Egyptian private equity firm Citadel Capital plans to spend around $17m setting up its own rail operator in Sudan, the company’s managing director tells MEED.

Citadel signed a right-of-way agreement with Sudanese Railway Corporation to give Nile Valley Railways, a wholly owned subsidiary of Citadel, the right to operate trains in Sudan.

Under the agreement, Nile Valley Railways will purchase rolling stock, including wagons and locomotives that will run on existing rail infrastructure in the country.

Due diligence is now being carried out as Citadel arranges the debt and equity financing required for Nile Valley Railways.

“Our very preliminary calculation is to start a small operation of 100 cars, three light locomotives, three heavy locomotives at an investment cost of $17m,” Karim Sadek, Citadel Capital’s managing director tells MEED.

Nile Valley Railways will also now be able to offer cargo transport services on the rail lines operated by the Sudanese Railway Corporation under a revenue-sharing agreement.

The Sudanese Railway Corporation operates more than 4,500 kilometres of track running from Port Sudan to Khartoum and on to Wadi Helfa on the Egypt-Sudan border and is making significant investments in the country’s rail infrastructure.

In early March, Citadel Capital also acquired a 49 per cent stake in Sheltam Railways, which is the largest shareholder and lead investor in Rift Valley Railways of Kenya and Uganda.

The firm plans to hold more than $900m worth of investments in Sudan by the end of 2010.