Oman's $3bn Railroad Project to Dilute Iran Oil Risk in Hormuz Waterway

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By   http://www.ibtimes.co.uk

Oman is preparing to raise funds for a $3bn railroad project: its leg of the so-called Gulf Cooperation Council Railway which is expected to span 2,173 kilometers, from Kuwait to the shores of the Indian Ocean by 2018.

Reuters A file photograph of the railroad that links Riyadh and the port of Dammam in Saudi Arabia.
Reuters A file photograph of the railroad that links Riyadh and the port of Dammam in Saudi Arabia.

The railroad, when complete, would help global oil trade bypass the Strait of Hormuz, a waterway that accounts for 35% of seaborne traded oil.

The entire stretch, which passes through six countries, would dilute the impact of Iranian threats to close the Hormuz waterway.

Oman would consider conventional bonds and sukuk, the version conforming with Islamic law, as funding alternatives for the line.

The nation is looking to issue bonds by the end of 2014.

It could also structure some contracts as public-private partnerships under which winning bidders would take on a high level of financial and operating risk, said Abdulrahman Al Hatmi, a director at Oman National Railway.

International investors are also offering to purchase trains and lease them back to the government, Al Hatmi told Bloomberg on 6 February, on the sidelines of a rail conference in Dubai.

Railroad construction in Oman is expected to commence in the first quarter of 2015, according to Al Hatmi. More info