25 January 2014

Ethiopia: Full Steam Ahead As Swiss Financier Jumps On Board

The Harro market railway project secured a loan facility in the past week for USD 1.4 billion from Credit Suisse, a Switzerland-based financial group.

The line stretches from Awash to Weldia, both in the Amhara Regional State, and is part of the national railway project that extends from Mekele, the capital of the Tigray Regional State, to Djibouti, via Semera, in the Afar Regional State.

The loan agreement will be signed on Wednesday (29) by officials from Credit Suisse and the Ministry of Finance and Economic Development (MoFED), sources told The Reporter.

Nine delegates from Credit Suisse recently met with professionals from the ministry to discuss the possibility of accessing a loan, with the two sides also deliberating on interest rates and the best way to service the deal. According to sources the board of directors at Credit Suisse has already approved the loan facility ahead of the signing ceremony this week. The loan will be used for the line that stretches through Awash to Weldia (Harro Market), part of the larger railway project that runs from Mekele via Weldia and Semera, to Port Tajura in Djibouti. Turkish company Yapi Merkezi secured the contract for the construction of the 389kms Awash to Weldia section, estimated to have cost USD 1.7 billion. Credit Suisse will provide USD 1.4 billion, with sources indicating the Ethiopian government will cover the difference of USD 300 million.

This is the first time that Credit Suisse has financed a project in Ethiopia, but sources revealed the Swiss multinational will actively participate in funding American and European corporations if they commit to undertake large developments in Ethiopia.

It was reported that the China Communication and Construction Corporation (CCCC) has secured construction for the Mekele to Weldia part of the rail line.

This project, estimated to cost some USD 1.5 billion, is financed by the Chinese EXIM bank and covers some 260kms.

The section that stretches from Mekele to Port Tajura, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country to the central, in addition to neighboring markets such as South Sudan.

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