EXCLUSIVE: Egypt finalising details of rail contract

20 June 2017

Loan to finance part of contract for 100 trains signed

Egyptian National Railways (ENR) expects to award the final contract for the supply of 100 new trains destined for Egypt’s mainline rail network to US-based GE soon.

According to sources familiar with the transaction, a final contract between ENR and GE is expected to be signed within days following the signing of an agreement on 17 June and once the final negotiations are completed.

The signing of a $300m loan agreement with the European Bank for Reconstruction and Development (EBRD), which will cover part of the $575m deal, on 19 June is also expected to facilitate the contract award.

It is understood that an export credit agency has agreed to finance the remaining portion of the deal.

Apart from the supply of 100 new trains, the deal includes 15 years of support, maintenance and spare parts for 81 trains that operate on Egypt’s mainline rail network.

Negotiations for another rail deal have not progressed at the same pace. ENR and Egypt’s Transport Ministry are yet to make a decision in terms of the supply of 700 non-air conditioned coaches, which it seeks to acquire.

Russia’s Transmasholding and Hungary’s Ganz Motor & Dunakeszi have formed a joint venture and submitted a technical and financial offer for the contract in 2016. They are bidding against a Latvian company who also offered to finance the project.

However, the financial terms offered by the Russian/Hungarian team were unacceptable and have been rejected, according to the source.

These contracts are in line with Egypt’s plan to reform its rail sector by increasing fleet availability and improving operational efficiencies and reliability. Future plans include the separation of freight operations and the introduction of track-access charges, which will provide a framework for future private sector involvement in the railway market.

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