodal terminals.

Jordan has now started discussions with banks with a final decision on how to finance the project in the next two to three months.

“A multi-state Infraco could also be considered,” de Villechabrolle says.

BNP Paribas expects that the annual revenues from the railway project will increase to JD1.4bn ($1.9bn) by 2050 from a prediction of JD229m in 2015.

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