Egypt rail freight modernisation to start in 2017

17 August 2016

European fund is considering new loan to support purchase of locomotives

It could take a year before Egypt and European Bank for Reconstruction & Development (EBRD) are able to finalise the €150m ($169m) loan designed to support Cairo’s plan to purchase up to 50 diesel locomotives to modernise its rail freight sector.

The deal has yet to be formalised and the entire process could take up to a year, according to a source familiar with the transaction.

“We still need to sign a loan agreement and appoint a consultant for the project,” the source tells MEED.

The loan coming from the EBRD comprises two-thirds (67 per cent) of the total budget that Egyptian National Railways (ENR) says it requires to reform and eventually commercialise its ageing freight rail services.

Once the loan is approved, a competitive tender will be undertaken to select the supplier of the rolling stock. Under the current plan, the maintenance of the new locomotives would be undertaken at a new depot that will be built on land owned by ENR.

It is understood ENR plans to spin off its freight operations into a separate subsidiary, and that track access charges will be introduced to encourage private sector participation.

EBRD has been a key partner in Egypt’s rail modernisation plan. It recently invited firms to bid for the contract to design, install and maintain six train sets on behalf of ENR.

The train sets will be used for Egypt’s mainline passenger rail services.

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