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Brazil is to join China and Turkey in financing the huge railway infrastructure construction in Ethiopia.
Our sources at the Ministry of Finance and Economic Development (MoFED) informed Capital that the expected finance for the 496km Sebeta-Ijaji-Jimma-Bedele railway project is in the final stages of negotiation with Brazil, one of the World’s fastest growing and emerging economies.
Diplomatic relations between Ethiopia and Brazil is growing at a fast pace, especially in the past few years. Ethiopia has opened an embassy in the capital of the Latin American giant, Brasilia and the late Prime Minister, Meles Zenawi, visited the country in May last year. He is the first Ethiopian leader to do so, after Emperor Haile Selassie, who visited Brazil about a half century ago.
In the past fiscal year, the Brazilian contractor Andrade Gutierrez S.A signed a Memorandum of Understanding (MoU) with the Ethiopian Railway Corporation (ERC) to undertake the project with the proviso that the contractor come up with the finance.
If the deal goes through, Andrade Gutierrez S.A will be the second biggest Brazilian company in Ethiopia after mining giant Vale which obtained a general exploration license in the Konso area of Southern Nations, Nationalities and Peoples Regional state (SNNPR).
According to our sources at MoFED, officials of the Ministry and the corporation have been meeting in Brazil to pave the way for obtaining the loan needed for the project.
“The two sides are already on the final step to secure the finance but needs the signatures of approval of the lender and the officials of MoFED for the disbursement of funds,” sources said.
If the financing turns out to be a reality, the Brazilian company will become the fifth company to engage in the national railway project.
Currently, three Chinese and one Turkish contractor are involved in the three national projects. The three Chinese contractors, China Railway Engineering Corporation (CREC), China Civil Engineering Construction Corporation (CCECC) and China Communication Construction Company (CCCC), are at present constructing the Sebeta-Mei’so, Mei’so-Dewale and Woldiya-Mekele projects. For the 317km Sebeta-Mei’so and 340km Mei’so-Dewale projects the Chinese Export Import (EXIM) Bank has provided the majority of the finance required; USD 1.1 billion and USD 1.2 billion, respectively. CCCC, the other Chinese company that is constructing the 268.2km Woldiya-Mekele project, came up with the USD 1.6 billion in finance.
Yapi Merkezi Construction Industry Inc, a Turkish company, is also constructing the 389km Woldiya-Mekele railway, which is projected to cost USD 1.7 billion and is financed by the Turkish EXIM Bank.
The Chinese financial support for governmental development projects is not unusual for Ethiopia, while its loan provision is growing from time to time. But the contribution of the Brazilian government for such kind of huge projects is quite new.
The Ethiopian government plans to construct more than 2,000km of rail lines by the end of the five-year Growth and Transformation Plan (GTP).
CREC is also constructing the 34km Addis Ababa light railway transit, which is also financed by the Chinese government.
The 496km Addis Ababa-Ijaji-Jimma-Bedele line will carry passengers and freight and is going to be powered by renewable energy.
Founded in 1948 in Belo Horizonte, Brazil, Andrade Gutierrez S.A is a large private firm which works in Engineering and Construction, Telecommunications and Energy sectors.