Although the construction had been planned to commence several years ago, the project had been suspended due to lack of funding. Prior to the Chinese agreement, which was only announced last week, the Ethiopian government had invited a host of international railway companies to bid an engineering procurement contract on several occasions.
According to Hailemariam, government whip at parliament and board chair of the Ethiopian Railway Corporation (ERC), the Indian Government which was also invited to bid took too long to respond to the request. The ERC chair said the government had tried to obtain financing through various methods before the Chinese funding agreement.
Hailemariam Desalegn, has announced the government’s decision to commence the project late this year (2010), adding that priority will be given to railway lines running from Addis Ababa to Djibouti, Addis Ababa to Afar and West to Bedele from the capital.
The Djibouti line is a vital trade route, whilst the country’s major mineral resource areas are in Afar and Bedele, where potash and coal minerals are mined. Transporting these minerals by train, according to Hailemariam, is economically viable. Laying a one kilometer railway line requires an average sum of 40 million birr.
Allana Potash Corporation, a Canada-based company, recently announced that it had started exploration of potash at Denakil Potash Project in Afar region. Bedele is also one of the major sources of coal in the country, according to a study conducted by Coal Phosphate, an office under the Ethiopian Ministry of Trade and Industry.
Ethiopia has been considering the use of coal to help fill the energy supply gap.
Senior Chinese government officials will soon visit the Eastern African country to hold final discussions before the project kicks off.
“This project is one of the main strategic projects of the country within the coming five years”, Hailemariam said.