Ethiopia signs Djibouti railway deal with China

ADDIS ABABA Dec 17 (Reuters) - Ethiopia signed an agreement with a Chinese state-run firm to build the final section of a railway line that will link its capital Addis Ababa to the tiny Red Sea state of Djibouti, an official said. The deal signed late on Friday with the China Civil Engineering Construction Corporation (CCECC) covers a 339-kilometre line that will join another project to connect the capital with Djibouti.

"This agreement is a contract to construct between Mieso, which is half way from Addis Ababa, to the Djibouti border," Getachew Betru, general manager of the Ethiopian Railways Corporation, told Reuters.

Ethiopia and Djibouti's economies are reliant on each other with about 70 percent of all trade through Djibouti's port coming from its land-locked neighour.

CCECC and China Railway Engineering Corporation (CREC) have won tenders for other sections of the 656-kilometre build. Those companies have brokered loans for Ethiopia from China's EXIM Bank, Development Bank of China and the Industrial and Commercial Bank of China (ICBC), Getachew said.

Ethiopia, which aims to construct 5,000 kilometres of railway lines in the huge country by 2020, says companies from BRIC nations have shown an interest in other projects.

The Horn of Africa country has posted high economic growth rates over the past five years and hopes to exploit growing business ties with China, India and Turkey to boost its expanding economy.

Under a five-year development plan launched last year, Ethiopia aims to boost infrastructure with a plan to increase power production from 2,000MW to 10,000MW and ambitions for 2,600 kilometres of railway lines by 2015.

"We have called on companies from the BRIC countries to be involved in the other projects. They have shown a considerable interest to get into tenders," Getachew said.

Getachew said Ethiopia will use some of its own funds to cover costs of the projects alongside loans secured from banks.

Ethiopia is looking for long-term loans that could either be on preferential or commercial terms, he said. It also plans to construct an inter-city light rail system in Addis Ababa.

By Aaron Maasho (Reuters)