The Ethiopian Roads Authority (ERA) and the officials of the Badia and the OPEC Fund for International Development (OFED) are negotiating for joint financing of the construction of the Bako to Shambu road, which could cost 1.2 billion Br.
Officials from the funding institutions arrived in Ethiopia last week. They started negotiations with ERA officials on Thursday, December 4, 2014, to upgrade the 60Km gravel road to asphalt concrete in the Oromia Regional State.
The design of the road has already been completed and the Authority was in the process of searching for financers, according to Authority sources.
Officials of the funding companies will stay this week to receive details of the funding, and reach an agreement with Authority officials, including the terms of agreement and identifying shares of the finances. Following the agreement, Authority and Ministry of Finance and Economic Development (MoFED) officials will discuss the financing before financers return to their countries to present the agreement to their boards and get approval, according to a senior Authority official.
Two Middle East financers will raise the funds jointly with the government of Ethiopia, but financing details are yet to be identified as the three parties are in negotiation, said an Authority source. The road is aimed to connect Bako and Shambu, towns located in West Shewa Zone of the Oromia Regional State, known by their potential in agricultural production. The road will help speed the transportation of crops from the two towns to Nekemte and other nearby towns.
The Hashemite Fund for the Development of Jordan, Badia, was established in 2003 and began operations in mid-2006 by serving Jordan and other regional countries including Africa. The other financer, OFID, is a development finance institution established in 1976 by member states of the Organization of the Petroleum Exporting Countries (OPEC) in Baghdad, Iraq, and currently has 12 members. OFID was established as a channel of aid to developing countries for infrastructure development, social services delivery and promotion of productivity, competitiveness and trade.
The financing for the projects will be via a loan arrangement. If financers are ready to provide the loan, it will be tabled at parliament for approval for the 2015/16 budget year, said the source.
ERA will be free to choose contractors from any country, including those that are not funding members.
During the current fiscal year, which is also the final year of the Fourth Road Sector Development Program (RSDP IV), with implementation costs of 125.3 billion Br, the ERA has a 30 billion Br budget. 20 billion is allocated from the Federal government and the remaining 10 billion Br is to be availed from the road fund and loans. As of June 2014, the Authority has rehabilitated, upgraded, constructed and maintained 61,114Km of roads, at a cost of 113 billion Br during the last four years of the RSDP IV.
Leave a Reply