Officials at the Ministry of Transport and Logistics are considering permitting private sector participation in railway freight transport as a means to cut market commodity prices.
The Ministry has been conducting feasibility studies to explore the possibility of private sector involvement in rail transportation, including the option of leasing out additional train cars on existing railways.
Dhenge Boru, a state minister for Transport, told The Reporter there has been interest from private firms, who are conducting their own feasibility studies.
Executives at the state-owned Ethiopian Railways Corporation believe private sector involvement can minimize the effects that logistics and transportation hurdles have on commodity prices, which can reach as high as 45 percent of cost, according to government reports.
Railway infrastructure and operators in Ethiopia are owned by the state. The Ethio-Djibouti Standard Gauge Rail Transport S.C, the country’s largest rail transport, is 75 percent owned by the Ethiopian government, while the Djibouti government holds the minority stake.
Three firms won multimodal transport operator licenses earlier this week following a bid that comes as part of the government’s efforts for logistics liberalization. Officials say to expect more of the same in railway services.
“Ethiopia is a huge country, very wide from north to south and west to east. We need to connect all these parts of the country using trains, either by expanding the infrastructure or using existing infrastructure,” said Dhenge.
The State Minister said his office is eager to see private investors take part in the Ethio-Djibouti railway’s activities.
