As a prerequisite to takeover the management of the Ethio-Djibouti Railway Enterprise, the South African Comozar wants ESL to establish a dry port facility near the railway track. A vast plot before entering the town of Dukem, 37Km from Addis Abeba, has been selected.

June 23, 2006

The Oromia Investment Commission is to grant Ethiopia’s flagship company, the Ethiopian Shipping Lines (ESL), a 238,000sqm plot near the town of Dukem to build a dry port facility that will also be used by Comozar (PTY) Ltd, the South African company that won a 25-year concession to run the Ethio-Djibouti Railway Enterprise.

The management company plans to increase the railway’s transport capacity to 1.5 million tonnes in five years, importing 46 locomotives and 600 wagons.

In the early 1970s, the train line’s heyday, the company had transported close to 450,000tn a year. Its capacity has deteriorated quite shockingly since then; it has only five operational locomotives, though another four are expected to resume service soon, say company sources.

The company wants to have a depot inside Ethiopia that could receive cargo as fast as possible from the Port of Djibouti, accommodating between 50,000 to 70,000tn. It presented its request to the Ministry of Transport and Communications a month ago.

Since then, Junedi Sado, minister of Transport and Communications, Ambachew Abraha, managing director of ESL, and Teum Tekei, general manager of the Railway Enterprise, among others, visited potential sites on May 27, 2006. The visit included stops at Comozar’s preferred locations, Adama (Nazareth) and Modjo stations.

The team finally agreed that a vast tract of land down the hill before entering the town of Dukem, on the right side of the railway line when it crosses the highway, was suitable for the dry port facility. The location is close to the train’s Addis Abeba terminal. The capital city also is where 85pc of the importers are located and where all the maritime bureaucracy is located.

The 210,000sqm plot granted by the Addis Abeba City Administration in the Akaki-Kaliti District to ESL will not be used for the dry port project, because it is too far from the railway line.

Senior officials disclosed to Fortune that the Investment Commission of the Oromia Regional State has agreed on Friday, June 16, to give the plot free of charge, but needs to follow through the documentation.

Comozar is expected to take full control of the Enterprise within the coming nine months, said sources. But before it takes over the management, it needs to come up with the organizational arrangement that will allow the Enterprise to be licensed in both Ethiopia and Djibouti.

Its managers, and its CEO, Eric Peiffer, are exploring different options including offering shares to Ethiopian private and state owned companies. ESL has agreed to buy shares in the new company, sources disclosed.

Of the earnings that the company anticipates to make when it gets operational, five per cent will be divided between the Ethiopian and Djiboutian governments, while Comozar expects to have a 10pc profit after covering costs.

By WUDINEH ZENEBE
FORTUNE STAFF WRITER