Two Chinese firms to overseas Ethio-Djibouti railway

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Ethiopia and Djibouti agreed to establish a joint company to manage operations for the Ethio-Djibouti railway.

According to sources, Ethiopia’s Minister of Transport, Ahmed Shide and his Djiboutian counterpart, Mohammed Abdulkadir Musa, sealed the deal early last week during their meeting in Djibouti, Ethiopia’s main logistical hub.

Forming the company was one of the major issues discussed at the 14th Ethio-Djibouti Joint Ministerial Commission held in Addis Ababa from July 18 to 21. They agreed on most of the technical issues involved in forming the company during the closed session of that meeting.

“The latest signing is just to legalize the agreement that passed in the joint ministerial meeting which was chaired by the two countries’ foreign ministers,” sources at the Ministry of Transport told Capital.

Some details are still being discussed. These issues will be decided by the Ethio-Djibouti joint railway commission, which will be led by the two nation’s transportation ministers.

The first cross-country electrical railway line in Ethiopia is expected to begin commercial service in the beginning of 2017. Since it will significantly reduce, from days to hours, the time needed to move cargo between the two countries, it should save Ethiopia a considerable amount of money.

According to the agreement, the organization will be headquartered in Addis Ababa, and will be responsible for providing passenger, freight and maintenance services on the railway. It is made up of two Chinese companies. The state owned China Railway Group Ltd (CREC), who built the Addis Ababa Light Railway and parts of the Sebeta-Mieso- Dewale Line, and the privately owned China Civil Engineering Construction Corporation (CCECC), which also constructed part of the Sebeta-Mieso-Dewale railway, including the Djibouti portion.

They will be responsible for managing the, high capacity, electrified cross country railway line, connecting central Ethiopia with ports in Djibouti. Ethiopia is the most populated country in the world without a sea port and Djibouti is Ethiopia’s major water access point. Two of the organization’s primary goals will be maintaining international standards and transferring knowledge.

CREC, along with the Chinese public enterprise, Shenzhen Metro Group manages and maintains Addis Ababa’s new, modern light rail system. The two companies signed that deal for USD 116 million.

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

CCECC finalized the contract to build the remaining 339km railway section running from Me’eso to Dewale at a cost of USD 1.12 billion.

Soon Ethiopia and Djibouti will also be connected via another railway line stretching from the north east of Ethiopia to the historical Port Tadjourah, a new endeavor expected to be inaugurated in the coming year.

Part of this railway project, connecting Mekele via Weldya and Semera, to Port Tadjourah is under construction. It is not known if the new joint company will manage the other railway or not.

The railway is being overseen by the Turkish state owned TCDD which established a consortium with Yapi Merkezi Construction Industry Inc., a private Turkish construction giant. Yapi Merkezi, won the 400 km railway project connecting Awash to the northern part of the country. This railway network ties the northern towns of Weldya and Mekele with the eastern town of Semera and finally connects them with Tadjoura Port in Djibouti.

This is the second time Ethiopia and Djibouti have established this type of organization. The first was formed to manage the old railway enterprise, based in Addis Ababa with branches in Dire Dawa and Djibouti. The government says it is using the experience of Ethiopian Airlines as an example which was managed by TWA, a US based aviation firm, for the first three decades. Another company from France was also competing for the management contract.