Indian firm seeks contract to build Ethiopia’s rail network

May 24th, 2009 - 2:59 pm ICT by IANS  

By Groum Abate
Addis Ababa, May 24 (IANS) An Indian project management firm wants to participate in the building of Ethiopia’s 5,000-km national railway network that will also link it with neighbouring Djibouti in the Horn of Africa.

State Minister of Transport and Communication Getachew Mengistie said the Indian firm, Overseas Infrastructure Alliance Private Limited (OIA), has shown interest in the network the country plans to construct over the next seven years.

OIA general manager Austin Sequeira, accompanied by several of his staff, recently visited Ethiopia to discuss the project. The OIA delegation also went to neighbouring Djibouti on May 21 to meet President Ismail Omar Guelleh. The company has already signed with the government of Djibouti a memorandum of understanding for the preparation of the technical study on the proposed new railway line between Djibouti and Ethiopia.

Sultan Ahmed Bin Sulayem, chairman of Dubai World, signed some months ago a deal to rehabilitate the railway line that is over a century old, for a staggering one billion dollars. Reconstruction of the line would mean improved transportation times on the vital trade route between Addis Ababa and the port of Djibouti.

OIA specialises in the design and management of development projects and infrastructure. The company also undertakes techno-feasibility studies for setting up railway networks, including rail electrification and gauge change.

According to the state minister, his ministry is also looking for other countries’ proposals for the construction of the rail network.

Among the objectives of the new railway are assistance to farmers keen to supply their produce to local and international markets and the enhancement of domestic marketing, by expanding access to commodities produced in remote areas.

Feasible routes for the proposed line are being identified by consultants working with officials from the Ethiopian Railway Corporation (ERC). Areas where work is proceeding include Finote Selam, Bahir Dar, Wereta, Woldiya and Debre Birhan. Finote Selam and Woldia are seen as possible locations for “railway centres”.

The newly formed Ethiopian Railway Corporation (ERC) has been tasked to build a 5,000-km network connecting different parts of the country. The ERC was established in November 2007 under the supervision of the Ministry of Transport and Communications, after a decision by the Council of Ministers, with a paid up capital of $750 million.

In its initial phase, a railway network will be built in capital Addis Ababa.

According to the official website of OIA, the company has initiated feasibility studies in some emerging nations in Africa, the reports of which were presented to their respective governments.

OIA has long been participating in business in Ethiopia. It signed a contract in 2006 with the Ethiopian Electric and Power Corporation (EEPCo) to supply electrical equipment worth about $65 million for the installation of 132 KV transmission and distribution lines.

The Indian company was chosen without a tender process because it secured from the Indian government a loan of $65 million that EEPCo needed for the project.

OIA has also signed a $640 million contract with Tendaho and Fincha sugar factories for the expansion and launching of sugar development projects. According to the agreement, the Indian government would provide the stated sum required for undertaking the projects as a soft loan.

The company would undertake the project, according to the agreement.

India’s commitment to provide a line of credit of up to $640 million to support the sugar industry in Ethiopia is the largest ever line of credit that India has ever provided to any country.

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