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Ethiopian Government Cancels Ethio-Djibouti Fuel Pipeline Project

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THE REPORTER — The Ethiopian government canceled the planned Ethio-Djibouti fuel pipeline project, reports the Ethiopian weekly English newspaper, the Reporter.

In 2014 the South Africa-based infrastructure investment group, Black Rhino, proposed to the Ethiopian government to build a 550km long pipeline to transport diesel, gasoline and jet fuel from the Port of Djibouti to central Ethiopia.

A senior Ethiopian government official stated that the government has canceled the project due to financial reasons. The official said though the pipeline project is viable, the government wants to protect the Ethiopian Railway Corporation which will soon start transporting petroleum products.
“We have built a new railway line to Djibouti with an investment cost of four billion dollars. And 100 fuel tanker wagons are ready to transport fuel from Djibouti. We have to maximize the use of the railway and pay back the loan to the Export Import (EXIM) Bank of China first,” the Ethiopian official said.

The project is estimated to cost 1.5 billion dollars. The Ethiopian government had reviewed and accepted the proposal in principle. Backed by the US investment group Black Stone, Black Rhino has undertaken a feasibility study on the project, which was going to be the first fuel pipeline in Ethiopia.

He said that while the country has a newly-built railway line, the construction of another expensive infrastructure cannot be justified. The International Finance Corporation (IFC) – the investment arm of the World Bank – had expressed interest in financing the planned Ethiopia-Djibouti fuel pipeline project.

“It is not that the project is unable to secure loan but while we are having the railway line in place building another fuel transport infrastructure is not economically a sound decision,” the Ministry of Transport official said. However, he said the construction of the pipeline can be considered after four or five years.

Ethiopia’s annual fuel import, which is growing at a rate of ten percent, has reached 3.8 million MT. The country so far uses tanker trucks to transport the fuel from the Port of Djibouti to central Ethiopia costing the country dearly. Fuel theft, adulteration and waste are also other challenges with the road transport.

The governments of Ethiopia and Djibouti signed a framework agreement on the planned pipeline construction in 2015.

Djibouti

Chinese-built Ethiopia-Djibouti railway begins commercial operations

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Ethiopian attendants participate during the opening ceremony of Ethiopia-Djibouti railway at the Lebu station in Addis Ababa, Ethiopia, on Oct. 5, 2016. (Xinhua/Sun Ruibo)

ADDIS ABABA, Jan. 1 (Xinhua) — The Chinese-built 756-km electrified rail project connecting landlocked Ethiopia to Djibouti officially started commercial operations on Monday with a ceremony held in Ethiopia’s capital Addis Ababa.

Contracted by two Chinese companies, the first 320 km of the rail project from Sebeta to Mieso was carried out by the China Rail Engineering Corporation (CREC), while the remaining 436 km from Mieso to Djibouti port section was built by the China Civil Engineering Construction Corporation (CCECC).

Speaking on the occasion, Ahmed Shide, Ethiopian Minister of Transport, hailed the standard gauge project as a milestone in China-Africa cooperation.

In addition to further enhancing economic ties as well as the people-to-people links between Ethiopia and Djibouti, it will have significant contribution to the ongoing development efforts of building a new Ethiopia, said the minister.

The minister urged local people, especially residents living by the line of the rail, to take care of it for its successful and sustainable operation.

Emphasizing on its huge significance and importance, Tan Jian, Chinese Ambassador to Ethiopia, noted that the project would contribute to the industrialization and diversification of the Ethiopian economy, and also towards the country’s growth and transformation plan.

“It is the first trans-boundary and longest electrified railway on the African continent. We, the Chinese, see this as earlier harvest project of the Belt and Road initiative. It is regarded by many as a lifeline project for both countries, for Ethiopia and for Djibouti. And we see this as a railway of development; as a railway of cooperation; and as a railway of friendship,” he said.

The ambassador has reiterated China’s commitment to further cooperating and closely working with Ethiopia and Djibouti to the railway’s smooth operation.

