Cairo / Krefeld This deal caused an international sensation: Siemens is supplying trains to Egypt worth 8.1 billion euros, and they are being built in Krefeld, among other places. But where will they actually go in the country on the Nile?
It is an order of superlatives, the largest that Siemens has landed in its 175-year history. Siemens is to build a 2,000-kilometer railway network for high-speed trains in Egypt, worth 8.1 billion euros. The trains are built in Krefeld at the plant in Uerdingen on Duisburger Strasse by around 2,000 employees, the locomotives for freight traffic in Krefeld and Munich, and the signaling technology comes from Braunschweig.
It’s a project that will finally modernize one of the world’s oldest railway systems in the most populous Arab country. However, there are many question marks over the whole thing, the most important of which is that since over-indebted Egypt is unlikely to be able to fully finance the mega-project, the bill could end up in the German state budget. Many other details of the project also remain opaque.
According to the company “Siemens Mobility”, 41 high-speed trains, 94 regional trains and 41 freight locomotives are to be delivered to Egypt in addition to the construction of the line. In the future, trains will travel through the Nile valley and the desert on three large sections of the route at speeds of up to 230 kilometers per hour.
The deal was sealed last weekend, and when it was signed in Cairo with Siemens CEO Roland Busch, Egypt’s President Abdel Fatah El-Sisi described the new railway network as a “valuable expansion of the Egyptian transport system” and the beginning of a new era for the railway system in Egypt, Africa and the Middle East. “With our latest technology for rolling stock, signaling and maintenance, Egypt will have the sixth largest and most modern high-speed rail network in the world,” said Siemens CEO Busch at the signing.
First, a route from Ain Sukhna on the Red Sea, an hour’s drive from Cairo, via the new capital commissioned by El-Sisi and then on through Cairo and from there to the Mediterranean coast, to the western town of Marsa Matrouh be built. This section of the route had already been agreed last year and advertised by Siemens as Siemens as the “New Suez Canal on rails”.
Only then is it the turn of the north-south route in the Nile Valley, where the absolute majority of Egyptians live. It is to lead from Alexandria via Aswan to the temple of Abu Simbel at the reservoir of the Aswan Dam. In the end, another route is to be built in the south, from the city of Safaga, south of the Red Sea, to the Nile valley.
“Transport has always been a key for the Egyptians, the population is growing and with it the demand for mobility. This demand must be satisfied and quickly – and for all Egyptians,” says a Siemens PR video. “The new rail network will connect cities across the country. It will send people and goods on their journey further, faster and safer, and it will be affordable,” says the promotional video.
In fact, the modernization of the Egyptian railways is more than overdue. The Egyptian railway was second in the world, after Britain, when a line was built between the Suez Canal and Alexandria in 1834. Even today, part of the rail network dates back to the colonial era. It’s far too small for the country’s 100 million population, has no electricity and is notorious for its horrendous accidents. “Our current rail network dates from the century before last. The trains are outdated, the signals are just as catastrophic as the railway workshops,” Egyptian Transport Minister Kamal El-Wazir made no secret of the current situation on Egyptian television.
According to a statement from Siemens, the construction of the new high-speed lines using the latest technology should also create 40,000 jobs in the country. Another 6,700 jobs would be created at other Egyptian suppliers and in other sectors of the economy. According to Siemens Mobility, around 90 percent of the Egyptian population will have access to the new rail network. With the shift of traffic to rail, the fully electrified rail network will reduce CO₂ emissions by 70 percent compared to existing bus or car traffic, the company explained.
However, the prerequisite for the lower CO2 emissions would be that the electricity is produced by renewable sources. The Egyptian government is indeed pursuing ambitious goals in expanding renewable energies. By next year, the share of renewable energies in the energy mix will be increased to 20 percent. By 2035, this proportion is set to increase to 42 percent. In reality, however, the country is behind these plans. So far, according to the Ministry of Electricity, the average daily share of renewable energies is around 14 percent, of which hydroelectric power, i.e. the Aswan Dam, accounts for more than half. But it is no longer expandable. The share of solar and wind energy is slightly more than five percent. By far the largest share of the Egyptian energy mix comes from several gas-fired power plants, which were also built with a major order from Siemens in recent years.
The railway project is expected to be accompanied by extensive resettlement measures when a route is built through the 20 million city of Cairo. Exactly how this will happen is not yet clear. For Stefan Roll, head of the “Africa and Middle East Research Group” at the Foundation for Science and Politics in Berlin, the project also raises many other questions. “There was obviously no transparent public tender and there is no visible cost-benefit analysis,” he says.
But the biggest question mark is over the financing of the project. “Egypt is heavily indebted and will probably have to spend 50 percent of government spending on debt servicing in the coming budget,” explains Roll. It is therefore completely open how such a billion-dollar project can be paid for at all. For Siemens itself, however, the risk is probably manageable. Apparently generous guarantees have been granted by the federal government via Hermes guarantees, he explains. “Extremely extensive loan guarantees for Siemens business with Egypt have already been given in the past. Now a considerable default risk should have accumulated. For Germany, this business is definitely associated with a certain risk,” says Roll.
Nevertheless, it is certainly not wrong that Egypt is modernizing its railway network. “This is more of a sensible infrastructure project,” says Roll, especially in comparison to other major projects that Egypt has started in recent years, for example the construction of a new capital, where there are big question marks as to whether this will actually move the country forward will bring. “Looked at in this way, despite all the lack of transparency and criticism,” says Roll, “this railway project is probably still the most sensible with its impact”.