GCC states sign the legal framework for a 2.1k-km regional railway, but each country still funds its own section

Gulf transport ministers have signed the legal framework for a 2.1k-km railway linking ports on both sides of Hormuz, though each country still funds its own track and how to pay for Saudi Arabia’s 672-km stretch is still unsettled. The Kingdom’s large share of the route puts its financing decisions at the center of the whole network, railway industry consultant Jean-Pol Mura tells us.

The line would run through all six GCC states: The General Agreement for the GCC Railway Project, signed in Bahrain on Sunday, covers Kuwait, Saudi Arabia, Bahrain, Qatar, the UAE, and Oman, according to a press release. Bahrain’s transport minister called it “an essential step towards completing the legal and regulatory work needed for the railway project to go ahead,”according to The National.

The official target is still full operations by December 2030. The project is 55.9% complete, GCC Secretary General Jasem Albudaiwi said, according to Ajel. Mura tells us that 2034 is the earliest plausible date. The railway was first proposed more than a decade ago.

Why it matters: With a finished network, Gulf shippers could move freight by rail between ports on either side of the strait instead of by sea. During the war, overland cargo between GCC states went by truck, with driver and vehicle rules changing at every border.

Separate checks

Funding stays national: Each section is financed and tendered separately by the country it crosses. The new agreement doesn’t set out a regional financing package or a common structure for running the network. Hafeet Rail, the USD 2.5 bn, 238-km line between Sohar and the UAE network, has secured USD 1.5 bn in debt financing through a joint venture of Etihad Rail and Oman’s Asyad Group, with Mubadala.

Decentralized financing comes with a coordination risk: Keeping financing at the national level allows governments to tap sovereign wealth or private capital without taking on collective GCC debt, Amandeep Kaur Ahuja, MENA geopolitical risk consultant, tells us. The risk is that uneven financing and construction schedules could delay the entire network, while heightened geopolitical uncertainty could push up borrowing costs for private investors, she adds.

Hafeet’s structure could work elsewhere: Other GCC members could replicate it, Ahuja argues, since this year’s shipping disruptions have strengthened the commercial case for land transport. Regional lenders may take comfort from government backing, though foreign capital could be harder to find. “While Etihad Rail did see Japanese financing, future foreign financing could hinge upon guarantees related to geopolitical instability,” she says.

The model may be harder to copy: The UAE-Oman line benefits from established port cargo flows and sovereign-linked sponsors, making its financing structure difficult to replicate elsewhere, Aadil Rashid Khan, associate director of mobility, supply chain and logistics growth advisory at Frost & Sullivan, tells us. The UAE network and the Saudi mineral lines are commercially viable independently, while the Saudi GCC connection, Kuwait, Qatar, and Bahrain would remain dependent on government funding or guarantees, he adds.

Saudi Arabia has set conditions before. The Kingdom’s section runs from the Kuwaiti border to the UAE border. Riyadh previously supported the connections as long as Qatar and the UAE paid for the related track on Saudi territory, Mura says, so it’s still unclear how the cost of cross-border sections will be shared.

Built for bulk

Big industrial shippers could anchor demand: Saudi minerals, Abu Dhabi petrochemicals, and industrial cargo arriving through Khorfakkan offer some of the strongest commercial openings for the railway, Ahuja says. Long-term freight commitments from players such as Saudi miner Maaden and Abu Dhabi refiners could secure volumes and firm up the investment case, she adds.

Lenders will want volumes in writing: Rail’s strongest commercial prospects are heavy, repeat shipments of minerals, petrochemicals, construction materials, and containers between industrial hubs and ports, transport and logistics specialist Ziya Mammadov tells us. To support financing, the new cross-border links will need take-or-pay contracts and minimum-volume commitments from anchor shippers, Khan argues. Miners, petrochemical producers, and port operators can promise steadier freight volumes than logistics companies on their own, he adds.

The long-range forecasts are large: The railway is projected to carry around 200 mn tons of goods a year by 2030, rising to 271 mn tons by 2045, Arab News reports. By Ahuja’s estimate, around 70 mn tons of freight moves by road across the GCC in a normal year.

The cargo is already moving by truck: Saudi Arabia alone moved 30 mn tons in 2025, and trucking out of Khorfakkan has ramped up to around 150k tons a day, Ahuja says. “We know the volume exists,” she adds. Double-tracking, more rolling stock, larger inland terminals, and a Khorfakkan rail spur could lift rail’s share of diverted cargo from the low hundreds of thousands of TEUs to the low mns within three to five years, former Etihad Rail strategy director Urs Mosimann estimated in April.

Rail would work best alongside trucks: The railway’s commercial edge may come from complementing trucking, Ahuja argues. Rail becomes more efficient over distances beyond 500 km, especially when operators can line up return cargo and avoid running empty, she says.

There’s a ceiling on how much diverted cargo rail can take: How much freight the railway can pick up during future disruptions will depend on available locomotives, wagons, terminal capacity, and existing cargo commitments, Khan says. Etihad Rail’s March surge of 459k tons over nine days works out to an annualized 18.6 mn tons, he estimates, or about a quarter of the GCC’s normal road freight, by our math. Longer terminal hours, more rolling stock, and faster turnarounds could lift that to 23-28 mn tons, he adds. Even with more trains, port handling, customs clearance, and last-mile trucking could remain the main bottlenecks, he warns.

Rules of the rail

Each operator would keep the revenue from its own section: Costs and revenue can be split by section, Ahuja says, so “Etihad Rail usage leads to Etihad Rail revenue.” Tariff structures will need careful negotiation under the Gulf Rail Authority framework to keep costs even across the network, she adds. She expects the sections to run separately but coordinate as a single unit.

Shared signaling still needs shared operating rules: The GCC Railways Authority will need to harmonize operating standards across all six national networks to keep signaling costs in check, Mura says. Even if every country adopts the European Rail Traffic Management System Level 2 (ERTMS Level 2), differences in national operating rules could raise costs, weaken interoperability, and hurt the network’s commercial case, he warns.

Next stops

Some links will pay off sooner than others: The UAE-Qatar-Dammam connection matters more commercially than Bahrain, Mura says, though limited capacity on Saudi Arabia’s east-west railway could constrain onward freight. Bahrain and Kuwait could still become commercially relevant over time, since new infrastructure can create trade patterns as well as serve existing demand, he adds.

What’s next: Hafeet Rail’s trial run, due in 4Q 2027, is the next milestone on the network. Further out, Bahrain’s connection depends on the proposed King Hamad Causeway to Saudi Arabia, The National reports.

The 2030 deadline divides the experts: Full operations by 2030 are unrealistic, and 2034 is the earliest plausible date, Mura says. Full commercial integration across all six countries by then looks unlikely too, Khan says, though he sees a Saudi-UAE-Oman rail spine as possible. The deadline is still achievable if national investment and construction schedules are coordinated, Mammadov argues. The bigger risk is countries finishing their sections at different times, which would leave the wider network unable to run as a single system, he adds.