Etihad Rail sees first freight shipments by year end

Etihad Rail has secured a key line of funding for the first link in the Emirates’ Dh40 billion national railway network, with its first freight shipments starting this year.

December 26, 2012
Etihad Railís First Batch of Rail Wagons Arrive at Mina Zayed
 
Images showcase the wagons at Mina Zayed today.

Courtesy Etihad Rail
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Etihad Rail has secured a key line of funding for the first link in the Emirates’ Dh40 billion (US$10.89bn) national railway network, with its first freight shipments starting this year.

The company, established in 2009 to develop the UAE’s freight and passenger railway networks, said yesterday it had secured a five-year loan worth Dh4.7bn for the first stage of its railway project.

Stage one of the railway line will run between Shah and Habshan to Ruwais, easing transport of the UAE’s onshore oil and gas resources to ports on the Arabian Gulf coast. The rail line is planned to eventually connect Abu Dhabi to Dubai and to the wider GCC.

The project was gaining momentum and should be ready to start shipping goods by December, said Nasser Saif Al Mansoori, the chief executive of Etihad Rail.

“With the recent arrival of our wagons, the considerable headway being made in construction on stage one, and as we look forward to the arrival of our locomotives later this quarter, Etihad Rail is on schedule to see the first train run from Habshan to Ruwais by the end of this year,” he said.

Stage one of the Etihad Rail comprises 264 kilometres of track that will transport shipments of granulated sulphur for Abu Dhabi National Oil Company (Adnoc) for export at the port of Ruwais.

The loan is a club deal with funding provided by National Bank of Abu Dhabi, Bank of Tokyo-Mitsubishi UFJ, Abu Dhabi Commercial Bank and HSBC Middle East.

The completion of the network will help speed the nation towards its oil diversification goals, said Mark Yassin, the senior general manager of global banking at NBAD.

The bank viewed the rail project as “a solid contribution to the UAE, and in fact the GCC, in terms of economic progress and diversification, as well as social and environmental benefits”, he said. “We see the first phase as a substantial step to improved and increased cooperation and trade.”

Infrastructure spending is expected to increase in the Arabian Gulf this year, as the high price of oil helps to fund Saudi Arabia’s plans for enlarged budget stimulus and Qatar’s preparations for the 2022 Fifa World Cup.

The World Bank estimates that the Middle East’s infrastructure requirements will total about $106bn per year until 2020. Oil-exporting countries in the region are expected to invest in infrastructure the equivalent of 11 per cent of GDP annually, or $48bn each.

“Investing in infrastructure is core to securing the foundations of the region’s long-term economic success,” said Mohammad Al Tuwaijri, the head of global banking and markets at HSBC Middle East.

Seventy-two per cent of companies polled by PricewaterhouseCoopers last year said they expected spending on infrastructure megaprojects to increase this year, but 64 per cent of respondents said they had already experienced cost overruns.

The Etihad Rail project will eventually span 1,200 kilometres and has required the construction of customised freight cars able to function in desert climates.

The railway link will stretch to Khalifa port and Jebel Ali to transport container freight arriving in the UAE, while also ferrying construction materials across the Emirates.