Fortune News | Mar 05,2022
The expansion project of a dry port facility in Modjo faces yet another setback following a deferred approval of a 25 million dollars loan request by the World Bank.
The Bank is financing the undertaking through 150 million dollar loans approved in 2017. However, the project was not commissioned to the China Civil Engineering Construction Corporation (CCECC) for over 4.7 billion Br until last July. The contractor is to receive the full payment in local currency.
Located 77Km east of Addis Abeba, Modjo Dry Port was established in 2009 to accommodate around 18,000 containers. Located along the Ethio-Djibouti trade corridor, the dry port rests on 62ht of land and handles 80pc of the country’s international trade. It has an annual capacity of handling over 170,000 containers.
The expansion project, which will take up 173ht of land, is expected to cut the average waiting time from two months to three weeks. The upgrading of the dry port to what will be called the "Modjo Green Logistics Hub" has had its deadline postponed from the initial July 2022. Due to slow progress, the project office has revised the completion date to November 2024.
Sellhorn, a German consulting company, was hired to conduct design and feasibility studies, but it delayed its work by a year, preventing the project office from hiring a contractor, disclosed Mengist Hailemariam (PhD), manager of the Ethiopia Trade Logistics Project. His office oversees the project under the Ethiopian Maritime Authority.
The project office has thus far received 20pc of the total loan from the World Bank.
"Disbursement has been slow because project progress has also been slow," said a person familiar with the project at the World Bank.
Lack of progress in the project has brought cost escalations over the past four years resulting in additional finance requirements, amounting to 25 million dollars. The request for additional financing was submitted to the World Bank last year.
The World Bank initially projected the construction to cost 80 million dollars, while 70 million dollars was earmarked for other port renovation programmes, IT-related works and machinery procurement. However, the price tag for the construction had reached 110 million dollars when the Chinese contractor was hired.
Although the World Bank was scheduled to decide on the additional loan request last August, the proposal is yet to be approved by its executive board. The contractor has already received advance payments of 869 million Br.
“Professional capability should be the focus when managing a project of this magnitude,” said Matiwos Ensermu (PhD), associate professor of logistics and supply chain management at Addis Abeba University.
Six other dry ports across the country are also operational, with a combined capacity of holding 24,000 containers. However, space constraints mean that congestion at the dry ports is common. The expansion project was expected to relieve congestion at dry ports and the ports in Djibouti. The holding of imported goods in Djibouti remains an issue between the transport authorities of both countries.
“The development and enhancement of dry ports in landlocked countries should always be a priority," Matiwos said. “Dry port efficiency in Ethiopia is a matter of survival to the logistics industry."
The Ethiopian Shipping & Logistics Service Enterprise (ESLSE) manages the dry ports.
"We'll benefit once the project is finalised and handed over to us," said Meheretab Teklu, the enterprise's deputy CEO.
According to the project office, 34pc of the work has been completed.
"We expect it to be two-thirds done by the end of this year," said Mengist.
The expansion is a pivotal factor in the Ministry of Transport's plan to double international trade volume within a decade. The figure stood at 17 million tonnes last year.
PUBLISHED ON Dec 04,2021 [ VOL 22 , NO 1127]
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