Etihad Rail set to launch next phase of UAE railway network

The second phase of the UAE railway project is expected to be funded by the UAE federal government

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The United Arab Emirates' railway developer Etihad Rail is set to secure government funding and award contracts to build the second phase of its $11 billion national rail network, its acting chief executive officer said on Tuesday.

"We're ready to award it. It's in finalizing stages for funding from the government," Faris Saif al-Mazrouei told reporters on the sidelines of an industry event in Dubai.

Gulf Arab oil exporters are spending hundreds of billions of dollars on projects ranging from power to transport as they look to diversify their heavily hydrocarbon-reliant economies and boost regional trade.

The second phase of the UAE railway project, which at 628 kilometres is the longest of the three planned stages, is expected to be funded by the UAE federal government, Mazrouei said. He declined to give costs for the project.

The Phase 2 project will connect the Mussafah port and industrial area and ports in Abu Dhabi and Dubai with the Saudi and Omani borders.

State-owned Etihad Rail secured a $1.28 billion five-year bank loan last year to build the first phase of the project. That phase, covering about 264 kilometres in the west of the country from Sha and Habshan near Abu Dhabi to Ruwais, is now complete and has begun operating trials, Mazrouei said.

Phase 3 will link up the northern emirates to complete the UAE network, which will cover about 1,200 kilometres (746 miles) as well as being part of wider regional long-distance rail transport project by the Gulf Cooperation Council, which also includes Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

The Phase 1 loan was arranged by National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, HSBC Holdings and Bank of Tokyo Mitsubishi UFJ.

A consortium comprising Italy's Saipem and Maire Tecnimont and UAE-based Dodsai Engineering and Construction was awarded the main civil and track works contract for Phase 1 and earlier this year Etihad Rail created a joint venture with Germany's Deutsche Bahn, Etihad Rail DB, to operate the Phase 1 railway and act as consultant for the other stages.

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