Project ID: 1471

China Eximbank provides $403.7 million buyer’s credit loan for Addis Ababa Light Rail Project (Linked to Project ID#69476)

Commitment amount

$ 496564123.21654075

Adjusted commitment amount

$ 496564123.22

Constant 2021 USD


Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]




Transport and storage (Code: 210)

Flow type


Level of public liability

Central government-guaranteed debt

Financial distress






Mixed (The next section lists the possible statuses.)





Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle


Completion (The next section lists the possible statuses.)










Planned start


Actual start


Planned complete


Actual complete


NOTE: Red circles denote delays between planned and actual dates



On June 22, 2011, China Eximbank and the Ethiopian Railways Corporation (ERC) — an Ethiopian state-owned enterprise — signed a $403,750,000.(ETB 7,347,972,973) buyer’s credit loan agreement for the Addis Ababa Light Rail Project. The borrowing terms of the loan (PBC) were as follows: an interest rate of 6-month LIBOR plus a 2.6% margin, a 3 year grace period, and a 23 year maturity. The Government of Ethiopia provided a sovereign guarantee for the loan. The borrower was expected to use the proceeds of the loan to finance 85% of the cost of a $475 million commercial contract [ID# ET/ERC/CREC/0901] between the ERC and China Railway Group Limited (CREC), which was signed on September 3, 2009. The ERC was responsible for directly funding the remaining 15% of the commercial contract cost ($71,250,000). Its direct contribution was payable in ETB as a down payment (with exchange rate applicable to the base date. According to the Government of Ethiopia’s Aid Management Platform (AMP), this loan achieved a 42% disbursement rate, with China Eximbank making 6 loan disbursements (worth ETB 3,097,176.899) between 2014 and 2016: an ETB 327,586,207 disbursement on January 8, 2014, an ETB 905,511,811 disbursement on July 8, 2014, an ETB 680,000,000 disbursement on October 8, 2014, an ETB 989,898,990 disbursement on January 8, 2015, an ETB 544,700 disbursement on October 7, 2015, and an ETB 193,635,191 disbursement on April 7, 2016. The Addis Ababa light rail metro system is a 31.6 km electrified light rail transportation system with two lines: a 17.4 kilometer east-west line and a 16.9 kilometer north-south line. The east-west line stretches from Ayat village to Tor Hailoch passing through Megenagna, Legehar and Mexico Square The north-south line passes through Menelik II Square, Merkato, Lideta, Leghar, Meskel Square, Gotera and Kaliti. The light rail metro system was designed to facilitate transportation in a city of 5 million clogged with other forms of transportation. Each train was planned have a capacity to carry 286 passengers for a maximum capacity of 300,000 passengers/day. CREC was the EPC contractor responsible for project implementation. The EPC contract identifies January 31, 2012 as the expected project commencement date and January 30, 2015 as the expected project completion date. It also identifies a defects liability period of one year. The project site was ultimately handed over to the EPC contractor on January 31, 2012. However, construction did not begin until April 2013. Trial operation of the railway began on February 1, 2015. The north-south line commenced operations on September 20, 2015, and the east-west line commenced operations on November 9, 2015. According to official figures, the rail system carried on average 105,000-110,000 daily passengers during its first 14 months of operations. Tickets initially cost two to six birr ($0.08 to $0.20), depending on the distance of the trip. ERC earned $5 million in revenue from the light rail line during the Ethiopian Fiscal Year 2016/17, and by January 2017, the rail system had carried over 50 million customers. The rail system was initially supposed to be run by the Shenzhen Metro Group and CRECG until 2020. However, in 2018, the ERC was prepared to take over the operation of the railway from CRECG. Since then, the railway has faced an array of operational performance and revenue generation problems. The Addis Ababa light rail metro system initially began operating with 40 trains, but as of 2021, it was regularly operating with approximately 20 trains. Addis Ababa’s deputy mayor has also noted that the city’s electrical grid lacked the capacity to power the system before construction began. Even with its own dedicated power supply, the Addis Ababa light rail metro system still experiences power outages and delays, leading to packed cars and poor service. Additionally, in 2021, Ethiopia’s Office of the Auditor General found that, during its first four years in operation, the Addis Ababa light rail metro system generated $11.1 million of revenue but cost $154 million to operate. It found that the system was falling far short of its original feasibility study, which said it would pay for its construction costs within 10 years through ticket sales, advertising and renting out spaces in stations, among other methods: '[t]he feasibility study has been inadequate, and it was conducted without collecting enough information. […] This, coupled with the absence of a maintenance center to fix the trains that need repair and other factors, have contributed to the losses sustained by the light railway.' There are some indications that the China Eximbank loan for the Addis Ababa Light Rail Project may have financially underperformed vis-a-vis the original expectations of the lender. According to the Government of Ethiopia’s Aid Management Platform, as of September 2019, ICBC suspended about $67 million worth of loan disbursements 'due to [the] cross-default situation of the country’ (see Project ID#58616). Then, in August 2021, China Eximbank withheld $339 million loan disbursements for 12 projects and halted project implementation due to Government of Ethiopia’s rapidly dwindling foreign exchange reserves and debt sustainability challenges. Demisu Lemma, the Director of Chinese Cooperation at the Ethiopian Ministry of Finance, noted at the time that the Ethiopian Government was in discussions with China Eximbank about a potential debt rescheduling (that would involved a 5-year maturity extension and a 1-year grace period extension). Ethiopia’s Office of the Auditor General also found in 2021 that the ERC had fallen into arrears and paid $2.8 million in fines to China Eximbank for overdue loan repayments related to the Addis Ababa Light Rail Project. Then, after considerable delay, the G20 Common Framework (CF) creditor committee for Ethiopia convened in September 2021, with the French Government and the Chinese Government serving as co-chairs. The CF debt rescheduling talks were still ongoing in mid-2023.

