The government has been holding talks with European companies over the privatization of Addis Ababa-Djibouti Railway as part of its plan to privatize state-owned enterprises so as to reform the economy and expand the role of the private sector.
According to the Ministry of Transport and Logistics, the railway needs an additional investment of 800 million dollars in order to be fully operational and efficient.
“We and the government have been encouraging the Chinese companies to have some amount of share on the railway but the companies are undecided on the matter,” said Tilahun Sarka Director-General of Ethio-Djibouti Railway.
“The question arises on the financial capacity that is required in acquiring the rail,” said the director as he explained that the value is about 4 billion dollars, since 4 billion is the amount that went into the construction costs of the project. “A detailed valuation assessment is of course needed to know the exact value when privatizing the line,” Tilahun underlined.
Ethiopian Railways Corporation is among the major state-owned enterprises that have been announced as slated for partial or full privatization. Specific details on the privatization process of the Ethiopian Rails Corporation are yet to be announced.
“The government will reform the railway infrastructure to enable the private sector to enter the country, which will support the country’s economy by increasing the efficiency, modernization, revenue generation and viability of the sector,” said Dagmawit Moges, Minister of Transport and Logistics, on Monday, February 21, 2022 whilst attending the official launching of a new scheme called ‘commuter train’ that the Railway started which is said to offer convenient and cheap transportation services for the residents near the station and along the line.
“We launched it considering the many resident settlements along the line to which we have not yet set up a railway station. Thus we did so in order to allow them to enjoy the convenience of the railway transportation in addition to the existing 14 stations the railway has. Thus we have added 5 additional stations,” explained Tilahun with regards to the realization of the new commuter train scheme.
The Minister of Transport and Logistics, Semerita Sewasew, State Minister of Finance, and Zhao Zhiyuan, China’s ambassador to Ethiopia, were among the attendees at the commencement of the Addis Ababa – Djibouti commuter train service.
As indicated at the launching ceremony, Akaki, Awash, Mulu, Afdem, and Erer are the new 5 stations which now tally the number of stations to 19.
“Residents along the railway can take the commuter train from the 19 stations. Moreover, the railway will bring development in the areas along the rail line,” stated Tilahun.
“The 752-km transnational railway, as a flagship project in the Belt and Road cooperation, demonstrates the aspirations of African countries to spur continental free trade by augmenting intra-Africa infrastructure connectivity,” remarked Dagmawit.
The 760km electrified line which runs from Addis Ababa to the port in Djibouti City, was opened in October 2016. 70 percent of the 4 billion dollar project was financed by China’s Exim Bank. The Addis Ababa-Djibouti electrified railway, also known as the Ethiopia-Djibouti railway, was then contracted for build to the China Rail Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC).
With regards to its impact the railway has cut the transportation time for freight goods from more than three days to less than 20 hours and has also reduced the cost by at least one-thirds.
Ethio-Djibouti Standard Gauge Railway has been transporting fertilizer, cement, and metal products for the past four years. In 2021 the railway recorded 86.13 million dollars in revenue, a 37.5 percent increase in 2020. The line was used by 449 passenger trains and 1469 freight trains over the year, transporting 77,357 TEUs. The railway has also created numerous job opportunities for locals, with more than 4,000 locals employed so far, which accounts for over 90 percent of the total staff.
As Dagmawit suggested, the railway needs an additional investment of 800 million dollars to be fully operational.
Ethiopia has 75 percent share on the railway line that is 760km of which 100km is in the Djibouti border. Currently, the Chinese company is managing the Railway; the government pays about 60 million dollars per year to the managing company with the agreement set to stay for the next two years. The management which started in 2016 has gone on to train local employees who will take over when the time is due.
The government plans to expand the Addis Ababa-Djibouti railway line to 4,000 km as per the ten-year development plan by expanding the railway line and connecting it to other neighboring countries’ ports.
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