VZCZCXYZ0018
RR RUEHWEB

DE RUEHAM #2190/01 2711238
ZNR UUUUU ZZH
R 281238Z SEP 09
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 6022
INFO RUEHGB/AMEMBASSY BAGHDAD 6295
RUEHBJ/AMEMBASSY BEIJING 0204
RUEHLB/AMEMBASSY BEIRUT 3103
RUEHEG/AMEMBASSY CAIRO 4147
RUEHDM/AMEMBASSY DAMASCUS 4248
RUEHIL/AMEMBASSY ISLAMABAD 0287
RUEHKU/AMEMBASSY KUWAIT 0930
RUEHMD/AMEMBASSY MADRID 0125
RUEHRH/AMEMBASSY RIYADH 2211
RUEHTV/AMEMBASSY TEL AVIV 1879
RUEHJI/AMCONSUL JEDDAH 0911
RUEHJM/AMCONSUL JERUSALEM 5655
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AMMAN 002190 
 
SENSITIVE 
SIPDIS 
 
FOR NEA/ELA AND EEB/TRA 
 
E.O. 12958: N/A 
TAGS: ECON ELTN EINV PGOV JO
SUBJECT:  JORDAN'S LIGHT RAIL PLAN STILL LACKS FUNDING; REVIVED 
OTTOMAN-ERA RAIL LINE CONFIRMS COMMUNITY INTEREST 
 
REFS: A) AMMAN 2032 
       B) AMMAN 1646 
  C) AMMAN 1633 
  D) AMMAN 460 
      E) 08 AMMAN 3139 
 
¶1. (SBU) Summary:  Jordan continues taking small steps to implement 
its plans to establish a light railway linking its two largest 
cities, Amman and Zarqa.  The project has been fraught with 
financial difficulties due in part to the domestic impact of the 
global financial crisis as well as to Jordan's owns budget problems 
(ref B).  Convinced that light rail is needed and feasible, the 
government of Jordan signed an agreement with the International 
Finance Corporation to identify project partners and administer the 
bidding and financing process.  In the meantime, Ottoman-era train 
infrastructure began being used during the month of Ramadan for 
daily train service between Amman and Zarqa on a trial run.  After a 
slow start, the train ferried more than 7,000 passengers and service 
is now available on a daily basis, possibly paving the way for 
future light rail service.  End Summary. 
 
Planned Light Rail Project Stalled by Lack of Funds 
--------------------------------------------- ------ 
 
¶2. (U) Jordan's Public Transportation Regulatory Commission (PTRC) 
announced in 2008 plans to establish light rail service connecting 
Jordan's two largest cities, Amman and Zarqa.  The railway would 
serve an estimated 100,000 commuters daily for the 16-mile, one-way 
trip.  PTRC's plan was to finance the project, estimated at $332.7 
million, through a Build-Operate-Transfer (BOT) arrangement.  In 
what was thought to be a major step toward realizing the project, 
PTRC signed a BOT agreement with a Pakistani-Chinese consortium of 
companies specialized in building railways in January 2008.  PTRC 
had planned to subsidize the cost by $90 million, but ultimately 
terminated the agreement after the consortium failed to secure the 
necessary financing for the project. 
 
¶3. (U) PTRC previously signed a similar agreement that also ended 
with the same unsuccessful results.  Under a 2007 arrangement, an 
alliance of three Kuwaiti companies and a Spanish group formed the 
Jordanian-Kuwaiti Infrastructure Company to construct and manage all 
operations of the light rail system.  PTRC terminated that agreement 
in March 2009 and Zahi Bani Saeed, Secretary of the Steering 
Commission for the Light Train Project, said the company's failure 
to secure funding was again the main reason for cancelling the 
project. 
 