Additional details

1. This project is also known as the Light Railway Project and the Addis Ababa Light Rail Transit (AA-LRT) Project. The Chinese project title is 亚的斯亚贝巴城市轻轨项目 or 埃塞——亚的斯亚贝巴轻轨. 2. AidData has estimated the all-in interest rate by adding 2.6% to the average 6-month LIBOR rate in June 2011 (0.398%). 3. The system identification number for this project in the Government of Ethiopia’s Aid Management Platform (AMP) is 87143122101162. 4. Behailu Sintayehu was the the ERC Project Manager of the Addis Ababa Light Rail Project. 5. One media source suggests that China Eximbank issued the loan agreement to state-owned Commercial Bank of Ethiopia, which then on-lent the proceeds of the loan to the ERC. This issue warrants further investigation. 6. The Ethiopian Government reportedly intended to use the Addis Ababa light rail metro system as a source of collateral to access bank loans for future extensions of the light rail metro system. Getachew Betru, CEO of Ethiopian Railways Corporation, has noted that ‘The Chinese city of Shenzhen was developed in the same manner.’ 7. As of June 2011, 1 Ethiopian Birr was equal to 0.058 United States dollars. 9. The commercial contract is also known as the ‘EPC/Turnkey Contract for Addis Ababa E-W & N-S (Phase I) Light Rail Transit Project’. 10. On September 1, 2014, the Chinese Government and the Ethiopian Railways Corporation (ERC) — an Ethiopian state-owned enterprise — signed a loan agreement worth approximately $77,065,407.531 (ETB 1,572,763,419) for the Power Supply System for Addis Ababa Light Rail Transit (AA-LRT) Project. This loan is captured via Project ID#69476. 11. The face value of the China Eximbank loan is identified as $475 million in the Chinese Loans to Africa (CLA) database that SAIS-CARI released in 2020 and re-released in 2021 and the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center released in December 2020 re-released in subsequent years. This appears to be an error that is based on the use of the commercial contract cost rather than the value of the loan that financed 85% of the cost of the commercial contract.

Number of official sources


Number of total sources


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Direct receiving agencies [Type]

Ethiopian Railways Corporation (ERC) [State-owned Company]

Implementing agencies [Type]

China Railway Engineering Corporation (CRECG) [State-owned Company]

China Railway Group Limited (CREC) [State-owned Company]

Ethiopian Railways Corporation (ERC) [State-owned Company]

Guarantee provider [Type]

Government of Ethiopia [Government Agency]

Loan Details


23 years

Interest rate


Grace period

3 years

Grant element (OECD Grant-Equiv)


Bilateral loan

Export buyer's credit

Investment project loan

Preferential Buyer's Credit