No plans to privatize railroads; $1 billion transport holding company established
CAIRO: Minister of Transport Mohamed Mansour says the planned LE 8.5 billion upgrades to the country s 100-year-old railway system are set to begin in October and continue for 24 months.
The minister s remarks at a German-Arab Chamber of Industry and Commerce luncheon yesterday highlighted his plans to upgrade the country s transportation infrastructure after yet another sinking in the Suez Canal claimed the lives of at least two people yesterday morning. He says other upgrades are now either in implementation or under study to seaports such as Port Said and Alexandria, ferry transport to Saudi Arabian ports, highways to connect Cairo suburbs to the city and barges ton increase Nile freight transport.
We re on the right track, says Mansour of upgrading railroads. But it will take time. What I m concerned about is the transition period of the next 12 months or so.
The money, of which LE 3.5 billion will be taken in loans by the ministry, will be used to buy new locomotives, upgrade the signalling system, tracks and worker pay. The Railway Authority now operates less than 300 locomotives of the 700 available. It employs more than 70,000 of the Ministry of Transport (MOT) 280,000 workers to serve 1.5 million passengers per day, according to MOT figures.
Although Mansour confirmed last month s Qalyoub train crash, which claimed the lives of 58 and injured 144 people, was a result of technical failure in the signalling system and not driver error, he says one priority will be to raise employee salaries.
We need to take a look at [Railway Authority employees], says Mansour. [A driver] makes LE 250 per month and he waits in the heat for trucks to pass by every morning. How can you expect to get performance out of him?
Railway Authority Chairman Ashraf Abu Zeid says following two major accidents in the past two months, some changes have been made including limiting passenger volumes to the capacity of available locomotives and changing schedules to allow for more buffers between trains.
How did the Railway Authority get to this point? says Abu Zeid. It s the accumulation of years of not having the right equipment because of under-funding. With the government s recent approval of the minister s plan, we think things will change.
Mansour says the ministry has no plans to privatize the authority. Recent amendments to the Railway Law only allow the authority to enter into partnerships with the private sector to construct new projects, not sell any of its current assets.
How can a rail network that has lost LE 1.6 billion every year for the past four or five years become self sustaining? says Mansour. [With] the participation of the private sector, we are going to be self-sustainable and we will break even in four years.
On Monday, one such partnership was made official with the establishment of the Egyptian Holding Company for Transport bringing together MOT, UAE s Abu Dhabi Investment House (ADIH) and The National Holding Company, and Bahrain s Gulf Finance House. The company announced it will begin feasibility studies to connect Hurghada to Luxor and Borg El Arab to Aswan with paid-in capital of $1 billion. MOT retains a 20 percent share, according to Mansour.
The partnership was signed in early August with company officials maintaining they intend to invest up to $30 billion over the next five years in various projects including highway, railroad and port construction.
We feel that the potential to generate returns from [the transportation] sector, with Egypt being the most populous country in the region is very high, an ADIH spokesman told The Daily Star Egypt in August. Moreover, the government s thrust to join hands with the private sector on infrastructure development in the sector has also opened up a great opportunity.
In order to become self-sustainable and preserve low fares for low-income passengers which make up the majority of railway volumes, Mansour says MOT will focus on increasing freight capacity, raising first class fares and utilizing the Railway Authority s assets which include 190 million square meters of land either for commercial leasing or advertising. Railways now haul 12 million tons per year using just a handful of locomotives, says Mansour.