The first phase of Etihad Rail project is all set to be kicked off as the state-backed firm has secured a USD 1.28 billion loan to begin work. The five year financing has been arranged by National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, HSBC Holdings and Bank of Tokyo Mitsubishi UFJ.
Etihad Rail will be building a USD 11 billion railway network in three stages across the United Arab Emirates. The railway project is part of intensive efforts by Arab states to improve connectivity by spending several billions of dollars on infrastructure projects. Huge investments are being made in power, transport and housing sectors to diversify the economy and improve services for local populations. Development of such projects also has political motives in the wake of Arab Spring. Over the next five years, Saudi Arabia alone is expected to spend an estimated USD 400 billion on infrastructure projects.
The first phase of UAE rail network will cover 264 kilometers in the west of the country from Shah and Habshan near Abu Dhabi to Ruwais. The link will help in transportation of granulated sulphur shipments for export by the Abu Dhabi National Oil Company. In October 2011, the company awarded a contract worth USD 900 million for the construction civil and track works. Etihad Rail received its first shipment of wagons for phase one in December last year, while the initial shipment of locomotives is expected to arrive this quarter. Once complete, the railway network will extend across the UAE and span about 1,200 kilometers. It will be part of the planned Gulf-wide railway network.
In a company statement, Nasser al Sowaidi, chairman of Etihad Rail, says that “the securing of this loan represents the beginning of a new era for the UAE in trade and travel through a transportation network that will connect all seven emirates with our GCC partners”.