Using molecular dynamics, an isotropic-nematic transition was found in bulk salt-free solutions of charged rods with their counterions in the semidilute regime. This phase transition is driven primarily by electrostatics, rather than by excluded volume. The counterion condensation effect, which is controlled by the Manning parameter, leads to liquid crystalline phases of rods. For elevated values of the Manning parameter, an attraction is obtained between the rods, and the nematic phase appears. For small values of the Manning parameter the counterions de-condense, and the nematic phase disappears. Instead, in a neutral system of rods and spheres there is no appearance of nematic phase. The diffusivity of both rods and counterions is reduced with the Manning parameter. (C) 2015 Elsevier B.V. All rights reserved.