¶4. (SBU) Mahmoud Khazaleh, Director General of Jordan Hejaz Railways 
(JHR), the government entity managing Jordan's railways operations, 
asserted that the project is economically feasible and told EconOffs 
that the international economic crisis was the main reason companies 
were not able to secure financing for the project.  He further 
commented that consecutive GOJ administrations had delayed moving 
forward on the plan, which resulted in much higher expenses, mainly 
for land acquisition as land prices have soared significantly in 
recent years.  Comment:  Questions of financing these kinds of 
development projects are paramount and not unique to the light rail 
project.  Jordan is facing a severe budget deficit this year and the 
2010 budget situation is likely to be worse given drops in 
government revenues, a decline in foreign grants, and mushrooming 
capital expenditures in the first half of 2009 (ref B).  The budget 
equation will remain very important as the rail and other projects 
progress.  End comment. 
 
World Bank Help for Rail Line 
----------------------------- 
 
¶5. (SBU) Undeterred, PTRC Director Jamil Mujahid told Jordanian 
media in August 2009 that the failed agreements would not prevent 
PTRC from going through with its plans.  PTRC subsequently announced 
it was going to finance the project on its own and had established a 
commission that would screen project bids.  Mujahid further noted 
the GOJ would cover costs of building a new wide-gauge railway and 
would seek BOT agreements with investors for new equipment and 
machinery. 
 
¶6. (SBU) Hejaz's Khazaleh echoed Mujahid's statement, telling 
 
EconOffs that the GOJ would spend $90 million on building the 
railway's infrastructure instead of using the funds to subsidize the 
potential investor, as initially planned.  In hopes of attracting 
foreign investment, including from "capable American companies such 
as Amtrak," the Ministry of Transportation signed on September 16, 
an agreement with the World Bank's International Finance Corporation 
(IFC) authorizing the latter both to seek investors able to 
implement the project and to manage the bidding and financing 
operations.  IFC will reassess the feasibility of the project over 
the next 18 months, taking into account previous studies conducted 
by the GOJ, and is expected to float an international tender for 
potential bidders to begin project implementation, according to 
Khazaleh. 
 
Ottoman-Era Rail Revived as a Test Balloon 
------------------------------------------ 
 
¶7. (SBU) Convinced of the future success of light rail service, PTRC 
began a trial run on August 21 between Zarqa and Amman to alleviate 
Ramadan traffic congestion.  After a slow start - only a handful of 
passengers rode the train at the start of the experiment - JHR 
transported more than 7,000 passengers during Ramadan.  JHR has 
since made the Zarqa-Amman route part of its regular operations with 
the train making two daily trips between the cities, operating on an 
old rail line originally constructed in 1908 as part of the Ottoman 
Empire's Hejaz railway made famous in "Lawrence of Arabia."  Bani 
Saeed said PTRC would consider adding another train to facilitate 
operations, depending on demand, and would examine ways to further 
improve the service.  In addition to this service, there is regular 
passenger roundtrip rail service from Amman to the outskirts of 
Damascus twice a week as well as daily cargo traffic. 
 
Riding the Rails:  Low Fares and Lots of Noise 
--------------------------------------------- - 
 
¶8. (SBU) Two EconOffs joined 50 commuters for the morning trip from 
Zarqa to Amman on September 14.  Commenting on the lower ridership, 
the train engineer reported that return trips carry an average of 
200 passengers with a maximum capacity of 400.  The train -- two 
engines, a kitchen car (closed for Ramadan), six passenger cars with 
bathrooms, and a caboose -- departed 15 minutes late a few hundred 
feet away from the old Zarqa station of the former Hejaz railway 
line.  The first half of the slightly bumpy, but enjoyable 50-minute 
ride was through the trash-strewn and crowded urban areas that 
characterize modern, industrialized Zarqa (ref A).  EconOffs briefly 
glimpsed the desert landscape before arriving at Amman's outskirts. 
While officials from the Zarqa Municipality who were part of the 
team that rode the train's initial run complained that the 
1970's-era cars were old and uncomfortable, EconOffs were pleasantly 
surprised by the clean, air-conditioned accommodations.  Other 
riders were likewise satisfied with the service and the low fare of 
250 fils (35 cents), less than a can of soda.  The duration of the 
trip was also comparable to the rush hour drive time to Amman, and 
instead of gridlock, the only obstacle was the occasional sheep on 
the train tracks. 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman 
 
BEECROFT