The Reporter (Addis Ababa)

22 March 2014

Ethiopia: Transnet to Rail in for Railway Operations

South Africa's biggest transport system operator, Transnet SOC Limited, is dealing with the government of Ethiopia to have a business stake at Ethiopia's upcoming railway system, The Reporter has learnt. According to Assefa Gebremichael, Chief Executive Officer (CEO) of Taycon Real Estate and representative of Transnet, after four months of talks, Transnet is progressing to ink a Memorandum of Understanding (MoU) with Ethiopian government officials in two weeks' time.

Assefa said that although the process is at a formative stage, Transnet will seek to work with both the Ethiopian Railways Corporation (ERC) and the Metal and Engineering Corporation (MeTEC) At least for the moment, that is what is included in the package plan for Transnet, Assefa said. The South African giant is known to have a long-lasting operational stand across Africa.

Transnet will bring in alliance or co-production schemes in rolling stock with MeTEC and other operational services with ERC. And for such propositions, Transnet's high-level officials were in the capital for deals. A couple of weeks ago they met with Brigadier General Kinfe Dagnew, Director General of MeTEC and Engineer Getachew Betru (Ph.D.), CEO of ERC. Transnet is looking at both the city's light railway and the nationwide railway systems to embark on. Assefa told The Reporter that the South African giant is close to inking the deals to become physically present in the capital after several weeks of paper work.

The MoU will envisage Transnet's interest. Transnet from the southern tip of Africa together with Ethiopia from the east tip are believed to have a new regional powerhouse in the continent. The tripartite merge is also in line with the New Economic Partnership Development (NEPAD) that has been focusing on continental interconnection and integration. Assefa has been involved in bringing in some US companies who are willing to have public private partnership modalities in Ethiopia. He is behind those companies that are zealously waiting for the approval of the government to settle in the ongoing light railway routes of the capital.

The Ethiopian Railways Corporation (ERC) recently announced that it had proposed to develop rail stations for commercial and residential purposes. The new plan is called Terminal Oriented Development (TOD) where some US companies are willing to develop the entire 41 stations along the light railway routes. The US companies and some other South African contenders had presented their attentiveness on November 27 of last year. Since then nothing has publicly come out from the government's side towards TOD.

According to ERC, the Ethiopian government no longer will finance the USD 450 million loans embarked on the Light Railway Transit (LRT) project stretching some 34 km in the capital. It can be recalled that the Chinese Ex-Im bank has financed the project and the other Chinese firm - China Railways Engineering Corporation - was handed the construction of LRT. According to the recent updates of ERC, LRT is way over 50 percent complete. In addition to the LRT, ERC manages the practicalities of nationwide railway lines, which in addition to the Chinese, Russian, Brazilian and US companies are coming here to take part. If realized, Transnet will be the first African firm to engage in Ethiopia's railway project.

Transnet SOC Ltd is a large South African rail, port and pipeline company headquartered in the Carlton Center in Johannesburg. It was formed as a limited company on 1 April 1990. A majority of the company's stock is owned by the Department of Public Enterprises, or DPE, of the South African government. The company was formed by restructuring the operations of South African Railways and Harbors and other existing operations and products into business units.

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