Swiss bank approves $865 mln loan for Awash-Weldiya railway project


The Ethiopian Railway Corporation (ERC) is going to sign a USD 865 million loan with a Swiss lender for the railway project that stretches from Awash to Weldiya, Capital learnt.

Diplomatic sources at the Turkish Embassy told Capital that the signing ceremony will be a green light for the Turkish company that clinched the contract to commence the construction project that will begin before next month.
Sources at ERC told Capital that the signing event which will take place in Addis Ababa was planned for last Friday April 18, but has been rescheduled for the next few weeks.
The diplomatic sources stated that the balance of an expected USD 1.4 billion loan from   Switzerland’s Credit Suisse group is also expected to be approved in the near future.
According to sources, the additional money needed will be also provided for the project in the near future.
The ground work the Turkish construction firm was supposed to complete has yet to get underway; even thought it signed a contract with ERC in 2012.
Turkish company YapiMerkezi secured the contract for the construction of the 389kms Awash to Weldiya section, estimated to cost USD 1.7 billion, a section of the larger railway network running from Mekele via Weldiya and Semera, to Port Tadjourah in Djibouti.
PM Hailemariam Desalegn during his quarterly briefing on Thursday April 24, at the parliament stated that railway projects that are scheduled to be undertaken during the Growth and Transformation Plan (GTP) have been delayed because financers have been unable to release the expected loan on time. This is the Swiss bank’s first loan to the Ethiopian government.
Sources said that the Awash – Weldiya railway project will commence as soon as the USD 1.7 billion needed is released by the bank. The Turkish company has worked on several overseas construction projects including in Dubai and Russia.
The China Communication and Construction Corporation (CCCC) will build the Mekele to Weldiya part of the rail line. The estimated USD 1.5 billion, is financed by the Chinese EXIM bank and covers some 260kms.
The section that stretches from Mekele to the Port of Tadjourah, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country with the center. The Indian EXIM Bank has also pledged USD 300 million for the Asayita-Port of Tadjourah segment of the Mekele-Port of Tadjourah railway line.
The PM said that the loan that is expected from Russia and Brazil for other railway projects has also been delayed because of economic conditions in their country.
Russian Railway and Andrade Gutierrez Participacoes SA of Brazil have signed an EPC contract with ERC to undertake the railway stretching from Mojo to Weyto, and Sebeta to Bedele respectively.
In the Growth and Transformation Plan (GTP), the Ethiopian government plans to construct 2,395km of railway, which will extend to four parts of the country.
The 657km Sebeta-Dire Dawa-Dewale is the only railway project which is currently under construction.
The Chinese contractors, China Railway Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC) are currently constructing the Sebeta-Mei’so-Dewele railway line. For the 657km project, the Chinese Export Import (EXIM) Bank has provided the majority of the USD 2.3 billion needed.
CREC is also constructing the 34km Addis Ababa LRT, which is also financed by the Chinese EXIM Bank.