Railroads are a state monopoly run by the National Railroad Transportation Company (Société Nationale des Transports Ferroviaires--SNTF), a semi-autonomous public entity operating under the aegis of the Ministry of Transport. The approximately 4,000-kilometer railroad system, which is old and poorly designed, is further handicapped by the lack of long distance traffic. Phosphate and iron ore traffic in the eastern region is almost the only commercially profitable freight traffic. Passenger traffic is concentrated mostly around the major urban areas, especially the capital. A main railroad line connects major cities along the coast and joins the Moroccan and Tunisian systems at their respective borders. However, rail links with Morocco were closed for twelve years as a result of tension between the two countries and reopened only in September 1988.

SNTF has argued that rail transport is 75 percent cheaper than road transport and that it should be developed to carry up to 40 percent of freight, as in France. The fact that the railroads carried 53 million passengers and 13 million tons of freight in 1989 lent further credence to SNTF's ambitious US$11 billion program to double the length and freight capacity of the existing rail network. The expansion program includes a new line running east-west across the Hauts Plateaux, new track, freight centers, and stations. Although the government's austerity policy may affect the level of investment in railroad improvement, several new lines were under construction in 1993 and others were under renovation, including the Jijel-Ramdune Djamal line in the northeast and stretches of the line in western Algeria.

Funding for Algeria's railroads came from outside sources. In 1991 the African Development Bank approved a loan to finance construction of a railroad tunnel that would cost US$130 million and take more than three years to complete. Part of a US$211 million loan from the World Bank in 1989 was allotted to the reconstruction of Algeria's railroads.

An urban rail project involving work on the first twenty-six kilometers of the Algiers subway system, which had been planned for 1985, was begun in August 1989. The whole system is to total sixty-four kilometers when completed in 1993-94.

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Source: U.S. Library of Congress