A New Future of Localizing Industrialization of Railway in Egypt

× During the TransMEA 2021 Intelligent Transport Exhibition , the National Authority for Tunnels and ROTEM-NERIC Consortium signed an MOU for Localization and Supply of Forty (40) Metro Train Sets for lines 2 &3. A major step towards industrialization of rolling stock in Egypt.

NERIC is currently establishing a rolling stock manufacture facility at East Port Said Special Economic Zone aiming to deepen and localize the railway industry in Egypt.

× Realizing the dream ... NERIC’s rolling stock production facility under construction.

× Egypt’s Minister of Planning Hala El-Saeed, and Minister of Transport, Kamel El-Wazir, witnessed on Tuesday the signing of a new contract for establishing the National Egyptian Railway Industries Company (NERIC) between Suez Canal Economic Zone and the Sovereign Fund of Egypt along with several private sector companies.

The Suez Canal Economic Zone and the Sovereign Fund of Egypt signed on Tuesday an agreement to establish new rail company, named the National Egyptian Company for Railroad Industries (NERIC).

The new company will be specialised in localising the production and refurbing of locomotives in Egypt to meet the country’s demand and increase its exports.

It is expected to invest $10 billion over the next few years, said Egypt’s Minister of Planning Hala al-Saeed.

Al-Saeed and Minister of Transport, Kamel El-Wazir witnessed the signing ceremony in East Port Said on the sidelines of the third edition of the Smart Transportation and Logistics Fair and Forum for the Middle East and Africa (Trans MEA 2020).

The agreement was signed with several private sector companies, including Samcrete Investments Holding, Hassan Allam Holding, Orascom Construction, and Connect Information Technology. Orascom will have a 15 percent share in the new company.

One of the new company’s investments will be a 2.2 billion Egyptian pound ($140.2 million) facility that will house three lines. One is designed to upgrade rail engines, the second is to produce metro cars, while the third is to produce high-speed, long-distance railcars, NERIC chairman Ahmed Fekry told reporters.

The production lines will have a capacity of 150,000 pieces of rolling stock per year. The planned investment is part of a plan to modernise Egypt’s ailing railway network and kickstart rail exports to other countries in the region, Fekry said.

× Egypt will have its first major rolling stock production plant under an agreement signed in Cairo on Tuesday for the creation of a joint venture with a capital of $240 million.

The General Authority for Suez Canal Economic Zone (SCZone) and the Sovereign Fund of Egypt signed an agreement with several private-sector companies for the establishment of the National Egyptian Railway Industries Co. (NERIC) in East Port Said, a key Egyptian export terminal on the Mediterranean Sea.

Local media, and statements by planning and transport ministry said the private partners comprise Samcrete Investments Holding, Hassan Allam Holding, Orascom Construction, and Connect Information Technology.

Planning and Economic Development Minister Hala Al-Saeed said a refurbishment plant is expected to start operation in the fourth quarter of 2021, while the locomotive factory would begin its operations by the end of 2022.

Investments in the joint venture are expected to reach $10 billion over the coming 10 years, she added.

Transport Minister Kamel Al-Wazir said 40 percent of the components of the rolling stock would be locally produced and that the plant would target both the domestic and foreign markets, adding that it also aims to attract technology and capital by global firms.

He said the factory, spread over 300,000 square metres, would be built in two stages and would have the capacity to produce 300 units per year.

"This is one of the most important industrial projects in Egypt," the Zone's Chairman Yehya Zaki said. "The project is expected to boost the Zone's international rating and create large investment opportunities."

× INVESTMENT WATCH- Big new rail company plans to invest USD 10 bn + tons more rail transport news from Cairo ICT: The Suez Canal Economic Zone and the Sovereign Fund of Egypt signed an agreement yesterday to set up the National Egyptian Company for Railroad Industries (NERIC) — the new company specialized in producing and refurbing locomotives — at the Cairo ICT expo Monday, according to a Planning Ministry statement (pdf). The company is expected to invest USD 10 bn over the next few years, Planning Minister Hala El Said said.

Private sector firms look like they’ll hold the majority of the equity in the new company, but the minority stake to be split by the SCZone and SFE will be preferred shares that give them extra voting rights and a claim to a larger percentage of any profits or gains on exits, El Said suggested to Kelma Akhira’s Lamees El Hadidi last night (watch, runtime: 9:09). The minister didn’t specify the extent of the preferred voting rights or the questions on which they might be exercised. The exact ownership breakdown among the private sector firms still isn’t clear but the ministry statement says that Orascom Construction (OC), Samcrete, Hassan Allam Holding and Connect Information Technology will hold stakes, with OC taking a 15% share.

The investments include a EGP 2.2 bn facility that will eventually house three lines: One to upgrade rail engines, one to produce metro cars, and another to produce high-speed, long-distance railcars, Chairman Ahmed Fekry said, according to the local press. The production lines will have a capacity of 150k pieces of rolling stock per year. The planned investment is part of a plan to modernize Egypt’s ailing railway network and kickstart rail exports to other countries in the region, Fekry added.

Other agreements signed at the expo:

• Setting up a railway signaling control center in the Technical Institute for Rail Technology, under an agreement between the National Railways Authority and the Egyptian arm of French manufacturer Alstom.
• The christening of the New Cairo monorail station One Ninety through an agreement between the National Tunnels Authority and Landmark Developments.
• An MoU between the General Authority for Land and Dry Ports and a consortium of unnamed American and British companies to conduct a feasibility study for the Sohag Dry Port and logistical zone.
• A training and skill transfer agreement between Huawei and Trans IT, which will see the Chinese tech giant provide training to its staff.
• Setting up a railway engineering training academy in Cairo with Bombardier Transportation, to train new local engineering graduates.

OTHER RAILWAY NEWS: Orascom Construction will spend EUR 2 bn on the construction of the two monorail lines for the new administrative capital and Sixth of October, CEO Osama Bishai said at the expo, according to Al Mal. The project entails a 54-km-long monorail system connecting Nasr City with the new administrative capital, and a 42-km line between Sixth of October and Giza. A consortium made up of Bombardier, Orascom Construction, and Arab Contractors signed a 30-year contract for the construction and maintenance of the lines last year. The two lines are expected to cost more than USD 4.6 bn, USD 3 bn of which will be spent on construction and USD 1.67 bn on operating and maintaining the lines for 30 years.

OC, Mitsubishi sign USD 800 mn contract for civil works on Cairo Metro Line 4: A consortium of Orascom Construction and Japanese conglomerate Mitsubishi signed a USD 800 mn contract with the Transport Ministry for railway works for the first round of Cairo Metro Line 4, OC said in a press release (pdf). The project will be financed through a JPY-denominated loan from the Japan International Cooperation Agency, which we previously noted is funding the first phase of the new metro line. The OC-Mitsubishi consortium signed the agreement during this week’s TransMea 2020 expo, which is currently underway as part of the Cairo ICT conference.