Cost estimated at KD 856 mln

KUWAIT CITY, July 14: “The Railway” is a project all citizens are eagerly awaiting as it would contribute to pushing the country’s transportation sector and create a qualitative shift therein but the project did not come to light according to the specified time period and delaying more than necessary due to many obstacles–despite the project is a governmental commitment toward the Gulf Cooperation Council states and should be operational in 2023.

Well-informed sources affirmed that the Public Private Partnership Projects Authority has completed the procedures for launching the railway project at a total capital cost of about 856 million dinars to be divided upon completion of the infrastructure.

The line will extend from the southern borders with the Kingdom of Saudi Arabia to the passenger terminal in Kuwait City, and extends north through the Silk City to Boubyan Port, in addition to the completion of the passenger terminal, control systems, and the cost of trains

Implemented
The authority’s study indicates the project will be implemented by a system of partnership between the public and private sectors, and be of greater economic feasibility than the government implementing it alone where 28% of the project’s cost will be saved.

Note that the investment percentages will be distributed in the project company in the formula of 44 percent for the private sector, 6 percent for government investment agencies, and 50 percent to citizens. According to the financial study prepared by the project consultant, it estimated that the value for money, which is the difference in the costs to be borne by the state, between direct contracting and the method of partnership with the private sector, is estimated at 400 million dinars, which is equivalent to saving on public money an estimated 28 percent.

According to the feasibility study, the internal rate of returns for the project is 12 percent, while the nominal costs of the two partnership contracts amount to 4.8 billion dinars, including the paid-up capital of the two companies for a period of 30 years. It is an average of 160 million dinars annually, as the government will return it in the form of annual payments.

While the nominal costs of service contracts from train operators are estimated at 395.5 million dinars for a period of 30 years, or an annual rate of 13.2 million dinars, and the government will pay them in the form of annual payments. The study pointed out that two shareholding companies will be offered by the partnership system, the first for infrastructure and the second for the lines, train and station systems. Note that the cost of the studies that were completed for the project amounted to 1.5 million dinars.

The study stated that Kuwaiti public shareholding companies will be established to implement the project, which will result in providing job opportunities for the Kuwaiti workforce. The project would also stimulate the Kuwait Stock Exchange, in addition to establishing a new transport sector based on global experiences from private sector, which would ensure the transfer of expertise and knowledge to the Kuwaiti workforce that will work in the sector.

It is noteworthy the length of the network is 574 km, passing through Kuwait from north to south, and from east to west, and will connect with the Kingdom of Saudi Arabia and Iraq on 317 km major lines that will serve the needs of the country in the short to medium term. It includes commitment to the Gulf railways project and 257 km of secondary lines that will serve the needs of Kuwait in the long run.

This project will serve both passengers and freight operations, noting the speed of passenger trains should be 220 km / hour and goods are 120 km / hour, according to the general principles of the Gulf Railways Network in the Gulf Cooperation Council countries.

Partnership
The study showed that implementation of the project according to the partnership system will achieve many benefits, including: reducing the completion period, controlling implementation costs, creating job opportunities for citizens, adhering to the highest technical standards, contributing to economic development in the country, providing significant financial investment opportunities to Kuwaiti banking sector, establishing a new transportation sector, and involving government and citizens in contributing to infrastructure projects. The total nominal costs of the management contract are 91.2 million dinars, which the government will pay in annual payments reports Al-Qabas daily

The total cost of trains is 29.8 million dinars. Distribution of investment rates in the project company (the proportion of the investor in the private sector is 44 percent, the proportion of government investment agencies is 6 percent, and the proportion of citizens 50 percent), while the annual rent amount for the project land is 274,000 dinars.