The Ethiopian Railway Corporation (ERC) terminated the consultancy contract it had with SweRoad (Swedish National Road Consulting), a Swedish Transport Administration subsidiary, on the Sebeta-Mei’so-Dewale railway project.
According to our sources at the consultancy firm, the firm that signed the contract with the state corporation, in regards to the railway project early last year, has officially stopped operations a few weeks back.
However, our sources say, the main reason for the termination of the contract with ERC is due to the disagreement between the Swedish consultancy firm and the Chinese contractor that is engaged on the construction of the project. This alleged fact was however denied by officials of the state corporation.
Debo Tunka, deputy CEO of the Infrastructure Division of ERC, informed Capital that the consultancy contract was terminated by the corporation based on its agreement with the financier, the Chinese Import-Export (EXIM) Bank.
According to our sources at the corporation, the new consultancy firm that will replace the Swedish firm has already arrived from China a few weeks ago. The deputy CEO also confirmed that the China International Civil Engineering Consulting is already on the ground and has started evaluating the site to commence consulting operations.
According to Debo, SweRoad had been selected by an international bid to consult on the 317km Sebeta-Mei’so-Dewale railway project, but this was before the corporation secured the necessary finance from the Chinese EXIM Bank. “The Swedish company was replaced due to the deal with the financier, that stipulated that the consultant had to be nominated by the bank,” he explained.
“We did not have any problem with the Swedish company and still do not; it is only because of one of the conditions in the deal with the financier, China EXIM bank, that we terminated our contract with them,” he reiterated.
Sources at the corporation stated that ERC officials wanted the Swedish company to continue with its consulting duties; however, all their attempts to convince the bank were in vain.
The two companies who allegedly disagreed on several issues on this project, SweRoad and the China Railway Engineering Corporation (CREC), are also working together on the 34km Addis Ababa city light railway project (LRT), which is financed by the Chinese government.
The Chinese EXIM finances 85 percent of the Sebeta-Mei’so railway project and the remaining balance is covered by the government of Ethiopia largely from the finance it collects through from the telecom monopoly, Ethio Telecom. The total cost of the project is USD 1.1 billion.
The other Chinese contractor, China Civil Engineering Construction Corporation (CCECC), has won the bid for the second phase of the project at the cost of USD 1.2 billion. This portion will stretch from Mei’so to the Djibouti border town of Dewale, and is 340 km long. Our sources also indicated that the Chinese consultant firm that is in the process of taking over the Sebeta-Mei’so project, will also control the Mei’so-Dewale undertaking. This represents the second leg of the new railway project that is going to connect Ethiopia with Djibouti, although it hasn’t been officially confirmed by the authorities of the corporation. The construction of the 656 km of railway line between Addis Ababa and the border of Djibouti is expected to be completed before other national railway projects underway.
On the initial deal with ERC, SweRoad had agreed to consult on both the Addis Ababa LRT and the 656 km Sebeta-Dewale project at the cost of USD 18 million.
Currently, two other railway projects have been awarded to a Turkish and an Indian company, respectively, in the past fiscal year. The Turkish company, Yapi merkezi, is constructing the railway from Awash-Woldiya/Hara gebeya at the cost of USD 1.7 billion. Similarly, the China Communications Construction Company (CCCC) is contracted to construct and complete the 268.2 km Mekele-Woldiya railway project which will cost USD 1.6 billion.