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Sun 17 Jan 2010 02:59 PM

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Yemen to launch $3.5bn rail project in July - official

2,500km line will run from the Saudi border to Oman, where it will join a Gulf rail network.

Yemen will launch a rail project worth $3.5bn in July as part of plans to upgrade infrastructure in a country battling lawlessness, militancy and rebellion, an official said in a weekend interview.

The 2,500km (1,560 mile) passenger and cargo network will run from the Saudi border along the Yemeni coast, passing through the main port of Aden, to Oman, where it will join a network linking the six Gulf Arab countries.

Bidding for the main 2,000km coastal line begins in July after Yemen conducted a feasibility study with UN help for the railway so no construction work has yet begun, Transport Minister Khaled al-Wazeer said. Completion could be years away.

The government is in talks with several railway firms in Britain, Germany, Russia, India, the United States and other countries and will offer the deal on a build-operate-transfer basis for 30-35 years, Wazeer said.

Under such an agreement an investor typically builds and runs an infrastructure project on behalf of a government for a limited time.

"We hope to find an investor, that would be the better. If we don't, then we would look for other opportunities and turn to international institutions," Wazeer said.

The lines will help economic development in the Arab world's poorest country and could boost government efforts to strengthen its control over a large, mountainous country. But the lack of central control could also hinder the plans. Yemen is trying to uproot al Qaeda militants while fighting a war with Shi'ite rebels in northern provinces and confronting a separatist movement in the south.

The minister said a second inner Yemeni route would link the remote Yemeni provinces Shabwa, Maarib and al-Jawf where diplomats say government control is especially weak.

"The population there will benefit from it, there will be development and this will end the economic problems," Wazeer said, shrugging off worries about instability.

Most of Yemen's infrastructure projects depend on international aid. Britain has invited partners to a conference on January 27 to coordinate counter-terrorism and aid efforts.

The countries in the Gulf Cooperation Council (GCC) -- a loose economic bloc comprising Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain -- are spending more than $100bn on various rail projects.

The Gulf Arab rail network alone will cost $20-$25bn as the six oil and gas producers seek to create a similar model to Europe's high-speed rail system.

Yemen also intends to stick to an order for plane maker Airbus to buy ten A320 aircraft worth $700m despite the country's financial difficulties, he said.

In another deal, Yemen is prequalifying five firms from France, Turkey, Malaysia and other countries for a deal to operate its two main airports in Sanaa and Aden, to be signed within two months, he said, without giving a value.

Yemen is also preparing a $500m contract to help operate ports, he said. (Reuters)

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