Office of the Auditor General finds that Ethiopia has incurred losses in the billions from its railways

According to a recent report from the Office of the Auditor General, Ethiopia has lost more than 4.6 billion ETB from its light railways in Addis Ababa which are managed by the Ethiopian Railway Corporation. The railways have been in use for almost six years but have been unable to cover the loans with which they were constructed.

The report shows that Ethiopia has been unable to repay the loans it took out for the railways and has been fined several times and forced to take out more. During the six years the railways have been operating, Ethiopia paid more than 113 million ETB in fines to the Chinese Exim Bank which funded 85 percent of the railway construction projects.

Originally the railways cost more than 19 billion ETB. Due to its inability to repay the loans it took out for the projects, the Ethiopian government has not only had to pay fines, but has also been forced to take out more loans from the Commercial Bank of Ethiopia, which experts fear may contribute to budget deficiencies given the fact that the bank is owned by the government itself.

The report by the auditor general also shows that while the railways brought in about 448 million ETB in revenues, they incurred a cost of 6.2 billion ETB; hence the 4.6 billion ETB loss.

The Ethiopian Railway Corporation’s management affirms that these numbers are not surprising given that the railways are not profit-oriented enterprises and require subsidisation in order to function. The corporation says that it has made such a request to the Addis Ababa city administration but is yet to receive a definite answer.

The explanation seems lacking, however, as feasibility studies before the construction of the railways had affirmed that the original cost of construction and implementation would be covered within 10 years of the start of operations. 

The Reporter

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