May 27 (Bloomberg) -- Ethiopia is in talks to receive $1 billion in funding from the Brazilian Development Bank to build a section of a railway that will be extended to connect to neighboring South Sudan, a Foreign Ministry official said.
Andrade Gutierrez Participacoes SA of Brazil will build the link running from the capital, Addis Ababa, to Jimma about 439 kilometers (273 miles) to the southwest, Taye Atskeselassie, director general for the Americas at the ministry, said in an interview on May 24.
The bank “is willing to finance the project,” he said after Ethiopian Prime Minister Hailemariam Desalegn met Brazilian President Dilma Rousseff. “The technical side has been finalized, it’s only the financing part; it’s a matter of the details.” Construction will begin “soon,” he said.
Ethiopia, Africa’s second-most populous nation, needs funding to build 4,744 kilometers of electrified railway lines at a cost of 110.8 billion birr ($5.9 billion) as it seeks to develop a cheaper alternative to moving goods by road. Economic growth may slow to 6.5 percent this year and next, compared with average growth of 8.7 percent over the past five years, according to the International Monetary Fund.
Brazil’s development bank, known as BNDES, has not yet received a request to fund the railway, the bank’s press office said in an e-mail.
The Export-Import Bank of China signed a loan agreement worth nearly $3 billion for a railway from Addis Ababa to the port of Doraleh in neighboring Djibouti, the state-owned Ethiopian Radio and Television Agency reported last week.
The government of Turkey is funding a separate route, while Ethiopia is negotiating with Russia and India to finance and build other rail projects, Ethiopian Railways Corp. said on April 26.
Officials from Petroleo Brasileiro SA, Brazil’s state-run oil company, attended last week’s meeting, Taye said. “They are very much interested in doing business as well here, but no specific issues have been raised at this time,” he said.
Hailemariam and Rousseff signed cooperation agreements on air transport, science and technology, education and agriculture, Ethiopia’s State Minister of Foreign Affairs Berhane Gebrekristos said.
“This is a turning point in Ethiopian-Brazilian relations,” Berhane said.
Ethiopia operates a state-led economy and is prioritizing investment in infrastructure as it seeks to transform one of the world’s least-developed countries into a middle-income nation by 2025, according to the government.
To contact the reporter on this story: William Davison in Addis Ababa at firstname.lastname@example.org