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Since the middle of last century, Egypt’s National Railway (ENR) development projects have depended on loans. In 1956, the Egyptian Rail Authority (ERA) National Railways company secured a loan of EGP 750,000 from the Post Office’s Saving Fund for five years at an interest rate of 4.5% to buy diesel-powered locomotives.
The Plan Sought the Development of the Railway Fleet
Qalyub train accident, left 58 dead
and 140 injured
Funding Provided by the Ministry of International Cooperation to Finance the Restructuring Plan
After the announcement of refurbishment and development plan was announced in 2006, more than 21,000 train accidents were recorded according to CAPMAS, which said 1,287 people died and 2,113 others were injured between 2002 and 2019.
In 2018 2044 accidents were recorded while the lowest number of accidents was in 2011/12
railroad tracks: A sloppy road that cuts the railway.
The year 2020 is the highest in terms of losses by 12.7 billion Egyptian pounds
The commissions’ carry-over losses reached their peak in 2020 by EGP 78 billion
The lowest expenditure was in 2011 as trains stopped during the revolution in the same year
2013 was the lowest in the number of passengers as the total reached 183 million
In mid-May 2020, during a meeting at the presidential palace, the debts of National Railways Authority amounting to EGP 250 billion or ($13.4 billion) of which EGP 100 billion ($5.37 billion) were owed to the Central Bank, the guarantor entity of all local loans granted to the Rail Authority, and EGP 150 billion ($8 billion) were loaned through the state budget for projects currently being implemented by the Ministry of Transport, were all presented by Minister of Transport Kamel Al-Wazir to President Abdel-Fattah Al-Sisi.
The Authority’s debts to the Central Bank, which a presidential statement issued after the meeting estimated at EGP 100 billion ($5.37 billion), were accumulated by the Authority over years due to an annual deficit between daily operating revenues and costs that has hit 30% in 2019. This deficit was covered by overdraft from the Central Bank in loans entailing interest that the authority committed to settle, according to National Railways’ head then, Ashraf Raslan.
The Authority’s debts include the loans it had borrowed late last century and the interest that such loans have incurred due to repayment failure. Interest value has exceeded the original loans; the Authority’s former head, Ashraf Raslan, says he considers this the biggest part of the debts, which continue to grow annually. Something similar happened to the loans obtained by the Authority from the National Investment Bank (NIB).
Italian grant
the value of 20 loans from the National Investment Bank.
additional loan from the World Bank.
In August 2009, the World Bank approved a $270 million loan for the National Railways Authority, as part of the government’s planned funding for its implementation. The loan was increased in September 2011 to $600 million, after approving a so-called “additional loan” at a value of $330 million.
According to a report by the Central Auditing Organization (CAO) issued in 2013, “The Rail Authority was unable to properly plan, organize and prepare itself to benefit to the maximum from the World Bank loan”.
The report attributed the reason to be the “very slow leveraging of the World Bank loan,” which negatively impacted the implementation plan.
According to the Central Auditing Organization (CAO) report, it took the Rail Authority more than one and a half year to contract a company to implement the project after it received 22.5% of the total value of the loan. The contracting procedures took more than three years also from the date after the Authority was granted the right to access the funds of the loan, the report said.
This negligence also meant that the so-called “additional loan” from the World Bank was not leveraged by the Rail Authority for another two years according to CAO’s report (The agreement with the World Bank gave the international body review and financial supervision rights). The report showed that spending the $330 million loan started more than two years after the loan was granted.
The report called on the Rail Authority to make quick use of the loan to save lives and property.
The World Bank’s loan, which was due to expire in September 2015, in accordance with the project agreement, was closed in December 2020. The Egyptian government was able to extend the project implementation period and the reforms agreed upon with the World Bank three times (2017, 2019 and 2020).
Railway operators continue to announce new development plans and receive additional international loans for implementation. The Rail Authority, which is trying to settle its old debts, has received so far $2 billion approximately from 2017 until the completion of this investigation.