Wednesday, February 8, 2023
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BusinessLack of finance derails second railway project

Lack of finance derails second railway project

Djibouti railway fetches 648.6 mln

The Ministry of Transport (MoT) disclosed that the construction of Ethiopia’s second railway project a.k.a. the Awash-Kombolcha-Woldia/Hara Gebeya railway project has made little progress in the past nine months due to financial shortages.

The Minister of Transport, Dagmawit Moges, presenting a nine month report before the House of Peoples’ Representatives (HPR) said that the construction of the project, which stretches from the Eastern to the Northern part of the country, has only managed to reach 54 percent completion over the past five years.

In her report, she highlighted the projects’ performance which is divided in two phases, namely the Awash-Kombolcha/Hara Gebeya Phase and the Woldia/Hara Gebya-Mekelle Phase.

“For the Awash-Kombolcha/Hara Gebeya, our target (in the first nine months of the current fiscal year), was to achieve 9.6 percent of the project. However, the actual performance achieved during the reported period is only 5.75 percent (almost 60 percent off target).”

Similarly, for the Woldia/Hara Gebeya-Mekelle Phase, the plan was to achieve 6.7 percent of the project construction. Yet it only managed to achieve only 1.9 percent (around 28 percent off target).

Explaining the reason for the projects’ delay, the minister told MPs that, “Initially the project commenced based on an agreement to cover 40 percent of the projects finance from local sources [by Government], while the remaining 60 percent was to be collected from foreign lenders via soft loan,” she said adding, “However, it has only been able to solicit 28 percent of the required total budget from local sources while the expected financing from foreign lenders has not yet been successful.”

To sustain the construction of the projects, the minister told parliament that, “Taking into account the importance of the project for the society and the country as a whole, we are going to request the Ministry of Finance (MoF) to help us and allocate additional budget.”

Additionally, Dagmawit has told the House that the already operational Ethio-Djibouti railway, over the reported nine months, has fetched a sum of over 648.6 million birr. However, the revenue collected from the service has been short of its target achieving only 75 percent of its target. The target was to collect 856.14 million birr.

According to the minister, the stated nine-month revenue has been collected from mainly commuters, cargoes and various income generating sources.

In her report, the minister highlighted the revenue that has been collected so far from the transport service including the Addis Ababa Light Rail Transit (AALRT) and the Addis Ababa- Adama Toll Road, among others.

According to Dagmawit, the AALRT has brought over 87.2 million birr in revenue achieving only 67 percent of its target from the 132 million birr target it wanted to achieve. The service, according to Dagmawit, has transported around 29 million commuters during the nine months from the planned 44 million commuters achieving only 66 percent of its target. Meanwhile, the Ethiopian Toll Road Enterprise also offered services to more than 6.38 million vehicles and collected over 191.47 million birr in revenue. She noted that seasonal and routine maintenance works were also carried out on more than 13, 228 km of road.

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