The Addis Ababa-Djibouti railway project has been carried out with an investment of 4 billion U.S. dollars, and China’s Exim Bank has provided a loan.

Speaking on his part, Djibouti Ambassador to Ethiopia, Mohamed Idriss Farah, said the railway project would have significant contribution to the economic integration between Djibouti and Ethiopia.

“This is important corridor, important railways between Djibouti and Ethiopia; we are working for our economic integration between our two countries. And this project was part of the economic integration, but not only economic integration but also connecting the peoples of Djibouti and Ethiopia,” said the ambassador.

The railway provides both passenger and freight services between Addis Ababa and Djibouti.

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Briefing Room

Djibouti is open to Turkey’s efforts to safeguard Red Sea, ambassador says

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Djibouti is open to any kind of approach from Turkey such as building a military base to secure the Red Sea, Djiboutian ambassador to Ankara Aden H. Abdillahi has said, pointing to possible steps that could be taken to strengthen military ties between the two countries.

Citing the Red Sea as the second-busiest sea way in the world, Abdillahi said: “This international sea way must be secured and the international community needs to ensure that this area is safe from all kinds of threats.”

In line with efforts to enhance the security of the region, the ambassador said that “possible steps from Turkey to build a military base in the country would be welcomed.”

Djibouti has become home to key military bases due to its strategic location on the Horn of Africa. The small country on the Red Sea hosts the largest permanent U.S. military base in Africa as well as military bases of France and China and Japan’s only foreign base. The country lies on the Bab el-Mandeb Strait, which is one of the busiest shipping routes.
Commenting on the recent graduation of Somali troops from the Turkish military base, the ambassador said that as a neighbor of the country, “Djibouti feels gratitude for Turkey for providing help to the government of Somalia.” He added that Somalia should be supported in its fight against threats of terrorism that affect the daily lives of the people, pointing to the recent terrorist attack in the Somali capital of Mogadishu.

He said the bilateral ties between the two countries have enhanced since the opening of a diplomatic mission in Djibouti in 2012, and that friendly relations between Turkey and Djibouti go back to the 16th century. Abdillahi also welcomed Turkey’s increased attention on Africa and its recent initiatives. “Turkey already started opening up to Africa in 2005, and in 2008, we had a Turkey-Africa summit. I think this new approach will boost ties further.”

Touching on the visit of Djiboutian President Ismaïl Omar Guelleh to Turkey, Abdillahi said: “Omer Guelleh’s visit to Turkey will completely change the relationship between the two countries.” He said that the visit will pave the way for further cooperation in various fields, including education, health and economy. The two countries signed many agreements while he was in Turkey.

In relation to the economic relations between the countries, the ambassador said that Turkey and Djibouti agreed on establishing a Turkish special economic zone that will enable Turkish business to establish industries.

“The business community can reach out to the region having a special economic zone with many facilities that will also allow Turkish business to target the whole region,” he said. He added that the port facilities in Djibouti rank among the best in Africa and that the economic zone provided to Turkey is close to the port.

Pointing out that Djibouti is the entry point of the region, he said many investments have been made in the port facilities, railways and highways to connect the whole region.

“In East Africa, the potential that we have is huge, and Turkey has great potential, as well. Building a strong partnership will benefit both sides. Today, this area is booming,” he said.

In relation to the U.S’s decision to recognize Jerusalem as the capital of Israel and relocate its embassy from Tel Aviv to Jerusalem, Abdillahi said: “We need to thank Turkey for its leadership for emphasizing that the decision cannot be accepted.”

Turkey condemned the decision from U.S. President Donald Trump, and Erdoğan urged world leaders to oppose the decision in an Organisation of Islamic Cooperation (OIC) summit in Istanbul. The OIC announced that it recognizes east Jerusalem as the capital of Palestine.

The U.S. decision was rejected in the United Nations General Assembly, which has isolated the country.

