The proposed rail network across Gulf Cooperation Council (GCC) countries  could be funded almost entirely by member state governments after failing to attract significant private sector interest, officials close to the matter said on Tuesday.
Nadhem Bin Taher, executive director, Land Transport Sector, National Transport Authority, said private companies were disappointed at the low returns of 7.18 per cent. “But we’re encouraging private investment,” he said.
Bin Taher was speaking at the 8th annual Middle East Rail in Dubai. The two-day event, which started on Tuesday and is the largest rail exhibition and conference in the region, brought together government officials and industry leaders from around the world.
The GCC countries have set a 2018 target to have an operational rail network connecting all six countries from Kuwait to Oman. However, some countries such as Kuwait are only just beginning their feasibility studies of their 511-kilometre rail network share.
Saudi Arabia and the UAE, on the other hand, are leading the way with part of the network currently being tested. 
John Lesniewski, director of sales and commercial agreements at Etihad Rail,  said phase one of the project, which connects Shah and Habshan to the Port of Ruwais, will be operational by the end of 2014.
Phase 2, connecting the Saudi Arabian border to Al Ain and Dubai, will start construction later in the year, he said.
Abdul Rahman Al Hatmi, director of railways at the Oman National Railway Company, said that the Omani government has budgeted costs for the entire railway project. He would not, however, disclose the figure. Despite this assurance, the state-owned Oman National Railway Company is still exploring other methods of financing, including from local and international backers.
Al Hatmi said one possibility is to privatise trains and lease them back or even to privatise entire train lines.
Construction on Oman’s first line, from Sohar to Al Ain, will begin later this year.
Al Hatmi said that tourists and business travellers are expected to use the train; however, the focus for the immediate future is to develop a rail network that supports freight.
Oman’s rail network will extend to the Port of Salahah  with the aim that container shipments will be offloaded in Oman and then be transported through the GCC-wide rail network.
By Alexander Cornwell