Budget Constraints Bind Hawassa Dry Port Dev't

The Enterprise has canceled the bid to hire a contractor for the development project

May 11 , 2019
By TEMESGEN MULUGETA( FORTUNE STAFF WRITER )


Lack of budget funding has forced the state shipping enterprise to hold off its planned construction of a dry port facility near Hawassa Industrial Park, the nation's flagship park.

The Ethiopian Shipping & Logistics Service Enterprise cancelled the tender announced at the end of April to construct the port, which was to be located 220Km from the capital. A feasibility study conducted by the Enterprise two years ago estimated the construction of the facility along with equipping it with necessary machinery would cost 117.5 million Br.

The Enterprise, which operates 11 shipping vessels, nine dry cargo ships and two oil tankers, has requested the Industrial Development Fund to allocate a budget for the port in this fiscal year's budget, according to Roba Megersa, CEO of the Enterprise.

The Fund, a division under the Ministry of Finance tasked with allocating budgets for the state-owned enterprises while developing infrastructure, did not respond to the Enterprise's request, according to the CEO.

"We've also many other projects that have failed in their implementation due to financial constraints," Roba told Fortune.


CCTV camera installation for the Qality Dry Port and some remaining construction work at Kombolcha and Dire Dawa dry ports are among the projects that failed to secure financing, according to the CEO.

Planned to hold 1,000 containers at any given time, the port facility was designed to have terminals, offices, inspection gates and warehouses. The port has targeted manufacturers in the park and import and export companies in the Southern National & Nationalities & Peoples' Regional State.

"We plan to build the port in Hawassa due to the park and the surplus agricultural production in the regional state," Roba told Fortune.

Built by China Civil Engineering Corporation in 2016, the park has 22 operational companies and hires 24,000 people. These companies generated six million dollars last month from direct exports.


"The port will have an enormous benefit for the existing companies in the park," said Belay Mikaeal, a manager at the Park from the Ethiopian Investment Commission.




While exporting products and importing raw materials, companies at the park transport their cargoes to Modjo Dry Port via truck and then use the train to ferry the shipments to the Port of Djibouti.

The Enterprise, established eight years ago after the merger of Ethiopian Shipping Lines, Maritime & Transit Services Enterprise and Dry Port Enterprise, secured 3.5ha of land from the administration of the regional state.

If constructed, the facility will be the ninth dry port in the county along with Modjo, Qality, Gelan, Semera, Dire Dawa, Kombolcha, Meqelle and Wereta.

While the first seven are completed and operational, Wereta, in North Gonde Amhara Regional State, is under construction at a total cost of 90 million Br.

The seven operational ports have an aggregate capacity of hosting 24,000 containers at a time and handling over 90pc of the country's trade. Modjo Dry Port was established a decade ago and hosts 78pc of the country’s shipping and logistics services.


Ethiopia has been criticised for having a poor logistics system. Even the World Bank's latest logistics performance index ranked the country 117 out 190-plus countries for the efficiency of its logistics operations.

The construction of the port is not the kind that will be holding off, according to Getachew Yirga, assistant professor at Bahir Dar University's Business & Economics Department.

"As it will play a significant role in facilitating the import-export activity for the companies in the park," said Getachew, "the Enterprise has to eye other alternatives to secure the funding.

It has to search for loans from international institutions or to work with private companies to get the funding, according to Getachew, who also cautions the Enterprise to keep an eye on the debt level of the country while searching for financing.



PUBLISHED ON May 11,2019 [ VOL 20 , NO 993]



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