“We need to express our solidarity with the people of Palestine who have been suffering, and accept the two-state solution,” Abdillahi said. He added that the decision to reject the U.S.’s steps was a wakeup call and Turkey’s decision to open an embassy in east Jerusalem would be a game changer

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Djibouti

From rail and airports to its first overseas naval base, China zeroes in on tiny Djibouti

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Djibouti President Ismail Omar Guelleh will arrive in China on Wednesday for a three-day state visit that is expected to further boost ties with the African nation.

 Situated in the Horn of Africa – adjacent to one of the world’s busiest shipping routes – Djibouti has a population of less than one million and is home to China’s first overseas military base.

With access to the Gulf of Aden and the Indian Ocean beyond, the area is a gateway into Northeast Africa and the Red Sea region.

According to United Nations trade data, Djibouti’s exports to China – including leather, salt and cement – totalled just US$7,500 in 2009. That compares to China’s exports to Djibouti, such as vehicles and electronic equipment, which reached US$20.7 million that year. But the relationship between the two nations goes far beyond trade.

PLA personnel attend the opening ceremony of China’s new military base in Djibouti in August. Photo: AFP

People’s Liberation Army naval base

China is the seventh country to set up a military base in Djibouti, a relatively stable nation with proximity to restive areas in Africa and the Middle East.

But Beijing has played down military use of the base, claiming it will be used for “logistics purposes”.

It said the base would enable China to better support its peacekeeping and humanitarian missions in waters off nearby Somalia and Yemen, in particular.

Other countries with military bases in the former French colony include the United States, Japan and France, and these bases provide the country’s biggest source of income and employment.

China agreed to pay US$100 million per year for its base in Djibouti, while the US pays US$63 million.

Natural gas

Last week, China’s POLY-GCL Petroleum Group signed a memorandum of understanding to invest US$4 billion in a natural gas project at Damerjog. The preliminary agreement will be finalised in six months, with work to begin on the project soon afterwards. It includes a natural gas pipeline, a liquefaction plant and an export terminal.

The gas pipeline will transport 12 billion cubic metres of natural gas a year from Ethiopia to Djibouti, while the liquefaction plant has a target capacity of 10 million tonnes per year of liquefied natural gas.

Djibouti President Ismail Omar Guelleh arrives in China on Wednesday for a three-day state visit. Photo: AFP

Addis Ababa-Djibouti railway

The 750km railway linking Djibouti and Ethiopia is the first fully electrified cross-border railway line in Africa.

China Railway Group and China Civil Engineering Construction Corp (CCECC) financed 70 per cent of the US$490 million project. Under the deal, Chinese staff will run the project for the first five years, after which Ethiopians will take over.

Launched in October last year, it took four years to build and connects the Ethiopian capital, Addis Ababa, to the Red Sea port of Djibouti – through which 90 per cent of Ethiopia’s goods are traded. Commercial operations are due to begin this month.

Airports

Two new airports in Djibouti were to be built by CCECC at a combined cost of nearly US$600 million under contracts signed in 2015. But the projects are expected to be put out for tender again, according to a Bloomberg report last month. It is unclear why the projects will go through another tendering process, but the report quoted a local official as saying that the Chinese company “will have no exclusivity”, although it can apparently bid for the contracts again.

Hassan Gouled Aptidon International Airport will be 25km from the capital and was due to open in 2018. With capacity for 1.5 million passengers per year, the airport is to have runways big enough for commercial jets including the Airbus A380.

The other airport, Ahmed Dini Ahmed International Airport, located in the north of the country, will have capacity for 767,400 passengers annually.

The Port of Doraleh in the capital, Djibouti City. China’s exports to the African nation reached US$20.7 million in 2009. Photo: Felix Wong

Free-trade zone

In January, Djibouti started construction of a free-trade zone with Chinese funding. The 48 sq km free-trade zone is being built by Dalian Port. The zone will be operated by the Djibouti Ports and Free Zone Authority in a joint venture with China Merchants Holdings.

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