23 March 2014

Ethiopia: Wheels in Motion On World Bank Financed Oromia, Amhara Road

The contract is the first in Ethiopia to give the responsibility of maintenance to the construction company

Ethiopia and the World Bank (WB) have signed a 320 million dollar contract for the upgrading of the 258km Nekemte-Bure road that will connect the Oromia and Amhara regions.

The deal is the first road construction project in the country to make the selected contractor responsible for maintenance for six years after its completion. The agreement was signed on Tuesday, March 18, 2014, by Ahmed Shide, State minister for Finance & Economic Development, and Guang Zhe Chen, the WB's director for Ethiopia, in the premises of the Ministry of Finance & Economic Development (MoFED) on Algeria Street at Sidist Kilo.

"We expect that this form of contract will lead to an improvement in quality and greater control over the final cost of the works - both critical issues for the government," Chen said at the event.

Upon completion in 2019, the project is expected to benefit around 600,000 people who live in close proximity to the road. Consumers and producers based within the project area are ultimately expected to benefit from it, says Ahmed.

The construction consultant is yet to be selected in a tender this fiscal year for the project, which will begin early next year, according to Samson Wondimu, communications director of Ethiopian Roads Authority (ERA).

The project, which will provide a strategic link between Bure - a town located in West Gojjam Zone of the Amhara Region, 411km from Addis Abeba - and Nekemte - 365km from Addis Abeba in the East Wollega Zone of the Oromia Region - and forms part of the regional road link to Sudan, will be financed by a 320 million dollar loan from the WB as part of the 385 million dollar total project cost. The Ethiopian government will contribute 65 million dollars. The project was approved by the Board of Executive Directors of the WB on February 19, 2014. The loan is a concessional type (with no interest rate), with a maturity period of 40 years and a grace period of 10 years.

The project includes the upgrading of the above mentioned road, supporting the enhancement of Road Asset Management Practice and supporting the Road Safety and Institutional Development.

The WB and Ethiopia's long standing partnership in the transport sector goes back to 1950, when Ethiopia became the first country in Africa to receive funds for the maintenance of around 500km roads throughout the country.

Since the commencement of the Road Sector Development Program (RSDP) in 1997, the Bank, through six phases of support, has provided a total of 1.07 billion dollars for the upgrading and expansion of 3,725km of roads, which constitutes about six percent of the country's road network.

The WB has provided lending for more than 150 projects in Ethiopia, including infrastructure, protection of basic services, food security and education. As of January 2014, there are 25 active projects that are supported by the WB,With a net commitment value of more than six billion dollars.

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