$36 million AIIB loan to part finance Oman Railway Preparation Project

By Conrad Prabhu — MUSCAT: Dec 25: A groundbreaking, albeit modest, loan of $36 million extended by the Asian Infrastructure Investment Bank (AIIB) earlier this month, will help finance the groundwork for the execution of a national railway network under the auspices of Oman Rail. In providing the funding — one of two loans announced by the Beijing-based Bank in support of Omani logistics projects — AIIB said it was meeting 60 per cent of the cost of the ‘Railway System Preparation Project’, estimated at $60 million.  “The objective of the Project is to achieve full readiness for the construction of a new railway system that will support the Sultanate of Oman with the diversification of its economy and to develop the Sultanate of Oman’s position as a transport hub and as an exporter of minerals,” the multilateral development bank stated.

Importantly, the preparation project identifies three key goals. The first emphasises the importance of completing the design of the Engineering, Procurement, and Construction (EPC) contracts for the mineral lines, along with the preparation of the corresponding tender documents. Following a decision by Oman and fellow member states of the GCC bloc to defer the implementation of the GCC Railway System in light of the constrained fiscal environment, Oman Rail has prioritised the development of Segment 4D, which centres on the construction of a Mineral Line in the south of the country. Segment 4D, according to Oman Rail, will provide “low-cost rail transport connectivity to Oman’s fledgling mineral industry by reducing logistics bottlenecks to bring significant economic value to Oman”.

Consultancy services contracts envisaged as part of the Railway System Preparation Project include the provision of technical, environmental, social and commercial advisory services for the entire railway system design and procurement. Also envisaged in the scope of this package are engineering services for the railway system development, including infrastructure, rail compatible mining and industrial terminals, and port rail terminals and facilities. The selected consultants will be required to develop planning activities supported by specialised simulations in order to define the specific terminal and facility types required to develop the operations of Oman Rail heavy haul freight systems, mixed use systems and mass transit systems.

Yet another objective to ensure Oman Rail’s project readiness centres on the need for institutional capacity to operate and maintain the freight and networks. Selected consultants will be required to assist Oman Rail in creating the organization and ensuring operational readiness for freight and network operations and maintenance, and ensuring the provision of safe and efficient operation and maintenance (O&M). Additionally, the consultants will support the development of a profitable business plan and a successful disengagement and handover of the freight and network to Oman Rail. Training and capacity building of Oman Rail staff is a key requisite as well.

“Activities under the (Railway System Preparation) Project will support the preparation of environmental and social studies for planning and preparation of the railway, training of (Oman Global Logistics Group) and Oman Rail staff on these issues, and advisory support. It is anticipated that studies would include the preparation of a strategic environmental and social assessment, project specific environmental and social assessment, environmental and social management plan and a resettlement and land acquisition framework/ plan,” AIIB added in a statement.