Sunday, February 25, 2024
BusinessThe Ethiopian Railway Corporation declares 9.7 bln loss

The Ethiopian Railway Corporation declares 9.7 bln loss

Gov’t authorizes its 221 billion birr capital raise request

The Ethiopian Railway Corporation (ERC) concluded the just ended fiscal year with a 9.7 billion birr loss, according to the Ministry of Finance’s report on state-owned enterprises (SOEs).

The Ethiopian Railway Corporation declares 9.7 bln loss | The Reporter | #1 Latest Ethiopian News Today

The just concluded fiscal year proved challenging for Ethiopia’s state-owned enterprises (SOEs), particularly the Railway Corporation. While profits before tax of SOEs grew a robust 59 percent, the ERC reported a significant 9.7 billion birr loss.

The government planned to earn 6.8 billion birr in pre-tax proceeds from 36 SOE’s this fiscal year. But the Enterprises outperformed targets, collectively pulling in 8.1 billion birr – in spite of the Corporation’s nearly 10 billion birr loss, according to the annual report presented to officials from the Ministry of Planning and Development, and other stakeholders.

- Advertisement -

Despite the loss, the Council of Ministers also authorized the Corporation’s request to raise capital to 221 billion birr.

The report provided an update on state ventures shepherded by Public Enterprises Holding and Administration (PEHA) but left out enterprises under Ethiopian Investment Holding’s (EIH) watch.

Foreign currency earnings for the SOEs came up short of the USD 1.5 billion goal, achieving only 37 percent or USD 540 million. This marked a 58 percent decline compared to the USD 1.23 billion foreign exchange contributed last fiscal year.

Over half (56 percent) of the USD 540 million came from the Development Bank of Ethiopia (DBE), with 24 percent from industrial park exports and 18 percent from electricity exports.

The administration had counted on racking up 322 million birr profit dividend from three select SOEs. But profits only paid out 10.4 percent of that at 33.5 million birr. This poor result was mainly attributed to the Ethiopian Industrial Inputs Development Enterprise and Ethiopian Postal Service enterprise facing cash flow shortages, according to the report.

Outside of the Corporation, other SOEs have requested to raise capital throughout the period. The National Livestock Health Institute applied to up its capital to one billion birr currently under consideration. It floated channeling 40 percent of dividends that go to the government to raise capital.

Debt restructuring is also underway for Ethio-Engineering (formerly MetEC).

Of the 36 SOEs under federal authority, 26 major Enterprises – including Ethiopian Airlines, Ethio Telecom, the Commercial Bank of Ethiopia and Ethiopian Railway Corporation – were placed under the newly formed Ethiopian Investment Holding.

The remaining 10 SOEs continued oversight under the PEHA. While more profitable SOEs transitioned to the EIH, those grappling with debt and performance issues like Ethio-Engineering and the DBE maintained governance under PEHA.

Officials at PEHA have a differing perspective on ERC’s reported performance.

“ERC is investing most of its capital into infrastructure. So it cannot really be called a loss,” an official at PEHA told The Reporter. “ERC’s financing system also raises some concerns. It takes out loans itself in order to invest in infrastructure projects that do not provide significant returns. So the corporation pays back the loans itself. Its financing system need reexamination.”

The official further noted some figures in the Ministry of Finance’s report deviated from a separate report prepared by PEHA.

Abebech Diriba, communications head at ERC, confirmed the corporation’s 221 billion birr capital raise but declined to comment on the loss figures cited in the report.

- Advertisement -

Video from Enat Bank Youtube Channel.

Subscribe

- Advertisement -

Popular

More like this
Related

Championing peaceful dialogue, accountability

The findings of two reports issued by the Ethiopian...

Commission report implicates gov’t, OLF-Shene, Amhara forces in Oromia war crimes, crimes against humanity

A new report from the Ethiopian Human Rights Commission...

Rescue eludes Delanta’s desperate trapped opal miners

A breadwinner for two households – his own and...

Coffee shipments sit idle as vessels avoid Horn ports

Cash-strapped exporters, suppliers leave coffee farmers in limbo Ethiopian...