Etihad Rail Economic Rate of Return Rated at 15%

An Oxford University economics professor has estimated that the Economic Rate of Return (ERR) of the new Etihad Railway Network will be in the region of 15%. This is as against the minimum ERR suggested by the World Bank of 10%.

The ERR is defined as the benefit a project brings right across an economy, and differs from the Financial Rate of Return which only looks at the financial benefits. As such the UAE’s economy will be given a significant boost in the coming years from the new railway network.

In the face of the feared Peak Oil scenario, the UAE is attempting to diversify its economy away from crude oil and into other industries. Several industries have signed Memoranda of Understandings with the railway operator, including logistics and aggregates companies, and these will benefit extensively from an improved national transport network.

With the planned GCC Railway Network coming on stream in the next few years, the economy of the UAE will benefit from regional overland trade as well. This will boost the Emirates’ economies even further.