The Export-Import Bank of India has provided a $300-million line of credit to the Ethiopian Government for a railway link to improve regional connectivity and boost economic growth in the East African nation.
The credit line would entail concessional funds at an interest rate of 1.75 per cent.
The rail link will connect the Ethiopian city of Asaita to the port city of Tadjourah in neighbouring Djibouti, T.C.A. Ranganathan, Chairman and Managing Director of Exim Bank, said after signing the agreement here on Thursday.
About 50 km of the 210-km line will be in Djibouti, while the rest will be in northern Ethiopia.
“Ethiopia being a landlocked nation, the railway link to a port city will provide impetus to growth, particularly in the northern region of our country,” Ahmed Shide Mehmad, the visiting Ethiopian State Minister for Finance and Development, said.
The railway line is the first part of a larger regional project to improve railway connections in Ethiopia and other East African nations, he added.
Initially, the rail link will be utilised for freight purposes, and later extended to passengers.
This new credit line is the first in the Ethiopian Railway sector. Exim Bank has other existing credit lines with the Ethiopian Government in the sugar and rural development sectors.
Ranganathan said the detailed project report being prepared by RITES, an Indian public sector enterprise, is expected to be finalised within two months.
After financial closure, the Ethiopian Government is expected to call for bids from Indian companies. Both public and private sector companies can participate in the bidding process, it was pointed out.