The Ethio-Djibouti Railway (EDR) has announced its intention to participate in a significant construction project in Djibouti, which includes acquiring a substantial sftake in the Damerjog fuel storage facility.
The company seeks to enhance regional fuel distribution and transportation efficiency by expanding its operations through interconnected ventures, such as terminal and multimodal logistics.
Last week, EDR CEO Takele Uma led a delegation that met with senior officials from the Djibouti Ports and Free Zones Authority (DPFZA), including Chairman Aboubaker Omar Hadi.
The discussions centered on critical issues, such as securing a freight forwarding license for EDR, a joint venture between Ethiopia and Djibouti, and improving infrastructure to facilitate smoother cargo movement between Djibouti’s ports and landlocked Ethiopia, which depends heavily on Djibouti for international trade.
One of EDR’s major proposals is to construct a 17-kilometer railway line from Damerjog Liquid Bulk Port to Nagad, the largest and most distant railway station on the southwestern outskirts of Djibouti City.
This line would specifically enhance fuel transportation by rail, addressing a significant gap in Ethiopia’s logistics network.
The Damerjog Liquid Bulk Port, a modern facility capable of accommodating next-generation oil tankers, is located near the Somaliland border and is part of the Damerjog Industrial Park development, which includes an oil terminal. EDR’s proposed rail link aims to improve the efficiency and reliability of fuel imports and distribution in the region.
A feasibility study conducted by Great Horn Investment Holding (GHIH), a subsidiary of DPFZA, estimates the project’s capital expenditure (CAPEX) at USD 90 million, or USD 5 million per kilometer. Founded in 2016, GHIH specializes in multimodal transport solutions for logistics, aviation, and maritime industries.
During the meeting, EDR also expressed interest in investing in Damerjog’s fuel storage facilities, proposing a 49% ownership stake in the project, which includes infrastructure for jet fuel handling.
Experts emphasize that the Damerjog facility will be vital in ensuring a sustainable fuel supply for the entire region, not just for Ethiopia.
Currently, Ethiopia relies on the Horizon Djibouti Terminal, developed by the UAE in 2005, which has an annual capacity of 4.5 million tons.
In contrast, the Damerjog Liquid Bulk Port, which is nearing completion as part of the USD 4 billion Djibouti Damerjog Industrial Park, is expected to handle 13 million tons annually.
Although the Ethio-Djibouti Railway became operational in 2018, it has not yet transported oil due to the absence of connections between Djibouti’s terminals and Ethiopia’s depots. Consequently, 110 tank wagons purchased for fuel transport remain idle.
To address this issue, EDR is prioritizing a rail link to the Awash Oil Depot, Ethiopia’s primary national fuel terminal located 235 km east of Addis Ababa.
Sources indicate that this connection, just 300 meters from the Ethio-Djibouti Railway, is nearing completion.
“Transporting oil via rail is a top priority for Prime Minister Abiy Ahmed, which is why this line will be finalized shortly,” the sources added.
EDR and DPFZA are exploring the development of joint-venture dry ports at Nagad and Indode Stations, the latter situated on the southeastern outskirts of Addis Ababa. This project will involve collaboration between GHIH and EDR.
During discussions with a delegation from the China Development Bank and the China-Africa Development Fund, DPFZA Chairman Omar Hadi highlighted the need for USD 150 million in financing for two major initiatives: the Nagad-Damerjog railway connection and the establishment of new dry ports in Nagad (200 hectares) and Indode.
Sources indicate that both EDR and DPFZA have agreed to continue discussions to finalize the terms of cooperation, investment structures, and implementation roadmaps.
The USD 4 billion electrified Ethio-Djibouti Railway, in which Djibouti holds a 25% stake, is experiencing increased activity as EDR expands its focus beyond rail transport.
Through its new subsidiary, Global Logistics, EDR is actively entering the multimodal logistics sector, integrating land and maritime transport services to enhance regional trade connectivity.
This strategic expansion highlights EDR’s growing role in improving transportation and energy infrastructure in East Africa, facilitating more efficient trade flows between Ethiopia and Djibouti.
