Abu Dhabi: Hafeet Rail has successfully secured bank financing for its project, which aims to connect the Port of Sohar with the United Arab Emirates (UAE), with a total investment value of OMR577 million. This project finance debt, secured by banks from Oman and the UAE, in addition to regional and international counterparts, marks a significant milestone in the development of the railway network.
The ceremony to celebrate this achievement was graced by the presence of Sheikh Theyab bin Mohamed bin Zayed Al Nahyan, Deputy Chairman of the Presidential Court for Development and Fallen Heroes’ Affairs, and Chairman of Etihad Rail.
The announcement of this joint venture was made during the inaugural Global Rail Transport Infrastructure Exhibition & Conference - Global Rail 2024.
This OMR961 million collaborative project, spearheaded by "Hafeet Rail," reflects a strong endorsement from a diverse consortium of lenders, highlighting the strategic importance of the project for both Oman and the UAE. It signifies a significant step towards the unification of the transport and logistics sector, which is set to extend across the region, offering substantial socioeconomic and competitive advantages.
The Omani-Emirati railway network project represents the inaugural link in a comprehensive transport and logistics chain, poised to deliver mutual benefits and contribute to the economic growth and commercial activities between the two nations. This joint venture is a testament to the efficacy of collaboration, bringing together Etihad Rail, Oman Rail, and Mubadala in a collective vision for a connected and prosperous future. Etihad Rail and ASYAD Group are the leading shareholders in this venture, "Hafeet Rail."
Eng. Abdulrahman Al Hatmi, CEO of ASYAD Group, expressed, "The enthusiastic response from leading banks in both countries to finance this project underscores the confidence in this strategic investment. The successful acquisition of bank financing for Hafeet Rail not only bolsters the transport and logistics sector but also stimulates economic growth and fosters commercial ties between the two countries."
Shadi Malak, CEO of Etihad Rail, commented on the announcement, stating, "The approval of Hafeet Rail's bank financing is a clear affirmation of the project's potential. By linking the UAE National Railway Network with Sohar Port, we are establishing a critical conduit for trade, enhancing efficiencies, and reinforcing the region's status as a global logistics center. The relationship between the UAE and Oman is deeply rooted in history, and today, with Hafeet Rail, we are forging a new path of progress, prosperity, and limitless opportunities for our citizens."
In its role as the Lead Financial Advisor, Standard Chartered has been instrumental in securing the necessary funding for the development of the project, commencing in early 2023. Initially, First Abu Dhabi Bank served as the Co-Financial Advisor. The project's financing was sourced from a diverse array of banks, including those from the United Arab Emirates, Oman, the region, and internationally, spanning both conventional and Islamic financial sectors in both the AED and OMR currencies.
The consortium of banks involved in this financing agreement from the United Arab Emirates comprises Abu Dhabi Commercial Bank, Arab Bank, Commercial Bank of Dubai, First Abu Dhabi Bank, National Bank of Kuwait, Standard Chartered Bank, Abu Dhabi Islamic Bank, and Bank Ajman. Similarly, the agreement also encompasses nine banks from the Sultanate of Oman, such as Ahli Bank, Bank Dhofar, Bank Muscat, National Bank of Oman, Oman Arab Bank, Ahli Islamic Bank, Bank Muscat (Meethaq Islamic Banking), Bank Nizwa, and Alizz Islamic Bank.
The project includes a 238km railway network, which will feature 60 bridges, some of which will rise to a height of 34 meters, and tunnels extending up to 2.5 km in length. This network is designed to connect five major ports and various industrial and free zones across the two nations. It is anticipated that a single freight train journey on this network will transport over 15,000 tonnes of cargo, equivalent to approximately 270 standard containers.
The sectors poised to benefit from this enhanced capacity range from mining and iron and steel to agriculture and food, retail, e-commerce, and petrochemicals. Upon completion, the railway is expected to halve the travel time between Abu Dhabi and Sohar, with freight trains capable of reaching speeds of 120 km/hour. Passengers will also have the opportunity to utilize the network, with one train capable of accommodating up to 400 passengers at speeds of 200 km/hour.
The Hafeet Rail project is in alignment with the United Arab Emirates' Centennial Plan 2071 and Oman's Vision 2040, aiming to foster economic growth, social cohesion, and sustainable development in both nations. This joint network pays tribute to Jebel Hafeet, a site of historical and strategic importance to both countries, with the goal of strengthening trade relations, boosting tourism, and enhancing connectivity between the two nations and the broader region.
The project has successfully managed to reduce the required bank financing for the Emirati-Omani rail network from the initial estimate of $3 billion to $2.5 billion. This achievement underscores the company's strategic approach and commitment to optimizing resources while advancing the development of this pivotal project. Despite the reduced budget, Hafeet Rail remains steadfast in its dedication to delivering high-quality and efficient services, adhering to the highest global standards.
