Washington, June 25, 2025 – 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.
