Opec, Arab Bank Stretch Hands for Gonder’s Connectivity Ambition

OPEC Fund for International Development (OFED) and Arab Bank for Economic Development in Africa (BADEA) are to provide financing for an 80Km road project connecting two towns in South Gonder with a total cost of around 1.6 billion birr.

The agreement is made following a request by the officials of the Ethiopian Roads Authority (ERA) to delegates from the two financial institutions who were in Ethiopia three weeks ago. The OFED and BADEA officials came to Ethiopia for one week to negotiate with Ethiopian government officials for a 1.2 billion Br financing for the upgrade of the 60Km Baku-Shambu roads from gravel road to asphalt concrete in the Oromia Regional State; they have returned to present the loan agreement for their boards for approval, according to sources.

The new road in Amhara is aimed to connect Este with Hamusit, a town in Dera Woreda to the west of Este. Like the Baku-Shambu road, this will also upgrade a gravel road to asphalt concrete.

Bahir Dar University is working on the design and conducting a detailed feasibility study for the road including the final cost of the road, environmental assessment and economic advantage of the road, according to a senior official from the Authority.

If the two instititutions agree to finace this road, there will be more talks with the officals of the ERA and the Ministry of Finance & Economic Development (MoFED) about the details of the financing, said same source. If all goes well, the loan agreement could be tabled at parliament for approval for the 2015/16 budget year.

Details of the agreement will be known afterwards depending on whether the resepctivel boards will give a go ahead.

BADEA was established in 1975 by 18 Arab countries that are members of the League of Arab States (LAS) and headquartered in Khartoum, Sudan. OFID, established in 1976 by member states of the Organization of the Petroleum Exporting Countries (OPEC) in Baghdad, Iraq, currently has 12 members.

ERA’s bidget for the current fiscal year, which is also the final year of the Fourth Road Sector Development Program (RSDP IV), is 30 billion Br; the total bdget for the RSDP IV is 125.3 billion Br. The federal government supplies 20 billion of the 30 billion Birr budget for the current fiscal year, with the remaining 10 billion Birr to come from the road fund and loans. As of June 2014, the Authority has rehabilitated, upgraded, constructed and maintained 61,114Km of roads, at a cost of 113 billion Br during the last four years of the RSDP IV.

From previous experiences with the two financing insitituions, BADEA’s loans come with one percent interest and 10 year grace period, with the loan to be paid in 30 years; the OPEC fund provides the same one percent interest with five years grace period, and the loan to be paid within 20 years.

In June 2014 the parliament approved a 33 million dollar loan form the two financers for Arba Rakate- Gelemso Micheat road construction and upgrading project in Oromia Regional State.

 

The same financiers provide 33 million dollars in June 2014 for road construction in Oromia regional state

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