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Overview

China Eximbank pledges $1.5 billion loan to Ethiopian Railways Corporation for the Mekelle-Weldiya Railway Construction Project

Commitments (Constant USD, 2023)$1,569,297,572
Commitment Year•2015Country of Activity•EthiopiaDirect Recipient Country of Incorporation•EthiopiaSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Pipeline: Pledge

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2015
End (planned)
Jul 1, 2015

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Policy Banks

  • Export-Import Bank of China (China Eximbank)

Receiving agencies

State-owned companies

  • Ethiopian Railways Corporation (ERC)

Implementing agencies

Government Agencies

  • Government of Ethiopia

State-owned companies

  • China Communications Construction Co., Ltd. (CCCC)
  • Ethiopian Railways Corporation (ERC)

Loan desecription

China Eximbank pledges $1.5 billion loan to Ethiopian Railways Corporation for the Mekelle-Weldiya Railway Construction Project

Interest type•Unknown

Narrative

Full Description

Project narrative

In January 2015, the Export Import (EXIM) Bank of China agreed to loan the Ethiopian Railways Corporation (ERC) $1.5 billion for the construction of the Mekelle-Weldiya railway. In June 2012, the ERC and the Chinese state-owned China Communications Construction Co. (CCCC) signed a railway agreement worth $1.5 billion. CCCC is the contractor and the EXIM Bank of China is providing financing for the project. Initially, non-Chinese financiers were going to provide funding for the project, but the ERC was unable to secure said funding from those sources and subsequently turned to the EXIM Bank of China to finance the project. The railway line is planned to run in the Northern part of Ethiopia, connecting Mekelle and Weldiya in 268km of track. According to the Railway Gazette, construction began in February 2015 and will involve the creation of 29 bridges and 19km of tunnels. The rail line was developed to help transport potash from nearby mines that are currently being developed, but it will also carry other freight and passengers. The project interconnects states positioned in the northern parts of the country. It starts from Mekelle and then cross the Afar state and Hara market found in the northern Amhara state. After that, it crosses Awash-Kombolcha and at the end of the day it meets with the railway lines which come from the eastern part. The railway project is a single track having a width of 1.435 meter standard gauge apart from running by electric power. The current status of the project and further details regarding the financing of the project are unclear. As of November 2017, the railway was 45% completed, but construction may have been temporarily halted. The project was expected to be completed in September/October 2018. According to various reports, due to debt sustainability concerns, China Eximbank has not approved this loan.