Capital Ethiopia Newspaper

Partial privatization for Shipping Enterprise

During  his latest press conference Prime Minister Hailemariam Desalegn confirmed that his government is in the process of selling  shares of the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), which is the  only state run company that owns commercial boats in Africa, to an undisclosed company.

The PM explained that  the costs of inland transportation out way the costs of transportation by sea because of logistical issues and the cost of moving freight in Ethiopia.  He pointed out that, “the newly inaugurated railway will substantially decrease the cost of transportation, but logistical concerns are still a major source of concern.”

“We are trying to privatize the company with some equity to a specific company, not for lack of money but to modernize the system, using foreign companies that have knowhow, technology and managerial capability,” Hailemariam elaborated.

He said that that is why the government wants to introduce new ways of doing business and modernizing the system with the intervention of companies that have experience in logistics. “It has nothing to do with the financial shortages,” he stressed.

Ahmed Shide, the recently appointed Minister of Transport, who is responsible for following up the sector, told Capital that he is not able to comment about the negotiations as the process has not been finalized.

Recently it was stated that the Chinese logistics giant China Merchant Group (CMG) is negotiating with the government to purchase shares of the state owned enterprise, but government officials declined to comment.

The PM said that his government will sell shares of ESLSE with the goal of improving logistical services.

The China state owned CMG has become a leading, global logistics firm. In 2013 the company bought a 23.5 percent share of the Port of Djibouti, which is the major logistics hub for Ethiopia.

The Chinese government is expanding its influence in logistics hubs globally to realize its 21st century Silk Road Initiative.

Sources at Ministry of Transport recently told Capital that the Chinese public enterprise delegation visited the ministry to discuss the issue.

The Ethiopian logistics enterprise, ESLSE is a multimodal monopoly. It was established five years ago through the amalgamation of the historical Ethiopian Shipping Lines, the Dry Port Services Enterprise established about a decade ago, and the Maritime and Transit Services to undertake combined service for the sector.

Recently the government has drafted a directive that will include the private sector in joining  the multimodal scheme on a subcontract basis under ESLSE. Experts told Capital that the recent unexpected interest of including  private actors in the multimodal scheme will be linked with the government’s new vision of including foreign partners in the logistics sector. “The government is thinking the private sector should be trained and competent in the multimodal sector because ESLSE will be partially privatized in the near future,” experts speculated. They said that as a government it is a good decision to build up the capacity of the local companies in international eyes.  So far the logistics sector is protected for Ethiopians only.

The Ethiopians Shipping Lines which dissolved when ESLSE was formed is one of the oldest public enterprises in the country. It operates a dozen vessels including two oil tankers.

In related news the PM denied speculations that the country is in a financial pinch and battling big international debt.

“Ethiopia’s debt sustainability is moderate it is available in the latest IMF Article IV consultation. It cannot be spoken like any political issue it has predetermined economic and econometrics calculation that can be easily known,” he stated.

“We have not had a financial liquidity problem because the savings is still growing by 30 percent. There cannot be a liquidity crunch at this time,” Hailemariam added.

“In order not to go into the red we need to increase our exports as quickly as possible so we have to work on manufacturing exports to move forward,” he said.

He also said that the natural resources is another way the government can expand export earnings. Recently the Chinese oil company, GCL Poly was awarded a natural gas development and exporting. The natural gas discovered during the Emperor period is expected to be exported within the coming few years.

He hinted that natural gas and mining can help increase exports.