Arbitration case with Turkish contractor remains unsettled

The Ethiopian Railways Corporation (ERC) has invited international bidders to submit expressions of interest for the resumption of a rail project that is at the heart of a heated arbitration case with a Turkish contractor.

The Corporation has set January 14, 2025, as the deadline for a tender for consultancy services for loss assessment and resumption of construction work on the Awash-Kombolcha-Hara Gebeya (AKH) rail project.

Bidders will have to submit half a million birr as a security deposit.

The 392-kilometer AKH 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 railway 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.

The project was making progress until war broke out in northern Ethiopia in November 2020, and the contractor subsequently abandoned the project on grounds of safety concerns as the two-year armed conflict raged near some of the project sites.

Yapi Merkezi alleges that part of the infrastructure was damaged by the fighting, and some of the equipment had been looted.

Following the war, Yapi Merkezi reportedly attempted to take the case to court, claiming half a billion dollars in damages and compensation incurred as a result of the fighting and subsequent delays. However, the Ethiopian government persuaded its executives to resolve the case through arbitration instead.

The case went to the London Court of Arbitration, where proceedings have been underway for the past year.

Last month, the Corporation’s attorneys demanded USD 1.6 billion in compensation for losses incurred as a result of the contractor abandoning the project.

The case is still ongoing, although ERC executives told The Reporter they expect a verdict in the coming weeks.

ERC has also floated a tender inviting international bidders to submit Expressions of Interest (EOI) with proposals for a joint investment partnership to develop a multi-purpose complex building project in Addis Ababa.