Chinese companies nab Djibouti railway project

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Ethiopia and Djibouti signed a deal with two Chinese firms to manage a joint railway line that will commence in the beginning of the coming New Year.

After the bid evaluation the Chinese consortiums will undertake the operation and management of the railway line for three to five years, according to Arkebe Oqubay (PhD), Special Advisor to the Prime Minister with a  minister portfolio, who is the board chairman of the Ethiopian Railway Corporation (ERC).

He told Capital that the consortium formed by the state owned China Railway Group Ltd (CREC), who built the Addis Ababa Light Railway project and parts of the Sebeta-Mieso-Dewale Line, and China Civil Engineering Construction Corporation (CCECC) have established a joint firm to manage the operation. The privately owned CCECC was part of the Sebeta-Mieso-Dewale railway project including the Djibouti portion.

The two companies will manage the first electrified cross country heavy railway line that connects the central part of the country with the ports in Djibouti, the major sea port access point for Ethiopia, which is the most populated state in the world without a sea port.

Arkebe declined to give the details about the total cost that the two countries will assign for the management and operation contract.

We followed the experience of Ethiopian Airlines who was managed by TWA, a US based aviation firm, for the first three decades.

The companies will manage the railway system with the aim of keeping the knowledge transfer and standard, according to the board chairman.

The official transferring ceremony for the managers will be held in the coming few weeks in addition with a fully electrifying process that will be finalized in the near future.

The Chinese public enterprise, Shenzhen Metro Group and CREC are managing and maintaining the modern rail system in the capital. The two companies signed the deal for a fee of USD 116 million.

CREC has constructed a 330km long railway line from Sebeta to Meeso at a cost of USD 1.841 billion. The section of the railway between Sebeta and Adama is a double track line stretching 114.73 km, while the Adama-Me’eso section is a single-track section with a length of 215.23 km.

CCECC finalized the contract for the remaining 339km railway section running from Me’eso to Dewale at the cost of USD 1.12 billion. The company also undertook the USD 525 million railway project in Djibouti that connects Ethiopia to the Djiboutian port.

Djibouti’s 92km railway, including the 12km that will link the Doraleh Multipurpose Port, Oil Terminal and Doraleh Container Terminal, is finalized. The project in Ethiopia and Djibouti is being financed by the Chinese EXIM Bank and the Ethiopian government has given a guarantee for the loan to Djibouti

The Turkish state owned TCDD has also established a consortium with a private Turkish construction giant, Yapı Merkezi.  Djibouti and Ethiopia selected the Chinese JV. Arkebe. In addition  that other company from France has been competing for the management contract.

Yapi Merkezi Construction Industry Inc., a Turkish construction giant, has won the 400 km railway project that connects Awash to the Northern parts of the country.  This railway network ties the Northern towns of Weldya and Mekele with the Eastern town of Semera and then connects them with Tadjoura port in Djibouti.