Iraq moves to improve rail network

23 September 2012

The government wants to regain the country’s position as the region’s premier railway system and plans to upgrade existing lines, construct new track and find funding for its schemes

With a pedigree spanning almost 100 years, Iraq’s rail system can stake a legitimate claim to being the oldest national network in the Middle East.

Although the 2,000 kilometres of functioning track is small when compared to the country’s size, and frequency is low at just four to six trains a day on most routes, rail is nonetheless an integral component of Iraq’s transport system. Trains will play a pivotal role in connecting the country in the future.

It took just a couple of weeks after the US-led invasion of Iraq in March 2003 before trains were back up and running on the Basra-Baghdad route, proving the durability of a network that has been hampered by maintenance problems stretching back many years.

The system did not emerge unscathed from the turmoil in the country. At the end of major combat activities in 2003, looters damaged state railways firm Iraq Republic Railways’ (IRR’s) train control dispatch centre in Kirkuk.

Dilapidated Iraq railway

However, an attitude of make-do-and-mend – an approach used by Iraq’s oil industry over years of war and sanctions – has been applied to the country’s railways with some success.    

Large segments of the country’s railway track are outdated and have defective signalling systems. Nonetheless, the main lines – including Baghdad-Basra, Baghdad-Mosul-Rabia, Bagdhad-Ramadi-Al-Qaim and Kirkuk-Baiji-Haditha – are all functioning.

IRR is now looking to double the single-track Baghdad-Basra and Baghdad-Mosul lines and has also secured a budget to focus on essential maintenance and ensure that current connections run smoothly.

“We are upgrading existing lines to double-track and are spending about $200m a year on track reconstruction and upgrading,” says IRR director Helal al-Quraishi. “As far as rolling stock goes, we are spending about $20m annually to rehabilitate and maintain this.”

About 100 passenger carriages are out of service and in need of repair, while only one in five of the country’s 5,000 cargo wagons are currently operating.  

There has been significant progress made in rehabilitating the system in the years since former president Saddam Hussein was overthrown. In 2009, the first rail cargo was moved from Camp Taji to the port of Umm Qasr. More recently, in mid-July 2012, Iraq took a giant technological leap forward with IRR’s introduction of computer-based train control and digital microwave radio communications networks. The new radio network for voice and data communications comprises 33 microwave transmission towers installed between Umm Qasr in the south and Rabia on the Syrian border.

Large-scale rail plans

The increasing political stability since 2007 has allowed Iraqi transport chiefs to start thinking on a larger scale. “In the period up to 2035, we want to transfer about 300 million tonnes of  freight transport to rail, with about 60 per cent of this coming through Iraq via GCC and Asian countries and onwards to Europe,” says Al-Quraishi. “We want to increase seating capacity to about 20 million a year.”

We are now upgrading existing lines to double-track and are spending about $200m a year on track reconstruction

Helal al-Quraishi, Iraq Republic Railways

The ultimate aim is to increase the length of the rail network five-fold to 10,000km. The government wants to regain Iraq’s position as the region’s premier rail network. In February 2012, Transport Minister Hadi al-Amri announced plans for the construction of more than 1,200km of new line, involving double tracks that allow speeds of 250km an hour (km/h).

“For the new fast lines, we plan a big project to implement a north-south railway route on the east of Iraq, starting from Faw and going through Basra, Amara, Kut, Baghdad, Baquba, Kirkuk, Erbil, Mosul and Zakho, and then connecting with the Turkish railway to pass through Turkey to Europe,” says Al-Quraishi.

In 2011, French government officials touted plans to assist in the creation of a high-speed rail line linking Basra and Baghdad, a line stretching 650km, with France’s Alstom chosen to play a key role in the $10bn scheme. The cities of Mussayeb, Karbala, Najaf, Samawa and Nasiriya will eventually link with Umm Qasr port. Alstom signed a memorandum of understanding on the project in June 2011, with the objective of signing a turnkey contract.

A separate western axis would link Basra, Nassiriya, Samawa, Najaf, Karbala and Mussaib with Baghdad. This line will focus on passenger traffic.    

Railway rehabilitation in Iraq

In the meantime, rehabilitation of existing rail lines will be a priority for IRR. “We are now involved in a project for the rehabilitation and transformation of the link between Baghdad and Basra and Baghdad-Mosul to double-track, with speeds of 120km/h,” says Al-Quraishi.

The new north-south routes will cover 1,200km and cost $20bn to develop, says
Al-Quraishi. IRR is trying to finance this project under deferred payment terms, meaning the main contractor would only be paid four or five years after completion of the rail links, which would be 2020 at the earliest. The developers will be paid after the assets are operational, either as a single payment or in installments.

