The Ethiopian Railways Corporation (ERC) has finalized assessments in its bid to restart the construction of a decade-old rail line project connecting Awash with Mekelle through Hara Gebeya, according to the Ethiopian Investment Holdings (EIH).
The Corporation earned 710 million Birr from commercial activities last year, according to a report from EIH.
In its assessment, EIH recommended fiscal realignment, asset optimization, alternative revenue streams, and a stronger risk management framework to ensure the state railway operator’s financial sustainability.
According to the fund, the Corporation continues to face heavy foreign debt from rail investments, even as pressure mounts to resume stalled projects considered critical to Ethiopia’s economic growth.
The Awash-Kombolcha-Hara Gebeya rail project kicked off in 2015 with USD 1.7 billion in financing from the state-owned Turk Exim Bank. Systra MD, a French firm, was awarded the contract for consulting on the project, while Yapi Merkezi, a Turkish contractor, was in charge of the construction work.
The project connecting central and northern Ethiopia features 10 substations, a dozen 10-kilometer long tunnels, more than 50 bridges, eight power stations, a dozen radio stations, and one primary workshop center, according to the website of the state-owned ERC.
It has been in limbo since 2020, when contractor Yapi Merkezi suspended work as war broke out in northern Ethiopia.
The suspension of the AKH rail line project sparked a dispute between the Ethiopian government and the contractor, which escalated into a USD 2.6 billion arbitration case in London, with the latter claiming USD one billion in war-related damages and the former countering with a claim of USD 1.6 billion in losses.
Despite the legal battle, the Turkish firm remains ERC’s preferred contractor, according to Abebech Diriba, head of communications at the Corporation.
“The verdict is still unknown, but the ERC requires Yapi Merkezi to complete the project,” Abebech told The Reporter in February 2025. “The Turkish contractor is fully aware of the project’s details, and it would be ideal if it could finish it.”
In November 2024, ERC floated an international consultancy tender to assess the status of the abandoned railway project and its prospects for resumption.
Within the past two weeks, ERC has convened local security and government officials in the Afar and Amhara regions to address ongoing theft and vandalism along the railway project route.
Discussions held in the cities of Awash and Kombolcha in recent weeks highlighted the role of trained militia, coordinated by regional security structures in guarding infrastructure.
ERC representatives called for local communities to protect the infrastructure, which they labeled a national asset, and argued the need for stronger accountability measures for theft, land encroachment, and illegal construction on Corporation property.
During a discussion event in Kombolcha on July 31, Seleshi Kassa, ERC deputy CEO for railway infrastructure, acknowledged that conditions have improved since government forces began securing the project but cautioned that unresolved challenges continue to threaten progress.
The AKH railway line is expected to link local markets and neighboring countries upon its completion, with officials hoping it will provide a major boost to trade and economic integration.
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