Taking a ride on the new Ethio-Djibouti train may be a bit of a better deal than first anticipated. That’s because the Ethio-Djibouti Standard Gauge Railway Transport SC determined ticket prices before the birr devalued. The Ethiopian Railway Corporation (ERC) recently stated that ticket prices were determined based on the equivalent of the local currency in USD but that amount was calculated based on a rate before the 15 percent devaluation that took place three months ago.
According to their study public transportation should be USD 0.03/km and USD 0.051/ton/km for freight cargo.
However the tariff equivalent with birr was calculated based on the rate before the devaluation. For instance the tariff from the initial point of Lebu station to Adama is 68 birr, according to the documents that Capital obtained from ERC but if it is calculated by 3 US Cents with the current exchange rate it would be about 80 birr.
Dereje Tefera, public relations head of ERC, confirmed that the tariff was calculated based on the exchange rate when the study was carried out. “The price is calculated as per the rate before the devaluation,” he told Capital. “Meanwhile the birr has devaluated by 15 percent compared with major hard currencies but we didn’t change the ticket prices to reflect that,” he said.
He said that the current tariff for the railway transport is based on the government’s decision.
The railway that is managed under the Ethio-Djibouti Standard Gauge Railway, was officially inaugurated 15 months ago from the Ethiopian side. The operation has been running but on a trial basis before this week. The two Chinese companies, 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) which built the railway, will manage the operation for the coming few years.
CREC has constructed a 330km long railway line from Sebeta to Me’eso at a cost of USD 1.841 billion. The section of the railway between Sebeta and Adama is a double track line stretching 114.73km, while the Adama-Me’eso section is a single-track section with a length of 215.23km. CREC also constructed the first light railway for Addis commuters.
CCECC finalized the contract for the remaining 339km railway section running from Me’eso to Dewale at a 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 will be also linked with ports in the near future. 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.
Experts say the new railway should improve transportation logistics from Djibouti.