UPDATED: Egypt's parliament gives green light to private investment in railway sector

Gamal Essam El-Din , Sunday 4 Mar 2018

Parliament gave its approval on Sunday to legal amendments aimed at attracting local and foreign private investment in the railways and regulating the debt-laden Egyptian Railway Authority

Rescue workers search at the wreckage after a train crash in Kom Hamada in the northern province of Beheira, Egypt, February 28, 2018. (Reuters)

Egypt's parliament – the House of Representatives – finally approved on Sunday several government-drafted amendments to the 1980 law that regulates the performance of the debt-laden Egyptian Railway Authority (ERA), with a view rescuing the vital railways sector.

Parliament Speaker Ali Abdel-Aal described the amended law (Law No 152/1980) as a crucial step to relieving the ERA of its chronic problems.

"We all know that Egypt's railway authority suffers from massive debts, outdated operation systems, and dilapidated train locomotives and wagons," said Abdel-Aal.

"The panacea for all of these chronic illnesses is to allow private investment in a bid to modernise this sector and rid it of its massive debts."

Abdel-Aal, however, argued that "the amendments do not open the door for privatising the national railways."

"This is different, because the amendments simply conform with Article 32 of the Constitution, which allows the private sector to operate public utilities for no more than 15 years," he said.

The amendments, which cover four articles, allow the ERA to give private investors concessions to build, manage, operate and maintain railway utilities through public tender and for no more than 15 years.

Article 4 also grants the ERA the right to establish joint venture companies whose shares can be traded on the stock market.

"Employees affiliated with Egyptian National Railways will be the most favoured to buy these shares," the article states.

However, MPs affiliated with the leftist parliamentary bloc known as the 25-30 Group strongly attacked the amendments, arguing that they represent the first step towards privatising the railways sector.

"This is a very dangerous step because it will lead to liberalising the prices of train transport, ultimately making it very difficult for the majority of Egyptians to travel by train," said MP Haitham El-Hariri.

The approval of the amendments came after Minister of Transport Hesham Arafat delivered a statement on a train accident that left 12 citizens dead in the Nile Delta governorate of El-Beheira on 28 February. Arafat said that outdated train locomotives were to blame for most of the train accidents in Egypt.

"We have locomotives that are 37 years old, while in other countries around the world they should be used for just 12 years," he said, adding that "98 percent of train locomotives owned by Egypt's railway authority go back to 1977, not to mention that maintenance workshops have not been modernised or upgraded since 1965."

Arafat said that these problems are due to a chronic shortage of funding.

"We hope that MPs will press hard to devote more budgetary allocations to the authority in the new fiscal year," said Arafat.

"Egypt's national railways have become burdened with as much as EGP 32 billion in debts," he added.

"In spite of the above problems," he argued, "plans to streamline Egypt's railways are underway. As many as 1,200 train wagons will be in operation in the next few months, with new three ones every month," said the minister.

"The number of VIP trains operating between Cairo and Alexandria will be also increased to serve investors and high-class citizens."

He also said that as many as 100 new train locomotives will be in operation soon, while another 100 are being repaired to join operations.

"I vow that there will be a concrete improvement in the performance of Egypt's national railways by the year 2022, because we are currently implementing a comprehensive reform plan," said Arafat.

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