CAIRO: Minister of Transportation Mohamed Mansour announced the ministry has secured the first order for 40 railway locomotives from General Electric (GE) in a deal worth $120 million (LE 680 million).
Despite the relatively small size of the order, Mansour said delivery will begin in September 2008, and continue at a rate of 10 locomotives per month. He said high global demand for the machinery has caused a long order backlog with prominent manufacturers.
The purchase will be financed entirely through a grant from the Qatari Government. Qatar and other Gulf States rushed to commit donations to Egypt after the August 2006 Qalyoub crash that killed 58 and injured 144. Just days after the crash, Mansour also renewed his appeal to the People s Assembly to finance an $8.5 billion (LE 48.5 billion) renovation plan of the railway system and received approval.
The Ministry of Transportation (MOT) was awarded $5.5 billion (LE 31.4 billion) from third mobile license auction proceeds and permitted to finance the rest of the amount through loans. The money will be used to buy new locomotives and raise employee salaries, some of whom earn as little as LE 250 per month. A portion of the budget will also be used to upgrade the signaling system, which investigators blame for the Qalyoub crash.
The Railway Authority now operates about 300 locomotives of the 700 available because of the deficiency in its maintenance infrastructure, according to Mansour. It employs more than 70,000 of MOT s 280,000 workers, and serves 1.5 million passengers per day, according to MOT figures.
The GE deal, Mansour said, is part of MOT s plan to overhaul the country s 100-plus year old railway system. In addition to new locomotives, MOT plans to introduce computerized signaling, and upgrade passenger carts, stations and maintenance facilities, he adds.
According to the MOT official that reported talks with GE were underway in early January, the ministry is still negotiating with US-based Electro-Motive Diesel and two Chinese manufacturers including Ziyang Locomotive Works.
Mansour has invited the private sector to participate in the railway restructuring program but has repeatedly denied the government intends to privatize the Railway Authority. By implementing public-private partnerships, increasing cargo transportation and raising first class fares gradually, the sector can become self-sustainable by 2012, he said.
According to MOT figures, the Railway Authority has incurred losses of more than LE 6 billion since 2002. The authority owns about 190 million square meters of land, most of which remains unutilized.
How did the Railway Authority get to this point? Railway Authority Chairman Ashraf Abu Zeid said. It s the accumulation of years of not having the right equipment because of under-funding. With the government s recent approval of the minister s plan, we think things will change.