ETHIOPIA INTEGRATED TRANSPORT PROJECT PHASE I (JIMA - CHIDA & SODO - SAWLA ROAD UPGRADING PROJECT)


Overview

  • Reference: P-ET-D00-007
  • Approval date: 07/12/2016
  • Start date: 07/12/2017
  • Appraisal Date: 05/04/2016
  • Status: OngoingOnGo
  • Implementing Agency: ETHIOPIAN ROADS AUTHORITY
  • Location: OROMIA AND SNNP REGIONS

Description

4.Proposed Bank Interventions in Transport Sector

Below are the long term program and the medium term action plan under phase I of the proposed program that the bank can intervene. 4.1.Ethiopia Integrated Transport Program - Long term

According to recent economic and transport sector diagnostic study funded by the AfDB, the Bank should intervene in program and dialogue, focusing on the 4 key strategic trade and transport corridors that will promote: a)logistics and transport service, b)concentration of production (agriculture, industrial and mining) and consumption nodes in order to ease transportation and add value onto the logistics chain, c)enhancement of connectivity and accessibility to and quality of transport service, d)capacity building and institutional strengthening e)regional integration especially in trade and transport f)transport asset management for sustainability, and g)expansion and modernization of transport infrastructure on key trade and transport corridor and urban mobility. h)Technical assistance to 11 countries to liberalize the air transport.

This program would vertically integrate all downstream and upstream transport trade and transport activities, connecting the producer (eg agriculture) with the consumer through transport and logistics and thereby lowering cost of trade, increasing opportunities for trade through higher production and consumption.

4.2.Ethiopia Integrated Transport Program Phase I (the SOUTHERN CORRIDOR)

In the medium term, it is proposed that the bank intervene as described hereafter. Focusing on the southern trade and transport corridor (Addis Ababa - Modjo- Hawassa-Tumi - Moyale, see Fig xxx below), it is proposed that Phase I of medium-to- long term integrated transport program be initiated that encompass the following:

"At national level

a)Infrastructure: development, maintenance and modernization of transport infrastructure on the basis of strategic transport corridors and urban mobility.

Activities: the construction of Jima - Chinda- Sodo- Sawla road

b)Concentration of production, consumption and distribution: the development of logistics system and concentration nodes of agricultural production and trade.

Activities: "Create a network of Agrocentres, complementary to ECX in order to concentrate freight volumes of national production, overcoming the fragmentation of local producers. "Build modern market facilities in major regional centers to strengthen the role of intermediate cities as regional distribution markets. "Create regional freight exchange services and infrastructure in order to promote the concept of service concentration. "Establish institution to promote value-adding logistics system

At regional level:

c)Trade, transport and transit: establish an institution to manage and promote regional transport corridors connecting Ethiopia with its regional trading partners including capacity building to operationalize Kenya / Ethiopia OSBP and regularize trade and transport regime.

d)Coordination of transport sector: build the capacity of MoT to coordinate all the authorities under it as well as capacity building for some of these authorities.

e)Liberalization of Air transport market: build capacity in the continental institutions charged with responsibilities to open air transport service in the 11 countries that have committed to liberalize their markets.

This 5 year program could cost up to USD 500 million and will be implemented in phases and with the support of other development partners.


Rationale

3.The Past, the Future and Opportunities

3.1.Five-Year achievement (2010-15)

The transport sector has transformed into a major government policy plunk. This is demonstrated by the achievements of the past 5 years during which the first line of railway was laid and now over 600km have been done. A light railway transit system of 34 km double electric lines has been built in Addis Ababa city. The government also constructed the first 70km of 6 lane tolled expressway, and at the same time created a special authority to manage all future expressways. The road networks expanded, doubling the length of paved road to 12,000km, and increasing the unpaved access roads to about 90,000km. The road fund, collecting fuel surcharge for road maintenance, has also expanded in its revenue, however, it has not matched the increasing demand for road maintenance which has fallen behind the rate of new road expansion.

In terms of regional integration, the government has signed several bilateral agreements with Kenya to operate the one stop border post, regularize road transport service across the border, and to manage the Mombasa Addis Ababa transport corridor. At the same time, agreements of management of the Djibouti corridor have been signed between Ethiopia, Sudan, South Sudan and Djibouti.

In addition, ground work for the establishment of single air market in 11 countries that have a good aviation industry has been laid. What is lacking is the impetus to move the plans to actions and deliverables. 3.2.Five-Year plan (2015-2020) The 5 year plans for the period 2015-2020 is contained in the GTP II. For the road subsector, under the RSDP V, government plans to double the road network and increase road density from 100 to 200 km per 1000 sq.km area at a cost of USD 17 billion. Within this plan will be the completion of the second 200km expressway funded by the government with the assistance of 4 development partners led by the AfDB; the completion and operationalization of the country's first one stop border post ( OSBP) at Moyale, opening up road to Mombasa port as an alternative sea port, as well as enactment of trade and transport regime between Ethiopia and Kenya. The government will also complete the Djibouti- Addis Ababa railway line, the Awash to Mekele line and the construction of another 1545 km of railroad. The sources of finance for these major initiatives are not clear yet and it is likely there could be financing gaps.

In addition, the government plans to improve transport and logistics (targets to move up the Logistics Performance Index from 2.59 in 2014 to 3.07 in 2020 and reduce waiting time at border from 40 days to 3 days), encourage private sector to participate in transport and logistics, establish linkage between agriculture production and markets using transport and logistics, improve capacity of transport corridors for export and import and expand dry ports.

The African Union and the 11 countries that have solemnly committed to liberalize their aviation industry by 2017 but require technical as well as financial support. 3.3.Challenges and Opportunities Transport is a crucial driver of development, bringing socio-economic opportunities within the reach of the poor and enabling economies to be more competitive. There is a co-relation between the improvement of the transport system and economic growth and poverty reduction. Having recognized this, the government has for the last 15 years or so been working on the expansion of the transport sector especially in expansion of road infrastructure, and recently, railway infrastructure.

The main challenges to implementation of transport sector development plans is the shortage of funds and capacity of institutions. All the plans require a great outlay of financial resources and so far it is not clear how funds will be mobilized. Other than traditional sources of funds (government expenditure and development assistance), tolling and PPP are new frontiers which are being explored but it is not expected to amount to much in the near future.

The infrastructural challenge for the future is to establish an integrated, multi-modal transport network consisting of an inter-connected system of corridors (road, rail, air, water) and nodes (inland ports, airports) to provide the basis of a smooth, highly efficient and competitive transport system to serve Ethiopia's economy.

Furthermore, there is need to establish a bilateral institution to manage the trade and transport with regional trading partners along the Ethiopia - Kenya, Ethiopia - Djibouti and Ethiopia-Sudan transport corridors, in line with the ongoing transport corridors development.

At continental level, there is a great opportunity to give support to the efforts to liberalize the air transport in the 11 countries that have shown more commitment by providing technical assistance to the institutions that are charged with the responsibility of moving this agenda.


Key contacts

WA-KYENDO Mumina Augustus - RDGE3


Costs

Finance source Amount
ADFUAC 67,267,699
ACFAUAC 67,320,000
GovernmentUAC 52,720,000
Co-financierUAC 4,040,000
TotalUAC 191,347,699