Despite all the money spent by regional governments on building air and sea ports in recent years, many of the major transport arteries of the Middle East remain narrow, congested and run down. While international sea and air links are generally strong, overland transport users have few options beyond often overcrowded or inadequate roads.

Among the major international links, the Suez Canal is in healthy shape. In September 2009, 1,454 vessels passed through the canal. That was a significant rebound from the 1,272 vessels that used the route in February, the quietest month of this year for the canal, when the impact of the global economic downturn was at its worst.

Some other transport links, however, have fallen into disrepair or vanished completely. The Hejaz Railway, which once connected Damascus to Medina, is largely broken, although Jordan now has ambitious plans to reopen its section as part of a JD3.2bn ($4.5bn) nationwide rail-building programme.

Across the region, from Iran to Algeria, there is a revival in railway building programmes as governments seek to improve their domestic and international transport networks.

In the Gulf there are plans for the GCC Railway, which will link its six member states, and three rail lines in Saudi Arabia: the North-South, Mecca-Medina and

Given the downturn in inter-national financial markets over the past year and a half, paying for all these schemes has not been easy.

Value of current transport projects
Country Value ($bn)
Algeria 22.38
Bahrain 10.18
Egypt 8.33
Iran 27.32
Iraq 14.63
Jordan 15.18
Kuwait 35.07
Lebanon 1.41
Libya 8.18
Morocco 12.86
Oman 17.88
Qatar 43.41
Saudi Arabia 60.17
Syria 6.06
Tunisia 5.33
UAE 103.10
Yemen 27.93
Source: MEED Projects

Transport

  • $14bn – Value of planned Saudi mainline rail projects
  • $4.5bn – Value of project to build Jordanian freight network
  • $11bn – Value of project to build New Doha airport

Some countries are seeking international investors to back billions of dollars worth of projects, such as the £E4.4bn ($800m) railway from Cairo to Roubiky and 10th of Ramadan cities in Egypt, and the planned Jordanian rail network.

In Saudi Arabia, the government will finance key parts of the kingdom’s infrastructure itself after banks refused to lend money to two multi-billion-dollar projects: the $7bn high-speed railway between Mecca and Medina, and the $7bn Saudi Landbridge rail link connecting the Gulf and Red Sea coasts.

In other cases, it is unclear whether the state or the private sector will finance badly needed developments. In Iraq, for example, the $1bn privatisation of the deep-sea port at Umm Qasr – the country’s marine gateway – has been on hold since September, when Transport Minister Amer Abduljabbar blocked the appointment of an international consultant, the US’ Cornell Group, to oversee the redevelopment of the site.

Iran’s ability to push ahead with its major transport projects is just as doubtful, although the financing difficulties in the Islamic Republic are further complicated by the US-led international sanctions and domestic economic problems.

High-speed lines from Tehran to Esfahan and Mashhad have been on hold since January 2008 because the government cannot afford to pay for them directly. The $18.5bn project to add 12 lines to the Tehran Metro before 2030 has also been stalled for two years.

However, a 1,100-kilometre-long rail line running the length of the country’s eastern border, from Mashhad in the northeast to the port of Chabahar on the Arabian Sea, seems likely to go ahead at a cost of at least $1bn, if only because Chinese rail firms are likely to provide the finance.

Many other international companies continue to shy away from Iraq and Iran, however, due to the inherent difficulties in working in either country and the opportunities available elsewhere.

Egypt has made significant steps to open itself to foreign investment since the government of Prime Minister Ahmed Nazif came to power in 2004, although further moves could yet be needed given the extent of Cairo’s plans. Investment Minister Mahmoud Mohieldin has drawn up a list of road, rail and port projects worth up to £E130bn that the government hopes to award by the end of June 2011.

“There is a desperate need for some of these projects in the different regions of Egypt”

Mahmoud Mohieldin

The port projects alone will require £E15bn in investment. They include plans for a £E5.2bn bulk terminal at Adabiya Port, to the south of the Suez Canal, which will import iron ore and export finished products. At the Mediterranean end of the canal, the Transport Ministry plans to build a container terminal and a ship refuelling station, and to develop the port’s logistics capabilities.

Other schemes cover less strategically important sites. For example, the Investment Ministry wants to build a 415km-long road linking the cities of Asyut, Qena and Sohag in Upper Egypt to the Red Sea coast, at a cost of £E1.6bn.

“There is a desperate need for some of these projects in the different regions of Egypt,” says Mohieldin.

In common with other countries in the region, Egypt is also expanding its rail system. Orascom Construction Industries, the country’s largest construction firm, is currently working on an upgrade to the Cairo Metro, which is due to have six new lines by 2022.

