Addis Fortune (Addis Ababa)

17 February 2013

Ethiopia: Optimal Railway Return Relies On Investment Model

column

In recent years, East African countries that form the Horn of Africa have generally been experiencing unprecedented economic growth. Whilst Ethiopia is no exception, the impact of the recent global economic downturn has affected the region, but possibly to a lesser extent than in some developed countries, mainly due to the political stability which emerged during the same period.

It is anticipated that the region will eventually assist sub-Saharan Africa as a whole in overtaking the Middle East to become the second fastest growing region in the world after emerging Asia. Nigeria and Ethiopia are currently leading the indices of potential investor destinations in Africa and the African economic growth rates.

Ethiopia's enormous and generally unexploited resources along with an investment friendly environment have played a prominent role in attracting foreign direct investment (FDI). As a result, FDI has increased significantly over the past few years.

The country owes its position in the indices of African potential investor destinations to significant infrastructure investment, and expansion opportunities in railways.

Whilst it is clear that the country is endowed with abundant and diversified natural resources, the quality and quantity of public, private and freight transportation systems which are currently available in Ethiopia have severely restricted and will continue to restrict economic growth from these resources. Robust and sustainable systems need to be provided to best service the country's transportation requirements.

Within Ethiopia itself, there is significant mineral wealth which is as yet generally untapped, as well as the established export trade of coffee, livestock and other agricultural products, all of which can be significantly enhanced by the construction of an efficient railway system.

Further benefits can be generated from the expansion of Ethiopia's planned national railway network into neighbouring countries to enhance their economic potential. Rail transportation of petroleum products, minerals and containerised freight represent significant rail freight market share potential for the nation.

It is therefore quite evident that there is an immense need for additional capacity to be provided for the movement of agricultural and other local products, as well as mineral and other resources, both in Ethiopia and its neighbouring countries. However, these needs and values can only be realised through the construction of high capacity and sustainable rail links and supporting sea port facilities.

It is acknowledged that the government of Ethiopia has, for many years, recognised the need to improve rail transportation throughout Ethiopia and has now confirmed its commitment to development of a standard gauge railway network by announcing a policy statement through its Growth & Transformation Plan (GTP).

In November 2007, the Ethiopian government created the Ethiopian Railways Corporation (ERC) which was mandated to develop and deliver a major project railway transportation investment strategy. Ethiopia, and developing countries in the sub-Saharan African region, are in the unique position of being able to learn from and utilise many technological advances in rail transportation systems from developed countries, since they first evolved in the United Kingdom over 150 years ago.

Also, it is important that any investment provided for the new railway network uses the most efficient and suitable of these available technologies for development of the national railway network in Ethiopia.

One of the most fundamental decisions which has to be made in the development of any railway network is the gauge of the track, or the distance between the rails on which the trains run, which generally varies between one metre and 1.6m approximately. The shape and size and the trains which run on the new tracks is also very important, particularly in view of the world's increasing awareness of the need for optimum use of energy and energy saving techniques and technologies.

At the time of the initial railway concepts in Africa and the subsequent construction of railways in this region, around 100 years ago, most of the tracks laid were narrow gauge, either one metre or 1.067m,. This was quite satisfactory for railway system performance and capacity aspirations at that time. However, many of these systems have either been removed, fallen into disrepair or continue to operate inefficiently with significant subsidised support, as is the case with the dysfunctional line from Addis Abeba to Djibouti.

Currently, East Africa is comprised of a huge and growing market, and significant levels of investment are planned. Kenya, Uganda and Southern Sudan have developed (or are developing) major infrastructure enhancement proposals, including railway transportation using a 1.435m track gauge.

These regions have also recognised the operational, capacity and economic benefits of moving to a standard gauge operation, instead of rehabilitating narrow gauge systems, to ensure the key objective of developing an integrated, efficient, high speed, high capacity railway transport system. Thus they would be able to ensure competitiveness and commercial viability with other forms of bulk goods transportation.

From information already publicised, the decision by the Ethiopian government to adopt the international standard gauge of 1.435m between the running rails is considered to be the best and most advantageous technology for Ethiopia. The railway network which has been planned will provide significant social and economic benefits to Ethiopia. Therefore, it is vital that railway capacity and infrastructure planning also take into account the likely initial and long term requirements of neighbouring countries, and align investment accordingly.

