The ongoing railway restructuring envisages the involvement of the private sector

The government is not considering rail connections to neighboring ports, including Lamu

The federal government is considering revamping the state-owned Ethiopian Railway Corporation, which would allow it to engage in the construction of new railway projects and employ private railway operators.

According to internal sources, the Ministry of Finance is conducting a study to restructure the Corporation (ERC) and plans to present it to officials from the Ministry of Transport and Logistics and ERC management and board members for approval in the coming weeks.

Ahmed Shide, the finance minister, told lawmakers on Thursday that the study had been finalized.

“This is intended to strengthen the mandate and capabilities of the Corporation,” he said. “We also plan to explore how to incorporate external potential.”

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The official of the Ministry of Finance with whom he spoke Reporter on condition of anonymity, the study aims to establish a railway company that will meet the logistical requirements of Ethiopia’s landlocked economy.

“ERC is a strategic institution, not just a state-owned enterprise. Ethiopia’s next major development projects focus on railways. Ethiopia is a landlocked country and cannot develop without first providing extensive infrastructure. Rail is a mass transport that can have a huge impact on markets and prices,” the official said.

Officials revealed that the study takes into account the involvement of private railway operators in the ERC.

“To make EDR more competitive, private operators are needed. We need to increase the number of railway locomotives. If we manage to increase the number of railway employees and the frequency of wagons, logistics prices will fall. This, in turn, will have a positive impact on raw material prices, production costs, inflation and overall economic activity,” the official said.

Plans also include adding several dry ports under the ERC umbrella by involving private operators.

“The diversification of dry ports within the ERC is also crucial. For example, if Ethiopia is to use Lamu port, we need to build a railway line connecting Kenya and Ethiopia. To connect Ethiopia’s economic corridors with ports in neighboring countries, it is essential to maximize rail networks. Therefore, restructuring and additional mandates for the ERC are necessary,” the official said.

According to a finance official, public-private partnership (PPP) programs may be incorporated into the Corporation’s operations to develop additional railway lines after restructuring.

“The private sector may not invest in rail but can use its own wagons to transport freight. These are the suggestions contained in the study,” the official revealed.

The official noted that the new proposals may be considered after discussions between the ERC board and Transport Ministry officials next week.

Attempts to address comments from the Corporation and the Ministry of Transport remained unanswered.