Ethiopia, Djibouti to establish company to regulate railway transportation


USD 300 million from Exim Bank of India ratified by Parliament

The 300 million dollar line of credit the Ethiopian government secured in June for the construction of the Asaita-Tadjourah segment of the Mekelle-Tadjourah railway project has been endorsed by the House of People’s Representatives on July 3.
In its Growth and Transformation Plan (GTP), the Ethiopian government has plans to construct 2,395km of railway, which will extend to three parts of the country. The 683km long Mekelle-Tadjourah railway project is expected to speed up Ethiopia’s increasing export and import activities via the port of Tadjourah on the Red Sea in neighboring Djibouti. 
This single-track railway is projected to cost around USD 1.08 billion, but the actual project cost will be known following the completion of detailed studies in two months time, according to Sufian Ahmed, Minister of Finance and Economic Development (MoFED).
USD 300 million has been secured from the Exim Bank of India, while another USD 300 million has been promised by the same bank upon the completion of detailed studies. The Ethiopian government is to cover the rest. The line of credit, which was signed by Ahmed Shide, State Minister of Finance and Economic Development (MoFED) and T.C.A. Ranganathan, Managing Director, of Exim Bank India on June 13 in New Delhi, will be used for the construction of one of the three segments of the Mekelle-Tadjourah railway that will facilitate the export of agricultural and industry commodities from the Northern part of the country where there are abundant potash deposits from Afar.
“The government has set up a very clear strategy to build infrastructure that goes hand-in-hand with the country’s development to accelerate the economic growth, improve the supply of goods to different parts of the country and enhance the country’s competence in the global market,” said Wondimu Gezahegn, MP, who read the proposal of the relevant standing committee for the House to ratify the line of credit on Wednesday afternoon.
This railway project that will facilitated cargo transport Tigray, Amhara, and Afar Regional states, is also part of the Djibouti-Dakar railway as per the plan to unite the economies of African states added the MP.
Meanwhile, Ethiopia and Djibouti are responsible for the construction of the Mekelle-Tadjourah railway, which includes 160km of rail track in Djibouti on its way to the Port of Tadjourah.
A company that will regulate and facilitate the railway transportation both imports and exports is to be established by the Ethiopian Railway Corporation (ERC), regulator of the Ethiopian railway industry, and its Djiboutian counterpart. 
According to Sufian, the company will purely be commercial and will also employ modern systems and technologies. Even though the two countries will raise the required capital for the project, most of it will be raised by the Ethiopian government, stated Sufian. “Our guess is that Ethiopia will raise about 90 percent of the capital,” he told MPs on Wednesday.