However, criterion such as the safe maximum operational speed of trains, tonnage, locomotive capacity and the number of operational tracks which are provided between and at main centres of population on the planned network, must be evaluated on a location specific basis by suitably qualified individuals. Customised software should be used during evaluations to ensure that correct standards of railway infrastructure and assets are provided throughout the planned life cycle of the line, to guarantee viability and sustainability.

Significant statistical data is available within the Central Statistical Agency (CSA) and other governmental organisations to allow completion of robust transport planning studies. Acquisition and interrogation of this data will allow input for demand forecast and train performance modelling programmes to be prepared, and to confirm any preliminary design assumptions made to date. This would also allow informed decisions to be made regarding final design concepts that may incorporate passenger and freight capacities, train lengths and weights, and corresponding railway infrastructure requirements.

Whilst freight traffic volume and services will dominate planned railway networks, it should be noted from surveys carried out by the Ethiopian Roads Authority (ERA) in 2007 to 2010, anticipated passenger loadings are significant, particularly between Addis Abeba and Adama (Nazareth), and between the capital and Ambo. The use of suburban services to complement long distance passenger train services and reduce traffic congestion and carbon emissions needs to be considered.

Planning of all initial and long term train services must be modelled to validate project concepts and determine track infrastructure, frequency of passing loops, station platform numbers and capacities, freight and train stabling layout requirements and other operational infrastructure requirements.

Utilisation of Le Ghare as a terminal station for suburban and intercity passenger patronage and transfer to the planned Addis Abeba Light Rail Transit (LRT) system must also be considered. Production of robust economic design, construction, operation and maintenance standards which allow optimum utilisation of the local material, plant and labour resources within Ethiopia and minimise foreign imports, is vital to ensure project capital costs are minimised and optimum sustainability for maintenance of infrastructure and assets are provided.

Indeed, the government has access to numerous international standards which should be expored and only those selected for use on the planned network should be adopted. Networks should also be protected from extreme floods.

It will be highly essential to assess the flood risk from extreme flood events for both the National Rail Network (NRN) and the LRT projects. Some of the existing roads along the proposed LRT route (Ayat to Megenegna) in Addis have frequently flooded this winter, making the design principles of the LRT finished floor level critical along this route.

It is imperative that a robust flood risk management mechanism be put in place. Sufficient detailed studies regarding the surrounding catchment may not have been undertaken when designing the LRT drainage systems, to allow a sound assessment to the flood risk.

Due to the urbanisation of the surrounding catchments of Addis Ababa and the climate change scenarios, the rainfall run-off will continue to rise in the future. Based on the existing information, the drainage arrangement for the LRT is to connect the LRT drainage system to the existing road drainage systems, which are already below capacity.

The design, construction, operation and maintenance of the railway infrastructure and its assets is a hugely complex task, for which previous experience and associated skills generally do not exist in Ethiopia at present. Procurement and management of associated infrastructure and assets is extremely costly and most difficult to modify during operation of the railway, without major disruptions to services and a severe impact on revenue collection.

Consequently, whole life project costs for new railway infrastructure are unlikely to provide a return on investment for at least 20 years, depending on the revenue models which are used and the tariffs charged. The use of local resources must be exploited to their full potential to ensure that the relatively cheap and available labour resource, which exists at all levels of academic qualification, is utilised to its full potential to minimise construction, operational and maintenance costs.

In parallel with this initiative, development of railway support industries in Ethiopia must be facilitated for human resources under separate investment arrangements. Short, intermediate and long term business development opportunities must be identified.

It is therefore essential that all aspects of project viability, accountability and due diligence exercises are completed and independently assessed at each stage of the project development and for each planned railway corridors.

Indeed, the proposed railway network will be the most important infrastructure development project in Ethiopia. It will also eventually be the biggest employer in the country. Yet, its benefits will depend on the way the project and its support activities are undertaken.

Dr Manaye Ewunetu is the Managing Director of Me Consulting Engineers, Based in the United Kingdom, for Africa and Middle East.

Ads by Google

Copyright © 2013 Addis Fortune. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.