Seven financial institutions along with the Ministry of Finance and Economy Development (MoFED) and the Ethiopian Railway Corporation (ERC) are going to sign a loan agreement to construct the railway project that has been awarded to a Turkish company.
The signing ceremony was consecutively postponed, though it has been set to be held here in Addis Ababa in the presence of top government officials.
The signing ceremony will take place in the beginning of the coming budget year that will start on July 8. It will enable the Turkish construction giant, Yapi Merkezi to commence the 400 km railway project connecting Awash to the northern town of Weldya (Hara Gebeya), a section of the larger railway network running from Mekele via Weldya and Semera, to Port Tadjourah in Djibouti.
The Turkish EXIM Bank already has approved USD 300 million for the railway. It is the largest ever amount the bank has provided for one project in a country. “It is the first time one project has received this big a loan in Ethiopia from the side of Turkish and European financial firms,” Emre Aykar, chairman of Yapi Merkezi, told Capital at his head office in Istanbul.
The total amount that will come from Europe for the stated project is USD 1.4 billion.
He said that his company has created a link between European financial institutions and Ethiopia.
“We have managed to convince different European financial sources like SACE Group, Italy, EKF (Eksport Kredit Fonden), Denmark and others from Sweden, Austria and two from Switzerland,” Aykar said.
He said that during the current rainy season the company will focus on the establishment of camps, soil investigation and other related works and the ground work will commence in September.
The company has signed a USD 1.7 billion contract with the corporation to undertake the project.
The loan agreement ceremony was expected to take place in May, but some procedures with the banks and MoFED contributed to the delay, the chairman said.
Yapi Merkezi has handled big projects in places like Dubai, Saudi Arabia, Morocco, Algeria and Sudan.
The company officials stated that the current railway project in Ethiopia is a breakthrough for the company as they hope to expand their activity.
“We have big interest to be part of the country’s development,” Aykar said.
The project is expected to end within 40 months.
The China Communication and Construction Corporation (CCCC) will build the Mekele to Weldya part of the rail line. The estimated USD 1.5 billion cost is financed by the Chinese EXIM bank and covers some 260kms.
The section that stretches from Mekele to the Port of Tadjourah, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country. The Indian EXIM Bank has also pledged USD 300 million for the Asayita to Port of Tadjourah segment of the Mekele-Port of Tadjourah railway line.
The Chinese contractors, China Railway Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC) are currently constructing the Sebeta-Mei’so-Dewele railway line. For the 657km project, the Chinese Export Import (EXIM) Bank has provided the majority of the USD 2.3 billion needed.