Cairo Metro explores PPP with banks

07 October 2015

Egypt has no prior experience with private financing for transport schemes

  • Egypt’s National Authority for Tunnels explores Cairo metro financing with development banks and three local banks
  • This would be Egypt’s first transport public-private partnership and is at a very early stage

Egypt’s National Authority for Tunnels (NAT) is exploring financing options for the Cairo Metro with development lenders and local banks, according to vice-chairman Sameh Refaat, speaking on the sidelines of MEED’s Mena Rail & Metro Summit in Dubai on 6 October.

The authority is studying the possibility of utilising a public-private partnership (PPP) model for future expansion.

It is in discussions with development banks such as the Washington-based World Bank, European Bank for Reconstruction and Development (EBRD), European Investment Bank, and African Bank for Development. NAT is also gauging interest from three local banks: Banque Misr; National Bank of Egypt; and the Bank of Alexandria. It has not yet approached international banks.

However, NAT has not used the PPP model before and is unsure of how it can be applied. Financing, structures, and heavily-subsidised fares will be key challenges.

“We are tired of state budgets and loans,” says Refaat. “It is very early days and the structure has not crystallised yet.”

NAT is keen to bring in outside expertise to work out the best model for the project.

The authority has invited consultant engineers to submit bids by 28 October for work on the first phase of Line 4 of the Cairo Metro. A tender for the construction of Line 4 should be issued before the end of 2015.

Line 3 is already under construction.

EBRD is financing the procurement of new rolling stock for Line 2 of the metro, as well as maintenance work. It expects to approve between €100m ($112.6m) and €175m of finance in November, to be repaid over 18 years.

The 13 eight-wagon trains will cost a total of €341m.

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