Jordan’s Transport Ministry has decided to completely restructure the Amman-Zarqa rail project, after terminating the contract of the winning consortium for the second time.

The 28-kilometre light railway will now be built as a public procurement scheme, after the government abandoned the build-operate-transfer framework it had previously employed.

The move follows Amman’s decision to scrap the contract awarded to the winning Kuwaiti-Spanish consortium for the JD236m ($333m) project.

Kuwait’s Aknan Global and Spain’s Ineco failed to raise sufficient funding for the scheme by the agreed deadline.

“The agreement was that the consortium must raise the money before the end of March, and they did not reach financial close,” says one source close to the project. “Now the government has decided to drop the build-operate-transfer scheme and pay for the railway itself.

“Rather than one single contract, the project will now be divided into several packages to make it cheaper to carry out the work.”

The ministry is assembling a committee to divide the project into more affordable packages.

The source says international bidders may need to partner with a local firm. Once the railway is completed, the government will appoint an operator to oversee the running of the project.

“It is not decided yet, but there will probably be packages for civil works, rolling stock, electrical and mechanical works,” says the source. “The committee will decide this in the coming days.”

The Kuwaiti-Spanish consortium’s failure to raise financing for the project is an embarrassment for the ministry, as it is the second time in just over a year that it has terminated the contract of a preferred bidder.

In March 2008, the consortium comprising Pakistan’s Infra-structure Development Company and China Railway Engineering Corporation was dropped from the project for unspecified “legal reasons”.

The ministry appointed Aknan Global and Ineco in place of the Pakistan/China consortium.

This followed the decision to retender the contract in 2006, when only three of seven shortlisted companies submitted bids.

The project’s history has seen a series of false starts since a feasibility study was awarded in 1998.

Prior to this latest setback, Amman had hoped to open the line, which will be Jordan’s only passenger rail service, in 2010.

The ministry has yet to decide on a new schedule. “The government would like to have the railway built within two or three years, but nothing is clear at the moment,” says the project source.

The government anticipates that 100,000 passengers could use the service daily between Jordan’s two most populous cities. The 28-carriage train could make 78 trips a day at a speeds of 90km an hour.

Saudi Arabia has in the past successfully shifted from a build-operate-transfer scheme to a public procurement structure to accelerate a struggling rail project.

The Haramain high-speed railway between Mecca and Medina was bogged down in bureaucracy before the kingdom changed its strategy early last year.

Since then, the project has made rapid progress, with a first construction contract awarded in March. Bids are due on the second contract in April.

Aknan Global and Ineco were unavailable for comment as MEED went to press.