The Ethiopian Railway Corporation (ERC) disclosed that it will not be able to start transporting fuel by train on the main Ethiopia-Djibouti railway line as trunk lines to the Horizon Djibouti Terminal (HDT), a fuel port in Djibouti, and the Awash fuel reserve depot, which is Ethiopia’s strategic national fuel reserve depot, have not been built.
ERC has successfully completed the construction of the 780-km Ethio-Djibouti Railway line stretching all the way from Sebetta town to neighboring Djibouti at a cost of 3.5 billion dollars replacing the century-old line built during the reign of Emperor Menilik. The corporation has imported locomotives and wagons that can handle the country’s import and export trade which mainly depends on the port of Djibouti. It is currently testing and commissioning the railway line which costs three million dollars per km.
The new railway line is designed to transport mainly imported dry cargo and fuel, both of which are currently transported by truck at a prohibitive cost. Transportation is the single largest cost for importers and exporters these days. Manufacturers particularly complain that the high cost of transportation is undercutting their competitive edge in the global market.
ERC had plans to transport fuel by train as the cost it incurs is much lower compared to the current mode of transport. However, the fact that the trunk lines connecting the main line to Horizon Djibouti Terminal and the Awash National Fuel Depot, transporting fuel by rail would be impossible for some time to come.
At the African Refiners Association’s (ARA) Storage and Distribution Forum held from November 8-9, 2016 at the Addis Ababa Hilton Hotel Yunus Mushaga, chief engineering, procurement and maintenance department at ERC, revealed that the corporation has faced severe constraints to start transporting fuel by rail from the port of Djibouti to central Ethiopia.
“The challenge we have is the rail links connecting the trunk lines to the depots along the corridor are not constructed. We have to be honest; I think this year we cannot transport oil by railway because there is no link with the Horizon terminal and also to Awash and other depots. This is the biggest challenge we have faced and we need to tackle it,” Yunus said.
He added that the loading facilities at Awash and Horizon terminal are not installed and may take time to complete. “We have faced a big stumbling block in this area,” he said.
Yenus told The Reporter that the reason why the trunk lines have not been built is that the Ethiopian government’s focus was on building the main railway line. He said the construction of the trunk lines was not included in the contractual agreement. “We first had to build the main line. Since the trunk lines are many we would need to conduct a study and build them later based on the study. We would connect the railway line to Industrial zones, dry ports, national depot and private depots.”
Yenus noted that from the Djiboutian side the government of Djibouti has to build the trunk line to Horizon terminal. “Horizon Djibouti Terminal Limited (HDTL) is ready to collaborate by allocating the required plot and other facilities. It is up to Djibouti Railway to construct the connecting rail. They do it according to their own schedule but we are following up the developments. From our side, we should connect the railway line to Awash depot. The Awash depot is a national reserve depot and currently it is not operational. So, we asked the Ethiopian Petroleum Supply Enterprise (EPSE) to set aside some part of the Awash depot for operation. They said that it is beyond their mandate and requires the government’s decision. So, we have asked senior government officials to pass a decision on the matter and awaiting their response,” he said.
He said that the government needed to decide promptly on allocating part of the Awash depot to the operation.
“This should be an immediate measure to be taken by the government. It is also incumbent up on it to finance the installation of additional facilities and rail links required at the Awash depot.
“The Djiboutian government also has to approve the expansion project and installation of additional facilities required at horizon terminal. EPSE and HDTL need to install the necessary loading and discharging facilities. ERC has presented its request to the Ministry of Transport and the Ministry of Public Enterprises.
However, EPSE partially refutes ERC’s statements. CEO of EPSE, Tadesse Hailemariam, told The Reporter that the issue of operational depot should not be cited as the cause for the existing problem. “The major challenge is that ERC has not connected the railway line to Horizon terminal and Awash depot. It is true that the Awash depot is a national reserve depot not operational depot. But, we have asked our board for budget and we are already constructing an operational depot at Awash at a cost of 110 million birr. The operational depot can handle 30,000 m cu of fuel and the construction would be completed in May 2017 before ERC builds the connecting rail,” Tadesse said. The Awash national fuel reserve depot has a storage capacity of 100,000 m.cu.
Tadesse said EPSE intends to build a new national reserve and convert the old Awash national reserve depot into an operational depot. “As there is effort underway to build an oil pipeline from Djibouti to Awash we shall leave Awash depot as operational depot and build another national reserve depot. As Ethiopia’s fuel demand is growing the Djibouti fuel port is not able to accommodate the growing fuel import. So, we have to transport the fuel efficiently to Ethiopia. Therefore, we are planning to make the Awash depot an operational depot and build another national reserve depot.”
EPSE is also planning to build a fuel depot in Dukem town where major fuel marketers such as NOC and Total have fuel depots. ERC is thinking of transporting fuel by train to Awash and then fuel marketers will transport the fuel by trucks. But in the future there is a plan to connect the railway line to the Dukem depots. “If we can access Dukem the rail transport will be more beneficial. We also can access the central market at lower cost.”
Yunus underscored that train transport is cheap and safe. “We use electricity to power the locomotives and electricity is cheaper than diesel. It is ecologically friendly. Rail transport is the safest mode of land transport except pipeline. We give priority to fuel transport not because we make money out of it but because it is a strategic product that needs safety. This railway is not built for profit but to boost the economy, to be an engine of growth. The price will be as cheap as possible.”
Rail transport can protect the fuel from theft and adulteration as the train stops at a limited number of stations and is escorted by security forces. ERC envisages transporting 40 percent of the fuel import by train.
ERC has already bought 110 fuel tanker wagons each weighing 70 tons. Each wagon can carry 80 m cu of fuel and can go 100 km per hour. The 110 wagons would be in three set of trains each having 36 wagons. One train can transport 2.8 million liters of fuel (gas oil, gasoline and diesel), the equivalent of 60 fuel trucks.
Each wagon is 12.3m long. The 36-wagon train set would be 500m long. Though the train can travel at 100 km per hour it will be limited to 80 km per hour due to safety reasons.
Ethiopia’s fuel import is growing at an annual rate of ten percent and has reached 3.6 million metric tons. The country spends more than 2.8 billion dollars on fuel import.