UAE’s Etihad Rail to seek about $2bn in financing

Etihad Rail, the developer and operator of the United Arab Emirates’ national rail network, is expected to approach banks for about $2bn to help finance the expansion of the network, banking sources familiar with the matter said.

The UAE, which launched the first phase of its rail project in 2016, plans to have a network with 1,200 km of track costing about $11bn, running from the border with Saudi Arabia to Fujairah emirate on the Gulf of Oman.

One of the sources said the new debt would most likely be a corporate loan, rather than project financing.

A spokeswoman at Etihad Rail, owned 70 per cent by the Abu Dhabi government and 30 per cent by the UAE federal government, was not immediately available to comment.

The first phase of the UAE rail project was built to transport granulated sulphur. The broader project aims to offer freight and passenger services across the country.

Gulf states plan a range of regional infrastructure projects from power to transport and housing. A drop in oil prices in 2014 led governments to rein in spending, halting several projects, but a recent price recovery has improved prospects.

Etihad Rail suspended tendering for phase two of its project in 2016, saying it was reviewing timing and delivery.

Last year, the Department of Finance in Abu Dhabi, the richest of the seven emirates making up the UAE, and the UAE Finance Ministry signed a financing deal for the second phase. It did not provide details of financing involved at the time.

The Abu Dhabi Department of Finance did not respond to a request for comment on the latest financing plan. A UAE Finance Ministry spokeswoman directed requests for comment to Etihad Rail.

The first phase of the project was backed in 2013 by a $1.28bn five-year financing package, provided by a consortium of banks including First Abu Dhabi Bank, which was previously called National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, HSBC and MUFG.