World Bank Approves $930m for Iraq Railway Upgrade
The World Bank approved on Wednesday a US$930 million [approx. IQD 1.2 trillion] loan for Iraq to modernise its railway network, strengthen domestic and regional trade, and support economic diversification.
The Iraq Railways Extension and Modernization (IREM) Project will upgrade the 1,047-km railway line connecting Umm Qasr Port in the south to Mosul in the north, via Baghdad.
The project will enhance travel efficiency, freight capacity, and access to sustainable transport infrastructure. It also supports Iraq's broader ambition to become a regional logistics hub through the Iraq Development Road (IDR), which aims to link the Gulf with Europe via Turkey.
Jean-Christophe Carret, World Bank Middle East Division Director, said the IREM project is a key step in Iraq's shift "from reconstruction to development," helping reduce oil dependency by promoting trade and creating jobs.
Key project components include:
Rehabilitation of critical rail infrastructure;
Modernisation of ageing locomotives and rolling stock;
Upgrades to the Baiji maintenance workshop;
Development of dry ports and logistics hubs to attract private investment;
Implementation of a Safety Management System and infrastructure safety improvements;
Technical assistance and training for Iraqi Republic Railways (IRR) personnel, with a focus on including women;
Community engagement through a participatory planning and monitoring process.
The project is overseen by the Ministry of Transport and implemented by IRR, with support from an international firm acting as Capital Expenditure (CAPEX) management agent.
By 2037, the upgraded railway is projected to handle 6.3 million tons of domestic freight, 1.1 million tons of imports/exports, and 2.85 million passengers. The line will serve eight governorates, impacting around 17 million Iraqis. It is also expected to reduce road maintenance costs by shifting cargo from trucks to rail.
The IREM project is anticipated to generate over 3,000 full-time construction jobs over seven years, and support 21,900 jobs annually by 2040 through expanded operations and logistics development.
Full statement from the World Bank:
Iraq: New US$930 Million Project to Extend and Modernize Railways, Promote Regional Connectivity and Boost Growth
The World Bank Board of Executive Directors approved yesterday a US$930 million financing to help improve Iraq's railway performance, boost domestic trade, create jobs, and diversify the economy. The Iraq Railways Extension and Modernization (IREM) Project will upgrade the railway infrastructure and services between Umm Qasr Port in southern Iraq and Mosul in northern Iraq reducing travel time, increasing freight volumes and providing users with improved access to sustainable transport infrastructure and services.
The Middle East is witnessing a resurgence in regional railways, bolstering trade routes within the region and with Asia and Europe to enhance connectivity and drive regional economic growth. Among these regional initiatives is the Iraq Development Road (IDR) announced in May 2023 that aims to transform Iraq into a pivotal transport hub by connecting the Gulf region through Iraq to the Turkish border, extending into Europe. Once connectivity is enhanced with existing ports and infrastructure, the IDR can significantly increase trade within Iraq and within the region. With Iraq's rail sector suffering from limited connectivity, disrepair and underfunding, investments in Iraq's existing railway network are an essential first step towards enhancing both national and regional connectivity.
"As Iraq shifts from reconstruction to development, enhanced trade and connectivity can stimulate growth, create jobs, and reduce oil dependency," said Jean-Christophe Carret, World Bank Middle East Division Director. "The IREM project is vital for transforming Iraq into a regional transport hub and helping achieve the IDR's goals of improved connectivity and economic diversification and growth."
The IREM project will rehabilitate and modernize 1,047 km of existing railways linking Umm Qasr Port to Mosul through Baghdad. The Project will also address the aging fleet of locomotives and rolling stock, refurbish the Baiji maintenance workshop, and procure necessary equipment and spare parts. Project activities will also promote private capital participation in the establishment of dry ports and logistics hubs with the generation of high-skill and sustainable jobs. The IREM project will enhance railway safety through a comprehensive Safety Management System, infrastructure upgrades, level crossing improvements, community awareness campaigns, emergency preparedness, and staff training. The Project will also include technical assistance to improve the institutional and corporate performance of the Iraqi Republic Railways (IRR), developing a Railway Sector Reform Action Plan, and identifying opportunities for private sector involvement. Furthermore, the Project will provide training for the IRR staff and support women's participation in the rail sector.
The project will be implemented by the IRR under the oversight of the Ministry of Transport. To ensure successful and prompt implementation, an internationally recruited firm will also be hired under the project to act as a Capital Expenditure (CAPEX) management agent with a mandate to support the IRR in building institutional capacity to manage large CAPEX programs and manage the implementation of the Project contract packages. Project implementation will also prioritize meaningful citizen and community engagement and will establish a community-led planning and monitoring process through which citizens and communities will get regular progress updates and provide feedback on implementation concerns.
By 2037, the revived railway line is expected to carry 6.3 million tons of domestic freight, 1.1 million tons of exports/imports, and 2.85 million passengers, including bulk commodities (such as grains or construction materials) and containerized commodities (such as industrial and consumer goods). The railway will traverse eight of Iraq's governorates, enhancing integration within federal Iraq, benefiting approximately 17 million people. The shift from trucks to trains will substantially decrease damage to roads and lower their annual maintenance costs. The Project will create over 3,000 full-time construction jobs for seven years. Once railway operations commence and the sector expands, the Project is expected to create 21,900 jobs annually by the year 2040.
(Source: World Bank)
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