The Transport Ministry is also looking for investors for a £E360m plan to move the section of the Matruh Railway running between the towns of Fukkah and Samalla in the northwest of the country. The ministry hopes that moving the rail line will free up beachfront land for development.

The rail projects elsewhere are even more ambitious, not least Jordan’s plans for a nationwide freight network linked to the borders of Saudi Arabia, Syria, Iraq and Israel. Its Transport Ministry launched the fundraising for the $4.5bn scheme to investors in Paris on 13 November.

To make the project more manageable, the ministry has split it into four phases, each of which will be developed in turn. The ministry plans to award the JD795m ($1.1bn) first phase, connecting its borders with Syria and Saudi Arabia via Irbid, Amman, Zarqa and Mafraq, in June 2010. A developer is expected to start work the following month, with the first freight trains running on the network in mid 2013.

For Jordan’s rail network to fulfil its potential, however, its neighbours need to build their own lines to connect with it. A line from Damascus to the border already exists, although its narrow-gauge track is too small to take the heavy freight trains Jordan wants to use, and will need to be replaced.

According to Herve de Villechabrolle, vice-president of French bank BNP Paribas, which is advising Jordan’s Transport Ministry, Syria is likely to finance and build a line between the border and Damascus.

“The Syrians are ready to start building the day that Jordan announces it is ready to start building,” he says.

Saudi Arabia’s rail building programme does include a link to the Jordanian border, as part of its North-South rail line, which will connect mines in the north of the kingdom with industrial facilities at Ras al-Zour on the Gulf coast.

“The Syrians are ready to start building the day Jordan announces it is ready to start building”

Herve de Villechabrolle, BNP Paribas

The line could also connect to the planned GCC Railway, which will run along the Gulf coast from Kuwait to Oman. The GCC Secretariat is expected to decide on the route next year, including whether to include a line through Bahrain and to extend the network as far as Oman’s border with Yemen.

Saudi Arabiais also pressing ahead with the Landbridge, which will link its east and west coasts via Riyadh, and the Mecca-Medina railway, which will provide a high-speed passenger service between the two cities.

Elsewhere in the region, city metro networks are also proceeding, if often at a slow pace. In Abu Dhabi, the Department of Transport has been weighing up bids for a consultancy contract for its two-line metro, although it is not clear when any award will be made.

Neighbouring Dubai opened the first stations on the Red Line of its metro network in September 2009, but work on further stations and lines is running late and over-budget. The Algerian government has also delayed the Algiers Metro, which was due to open in October, until the spring of 2010.

There have been some delays at the region’s ports, as operators wait for container volumes to pick up. Among those affected is Jebel Ali Port in Dubai, where the local DP Ports World has put its planned third terminal on hold.

The development of New Doha Port in Qatar is also proceeding slowly, with Doha only planning to award the dredging and breakwater work in 2010. Bubiyan Port in Kuwait is in a similar position, with the first contract for dredging and other marine works yet to be awarded.

One of the largest port expansions in North Africa, the $2.3bn construction of two new terminals at Tanger Med port in Morocco, is also on hold.

But some developments are making more progress. The first phase of the $2.1bn Khalifa Port, off the coast of Abu Dhabi emirate at Taweelah, will open in 2010, with container capacity for 2 million 20-foot equivalent units (TEUs) and 6 million tonnes of general cargo. Four subsequent phases will result in capacity rising to 22 million TEUs and 35 million tonnes of cargo by 2028.

While the slump in inter-national container traffic has hurt the region’s ports, Middle East airlines have defied the global downturn in air travel and continued to post healthy growth.

According to industry trade body the International Air Transport Association, Middle East airlines enjoyed 18 per cent growth in passenger traffic in September this year, compared with the same month in 2008, and 15 per cent growth in capacity. Such healthy growth rates have prompted the region’s airlines to increase the number of routes they fly and encouraged airport authorities to continue expanding capacity.

In Qatar, the airport authorities invited contractors to bid for the $11bn New Doha International airport project in June. Work will begin in earnest in 2010.

Saudi Arabia’s General Authority of Civil Aviation was also due to receive bids for the first two construction packages on the redevelopment of King Abdulaziz International airport in Jeddah in early December.

The amount spent on developing the region’s ports and airports in recent years means that in many cases, there is now less need to expand these transport links than to improve overland infrastructure, such as road and rail.

Unless the Middle East and North African economies recover more strongly than expected in the year ahead, there should be more than enough spare capacity in international trade links with other regions.

However, the investments now being made in domestic transport should help those economies perform better in future.