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RR RUEHWEB

DE RUEHAM #1581/01 1951011
ZNR UUUUU ZZH
R 141011Z JUL 09
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 5516
INFO RUEHGB/AMEMBASSY BAGHDAD 6268
RUEHEG/AMEMBASSY CAIRO 4071
RUEHDM/AMEMBASSY DAMASCUS 4198
RUEHRH/AMEMBASSY RIYADH 2184
RUEHTV/AMEMBASSY TEL AVIV 1795
RUEHJI/AMCONSUL JEDDAH 0892
RUEHJM/AMCONSUL JERUSALEM 5579
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AMMAN 001581 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELTN ETRD ECON EINV PGOV JO
SUBJECT: Jordanian Government Puts a Six Billion Dollar Railway 
Project on Hold 
 
¶1.  (SBU) Summary:  The Jordanian Ministry of Transport (MOT) 
announced that a USD 6 billion national railway project had been 
placed on hold due to a lack of funding and interested bidders. 
Despite the hold on the national railway network, MOT officials 
stated that the Government of Jordan (GOJ) had decided to proceed 
with financing the construction of an Amman-Zarqa light railway and 
was conducting a feasibility study for a separate railway project 
between Amman and Aqaba, Jordan's only seaport.  In addition to 
addressing domestic transportation needs, MOT believes development 
of a rail system is necessary for maintaining transit trade through 
Jordan.  Similarly, the Commissioner of the Aqaba Special Economic 
Zone Authority said a railway connecting Aqaba to the rest of the 
region was essential to establishing Aqaba as a key, regional 
shipping hub.  End Summary. 
 
Grand Plans to Revive and Expand Jordan's Railways 
--------------------------------------------- ----- 
 
¶2.  (U) MOT announced that due to a lack of funds and the failure to 
attract foreign investors, a planned six billion dollar project to 
build a comprehensive national railway network had been placed on 
hold.  (NOTE:  Jordan currently has two working railway routes.  The 
Hijaz railway, established in 1918, has not been conducting 
commercial trips since 1967 and is limited to use for tourism within 
Jordan and irregular trips transporting people between Jordan and 
Syria.  The second railway line connects Aqaba to the southern 
potash mines.  END NOTE.)  The new rail project, initially announced 
in August 2008, would connect major Jordanian cities, including 
Amman, Zarqa, Irbid, Ramtha, and Shuna in the Jordan Valley.  The 
proposed railway network would also run to the Northern Jaber border 
with Syria, to the Karama border with Iraq, as well as to a ferry 
connection to Egypt.  The railway was further planned to eventually 
extend to Omari on the Saudi border.  The overall proposal also 
included two sub-projects:  a light railway connecting Amman and 
Zarqa, Jordan's two largest cities, and a railroad connecting the 
Aqaba seaport to Amman which would be mainly used for commercial 
purposes. 
 
¶3.  (SBU) A feasibility study conducted by MOT determined the 
railway project would require USD 4 billion for infrastructure, and 
USD 2 billion for equipment and machinery.  MOT officials told 
EconOffs the Ministry had acquired lands along the planned routes 
and allocated USD 750 million, before the project stalled.  The 
railway's future now remains uncertain as the study predicted that 
any delay in launching the project would result in higher future 
costs. 
 
¶4.  (SBU) MOT officials told EconOffs that the initiative to build 
the railway network was motivated by fuel price increases in 2008, 
noting that fuel for transportation makes up 37 percent of total 
fuel consumption in Jordan, which the GOJ hoped to cut by one-third, 
saving an estimated USD 120 million annually.  MOT officials added 
that the originally proposed railway network would eventually 
connect the Jordan-Iraq border with the Aqaba seaport, thus 
facilitating oil transport and eliminating the need to construct a 
pipeline, with its estimated cost of USD 500 million.  In addition 
to easing the flow of oil, the railway was expected to enhance 
Jordan's position as a transit country for other commercial goods. 
The study warned that unless Jordan developed its railway network, 
it would eventually deter neighboring countries from using Jordan 
for the transit of goods.  (NOTE:  The trans-shipment of goods 
through Jordan to neighboring countries reached USD 1.6 billion in 
2008; MOT reported 90% of transit goods went to Saudi Arabia and 
Iraq.  END NOTE.) 
 
GOJ to Finance Amman-Zarqa Light Railway 
---------------------------------------- 
 
¶5.  (SBU) Zuhair Hatter, MOT Chief Engineer, told EconOffs that 
despite putting the national railway network on hold, the GOJ 
decided to proceed with a light railway project between Amman and 
Zarqa, Jordan's largest cities.  Hattar said the GOJ had opened a 
window for private investors to take part in the project on a 
Build-Operate-Transfer basis giving them thirty years exclusivity to 
operate the railway before transferring it to GOJ, but received no 
bidders.  So, Hattar said, the GOJ had already started laying down 
basic infrastructure for the light railway, and would announce a new 
bid for a contractor to construct it.  Hattar added that hundreds of 
thousands of commuters travel between Amman and Zarqa each day, thus 
prompting the Ministry's actions. 
 
Making Aqaba a Regional Hub Requires a Railway 
--------------------------------------------- - 
 
 
¶6.  (SBU) Former Transport Minister Ala'a Batyneh had initiated a 
feasibility study for a separate railway project between Amman and 
Aqaba.  Naeem Fakhouri, Commissioner of the Aqaba Special Economic 
Zone Authority (ASEZA), the governing and administrative body of the 
area that includes Jordan's only seaport, told EconOffs that the GOJ 
strategy to establish a railway connecting Aqaba to the rest of the 
region was essential for establishing Aqaba as a key regional 
shipping hub.  Currently, the Aqaba Railway only serves the potash 
industry.  To further develop Aqaba as a transit hub, MOT plans to 
institute new regulations aimed at easing restrictions on licensing 
for transportation companies and allowing the creation of joint sea 
and land transportation companies. 
 
Visit Amman's Classified Website at: 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
Beecroft