Cairo reviews costs of redeveloping ageing rail network

22 August 2008
Cairo is being forced to review the cost of redeveloping its rail network after bids for one contract came in well over budget.

Bids were submitted in July for the contract to rebuild the 1,300 level crossings on Egypt’s 5,000 kilometres of railway. However, the offers made by the international groups far exceeded the £E300m ($56m) estimated by the national rail operator, Egyptian Railways.

With budgets for major engineering and infrastructure projects escalating worldwide as raw material costs rise, the total budget of £E5bn for the overhaul of the existing rail network by Egyptian Railways and the Transport Ministry looks unlikely to be met.

“£E5bn does not look realistic with costs for these projects going up,” says a source close to the bidding process.

“The level crossings are a relatively inexpensive part of the wider rebuilding programme, but the bids still came in well above budget. Egyptian Railways has decided to look at the project again and retender it once it has worked out a way of getting the cost down.”

Egypt is attempting to renovate its entire track network, much of which dates to the colonial era.

Plans for a new £E3.5bn rail line between Obour City and 10th of Ramadan City also appear to have stalled while Egyptian Railways reviews the financing of the project.

“There has been underinvestment over a long period of time,” says the source. “The cost of upgrading the system is going to be huge. Egypt needs to find ways of bringing more private sector investment to the railways.”

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