Chinese Government cancels RMB 310 million of repayment obligations for Pushkin Square-Gotera Interchange Road Project (Linked to Record ID#59050)

On December 27, 2016, the Ethiopian House of Representatives ratified an RMB 360 million (ETB 623,366,177) interest-free loan agreement with the Chinese Government for the Pushkin Square-Gotera Interchange Road Project (via Proclamation no. 986/2017). The ratification proclamation entered into force on January 12, 2017.

The loan proceeds were drawn from Economic and Technical Cooperation Agreements (ECTAs) that the Chinese Government and the Ethiopian Government had previously signed on July 20, 2010, April 18, 2011, August 15, 2011, January 28, 2012, October 29, 2012, and May 24, 2013.

The interest-free loan, which is captured via Record ID#59050, was issued by the Agency for International Economic Cooperation within China's Ministry of Commerce (MOFCOM).

The borrower was expected to use the proceeds of the loan to finance an RMB 308,526,277.10 commercial contract between Addis Ababa City Roads Authority and China First Highway Engineering Co., Ltd.

According to the Government of Ethiopia’s Aid Management Platform (AMP), the ETB 623,366,177 loan achieved a 132% disbursement rate, with MOFCOM making 4 loan disbursements (worth ETB 825,594,492) between 2020 and 2021: an ETB 194,164,377 disbursement on June 9, 2020, an ETB 565,829,909 disbursement on March 24, 2021, an ETB 12,455,390 disbursement on August 17, 2021, and an ETB 53,144,816 disbursement on October 13, 2021.

According to the Government of Ethiopia’s Aid Management Platform (AMP), MOFCOM decided to cancel RMB 310 million of the Government of Ethiopia’s loan repayment obligations (due to its debt sustainability problems). This act of debt forgiveness is captured via Record ID#91947.

The project will involve the construction of a 3.8 km road with a width of 30-45 meters that stretches from Pushkin Square to Gotera Interchange in Nifas Silk Laphto District.

It has three segments: a 2.3 km road from Pushkin Square to the Gotera Interchange section stretches to 2.3 km and two feeder roads — Mauritius Street and Tanzania Street — that measure 1.5 km in length. The project also includes a two-lane 320 meter tunnel, bus rapid transit, and two interchanges.

Upon completion, it was envisaged that the project wouldreduce traffic congestion in Addis Ababa and ensure the smooth flow of vehicles coming from Kirkos, Gotera, Gofa, Sar Bet, Mexico and Keria.

China First Highway Engineering Co., Ltd., a subsidiary of CCCC, is the contractor responsible for project implementation. A consortium consisting of First Highway Consultant Co., Ltd and Xi'an Fangzhou Engineering Consulting Company Co. Ltd is responsible for project management. Best Consulting Engineers Private Limited Company is responsible for providing project consulting services.

A groundbreaking ceremony for the project took place on October 1, 2019.

Liu Yu, Economic and Commercial Counsellor at the Embassy of China, Takele Uma, Mayor of Addis Ababa, Ahmed Shide, Ethiopia’s Minister of Finance, and Tan Jian, Chinese Ambassador to Ethiopia, attended the ceremony.

Then, in May 2020, the Deputy Mayor of Addis Ababa conducted a project site visit and announced that the project was expected to reach completion within a year (May 2021).

This project has faced local scrutiny and criticism due to the fact that it was reportedly the most expensive road project to ever be undertaken (in unit cost terms) in Ethiopia (at ETB 395 million per kilometer of road).