Raising finance is the biggest challenge facing Iraq’s rail strategy. According to a senior Gulf-based lawyer specialising in rail projects, the Iraqi schemes could struggle to secure significant interest from financiers given the current economic climate.

“In Iraq, the sovereign risk is a different proposition from other Middle Eastern countries,” he says. “For a big capital requirement such as this, it would be difficult to see banks responding right now. The main issue is whether anyone is prepared to take a risk on Iraq’s government for 10-15 years. I don’t think there are enough [lenders] out there who are.”

The Transport Ministry has talked of wanting to interest private investors in its rail projects, but public-private partnerships (PPPs) are in their infancy in the region’s infrastructure sector and the sovereign risk issue is likely to prove a challenge in the country. Nonetheless, Al-Quraishi says he has encountered interest from firms based in Brazil, China and Turkey for the financing of the rail schemes.  

The large cross-country rail projects envisaged by IRR are not the only rail schemes under way in Iraq. Urban transport development is also making headway, with two separate projects planned for Baghdad and monorail systems for Najaf and Karbala.

In January 2011, Alstom signed an agreement with Baghdad Municipality to discuss a project to build an elevated rail system in the capital, costing an estimated $600m. The scheme involves building a line running for 25km on a viaduct, which is aimed at reducing traffic congestion.

France’s government has committed to finance 50-60 per cent of the total project cost, with the remainder funded through a low-interest loan from a French state-run bank, which will be repaid over 20 years. 

The first line of the monorail will start from Mustansiriya and run to the central station in Alawi al-Hilla in central Baghdad via Waziriya, Shaab, the Al-Sarafiya bridge, Buratha mosque, Abdulmohsin al-Kazimi Square, Eden Square and Muthanna airport. The second line will run from Baya to the Dora highway and Oqba Square, and will end at the Masbah metro station. The line will take about two years to build.

French company Systra is undertaking the preliminary engineering design for the $3bn Baghdad metro project, which will involve two lines – the first measuring about 22km and a second about 18km. Both lines will have passenger stations located every 1km. Bids for engineering, procurement and construction deals are expected in early 2013. Unlike with its other rail schemes, Baghdad Municipality intends to fund the scheme from its balance sheet. 

There is some confusion over the planned monorails at Najaf and Karbala. In the former city, Canada’s Transglobim International won a contract in 2010 to build a 37km monorail system to link the three holy Shiite mosques of Imam Ali, Kufa and Sahla. However, Iraqi officials have said that the project has been halted due to unspecified financial issues. 

Faster progress is expected on the Karbala monorail, which will link the holy shrines in that city with the Hussein bridge. The monorail will be 18km long and will connect 20 stations. It will be able to transport 5,000 people an hour in each direction when complete.

Difficult financing

Iraq’s National Investment Commission (NIC), which has received three bids to build the Karbala monorail, has been seeking a private finance option, but so far, interest has been scant. A project source says that the NIC may have to obtain assistance from the state or some form of multilateral funding for the scheme.

The latter projects are important for the southern cities’ religious tourism market, but the main priority in Iraq is to reinvigorate the national rail system.

With rail transport estimated at just one-eighth of the overall cost of truck haulage, there is logic behind spending massively on rail. The challenge for Al-Quraishi and his team is to discover the financing structures that will find favour with international partners, who understandably still view Iraq largely with a mixture of trepidation and anticipation.

Baghdad to construct cross-border rail links

Iraq’s transport officials clearly view the country’s rail network as an integral part of a wider trans-regional nexus that will connect Europe and Asia. In the interim, small steps are being made to link it with neighbouring railway systems. Earlier this year, the first train left Mosul to the Turkish city of Gaziantep, highlighting the potential of extending rail beyond Iraq’s borders.

Building up cross-border rail links is a clear aim of government policy. Plans include linking Iran and Syria, building on existing links with the Syrian city of Deir el-Zour, and links with Iran.

Iraq Republic Railways (IRR) signed an agreement in March 2012 with Syrian Railways to build the remaining line needed to reach the Iraq border at Al-Qaim. According to IRR director Helal al-Quraishi, there will be two connections to Iran – one through Basra and on to Kermanshah, and another between Baghdad and Tehran.

“Through Syria we have an existing connection between Mosul and Rabia Qamishli,” says Al-Quraishi. “We have another connection between Al-Qaim and Deir el-Zour. There is a stretch of about 120 kilometres inside Syria near the Iraqi border at Al-Qaim that is being built and that we can eventually connect to.”

Iraqi officials have also discussed building a 1,120km rail link to the Jordanian port of Aqaba, as well as extending connections to Kuwait and other Gulf states. 

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.