Egypt has allocated an increasing amount of funding for infrastructure development since 2014. The transport sector has become a key driver of economic development and growth in Egypt serving as a link between markets and production outlets. Egypt’s unique geographical location and infrastructure expansion will reinforce the country’s position as a global logistics hub. This goal is in line with Egypt’s Vision 2030 and its Sustainable Development Strategy.
Over the past seven years, Egypt’s investments in infrastructure renovation registered the highest records in its modern history. The National Egyptian Railways (NER) was the recipient of large investment and attention from the state. Historically, the NER is the second established railway lines in the world dating back to the mid-1800s, consisting of over 5,000 kilometers of railway lines, serving primarily low-income Egyptians. In 2019, the number of passengers using the railway system amounted to 270 million passengers, up from 228 million in 2015 and 247 million in 2010.
Developing Egypt’s Railway Network
The railway system is critical to Egypt’s economic growth. Currently, the national railway network is suffering a severe lack of investment. For years, the NER has encountered many impediments that inhibited development, particularly with regard to operations, cost recovery, maintenance, and customer service, a situation that prompted Egypt to strike several deals with international organizations including the European Investment Bank (EIB), the World Bank, and companies such as Siemens with the aim of developing the railway sector after periods of neglect that resulted in terrible accidents and human losses, let alone the material damages.
Railway development plans were announced in September 2014 during the Euromoney Egypt Conference, where NER officials announced a $10 billion investment plan over 10 years to upgrade and maintain the old railway network, with $2.2 billion coming from the World Bank. This investment was directed to upgrading rolling stock and railway infrastructure as well as training and transferring of know-how.
International economic reports indicate that the total investment in Egyptian railway projects amounted to $50 billion, with 45 percent of this funding being used to finance the current projects. Reports also indicated that Egypt is in the process of overhauling the country’s railways, including developing the infrastructure and rail lines and building new stations as well. Besides the railways, development plans of the Cairo Metro continued to move forward with a total cost of $20 billion, comprising six lines, aiming at improving the quality and level of urban transport services in the capital. However, Cairo was not be the only city in Egypt to be included in the overhauling plans as upgrading projects across the country are already underway.
Egypt’s First High-Speed Electric Rail System
In January 2021, a memorandum of understanding was signed between Siemens Mobility and Egypt’s Ministry of Transportation (MoT) for developing the country’s first electric high-speed railway system at an initial order value of $3 billion. The project’s first 460 km phase will connect the city of Al Alamein on the Mediterranean to Ain Sokhna city on the Red Sea, using high-speed trains first of its kind in Egypt.
The rail will pass through the New Administrative Capital, which is being built 45 km east of Cairo to relieve the pressure on the current capital having been suffering for a century the centralization of transportation with the bulk of transport passing through it, particularly railway journeys linking north and south of Egypt. The electric train will offer an integrated state-of-the art high-speed rail system for citizens and provide a technology boost for the country. The first phase of the project is expected to create 15.000 temporary jobs and 2,000 permanent ones.
The contract signed with Siemens covers design, installation, commission, and 15-year maintenance of the train. The first 15 stations are planned to be completed within two years. The project targets building a 1,000 km railway network worth $23 billion providing users with environment-friendly, safe, and affordable service.
Restructuring the Egyptian National Railways
The high-speed electric train was not the only railway project the Egyptian government took up in 2021. In March 2021, the World Bank approved a loan of $241.1 million to be directed to restructuring of the Egyptian railway network, including the modernization of signaling for lines from Alexandria to Cairo and from Beni Suef to Nagaa Hammadi. The loan will also be used to improve passenger safety, punctuality, and safety system asset management, develop human and institutional resources, and increase the number of trains running on time from 75 to 90 percent based on the needs of the lines.
General Kamel Al-Wazir, Egypt’s Minister of Transport, stated that “the modernization and overhauling of Egypt’s railways is critical to meet the travel needs of citizens and promote macroeconomics.” Al-Wazir added that “Improving the service for millions of daily passengers is an imperative priority, given citizens’ increasing dependence on railway to get to their jobs and do personal errands. Increasing freight transport is also a crucial goal of developing railways which would help increase the economy’s overall competitiveness.”
Additional Loans for Developing Railways
In April 2021, a €362 million worth agreement was signed between Egypt and the International Bank for Reconstruction and Development (IBRD) for developing railway in Egypt. The agreement got the final approval of the cabinet on 26 May. Similarly, the World Bank’s Board of Executive Directors approved, in March, a loan of $440 million to support Egypt’s initiatives to promote safety and quality of railway services across Egypt. If these mounts are added to the $241.1 million loan of the World Bank, these contributions would be sufficient enough to cover the total cost needed for upgrading railways in Egypt amounting to $681.1 million.
In the same vein, on 13 June 2021, the French Finance Minister Bruno Le Maire announced that France will invest €1.8 billion in state-guaranteed loans for Egyptian infrastructure, with additional €2 billion under review. While the majority of these investments will go to the renewable energy projects, water purification, and development of the Cairo metro with €800 million planned to be spent on replacing the 55 thirty-year-old metro trains of the first line, the Egyptian Cabinet simultaneously announced that the projects to be carried out in partnership with France include the construction of a railway connecting Aswan governorate in southern Egypt to Wadi Halfa in Sudan.
In sum, the Ministry of Transport’s ambitious plan is projected to put an end to the historically consolidated imbalances the ENR has suffered for decades. However, developing human resources is an integral part of this plan.
