Qatar signs railway study deal with Deutsche Bahn

HEADING EAST: A Deutche Bahn operated train in Munich, Germany. (Getty Images)

German railway operator Deutsche Bahn, which is planning an initial public offering, has signed a deal to help design a multi-billion dollar rail network in the Gulf Arab state of Qatar.

Qatari Diar Real Estate Investment Co, a unit of the country's sovereign wealth fund, said on Wednesday the project's partners would develop the blueprint for integrating Qatar's planned railways into a national and regional network.

Under its remit, Deutsche Bahn will provide technical and financial assessment studies, Qatari Diar said in a statement.

Qatar is planning a high-speed rail link between the capital Doha and neighbouring Bahrain via one of the world's longest bridges, nationwide freight and passenger services as part of a wider Gulf Arab rail network, and a metro in the capital city.

Qatar is the world's biggest exporter of liquefied natural gas. With Gulf countries witnessing annual population growth of between 5 to 10 percent, cities are increasingly facing congestion, forcing governments to spend on improving infrastructure.

The Gulf Cooperation Council, which groups the six regional states, is working on a feasibility study with the World Bank to create a $2.5 billion pan-Gulf rail network.

Dubai is expected to complete the first phase of a two-line $4.4 billion metro by September 2009. Other Gulf cities including Riyadh, Mecca, Abu Dhabi and Kuwait are also planning rail systems.

Deutsche Bahn has been looking at expanding its presence in the Gulf as regional economies buoyed by a more than a fivefold rise in oil prices since 2002 move to diversify their economies.

The rail firm was among bidders for an estimated $5 billion railway contract to build a 1,100 km railway across Saudi Arabia's desert.

Deutsche Bahn's IPO, which is expected to raise at least 5 billion euros ($7.4 billion) - making it Germany's biggest flotation since late 2000 - is likely to attract Middle East investors.

Sources told newswire Reuters on Aug. 25 a decision to widen the selection of banks to handle the IPO was aimed at attracting wide international interest, not only from Europe but also Asia and the Gulf.

A top investment manager from a Middle East-based fund recently flagged interest in the railway listing.

Deutsche Bahn officials met institutional investors in Dubai and Abu Dhabi on a recent roadshow, Der Spiegel magazine reported on July 27. (Reuters)

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