Ethiopian Shipping Lines’ Chinese boat order pending decision from Ministry of Finance


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An attempt by the Ethiopian Shipping Lines (ESL) to purchase nine new ships from a Chinese based ship building Company is pending a decision from the eastern African country’s Ministry of Finance and Economic Development (MoFED), without whose accord the purchase cannot go ahead.

ESL has steadily expanded its route network since it was launched in 1964 — with its first service along the UK/North and West European route — to include the Mediterranean, Adriatic, the Far East areas, as well as the Gulf regions and the Red Sea. For the recently concluded fiscal year, the flag carrier covered 26 per cent of the country’s import volume, generating an operating revenue of 2.6 billion birr. The company hopes to consolidate its expansion ambitions with the purchase.

Ambachew Abreha, managing director of ESL has asserted that he expects a positive outcome from the negotiations with the Chinese company in the coming week. The deal, if signed, will see ESL acquiring 9 new vessels in addition to their older 150 000 tonne capacity fleet made up of nine vessels. However, the MoFED is, reportedly, seriously considering the possibility of tightening public foreign borrowings, either by direct restriction or by providing a government guarantee.

Negotiations between ESL and the Chinese company, on issues concerning payments ahead of the purchase of the vessels, have been ongoing for some months now after the Chinese company decided to consider the purchase order as an option, that is, if a first instalment was not made. This comes after ESL terminated an earlier order placed with the Chinese company. According to sources, the Chinese company received ESL’s termination order after they had already begun constructing the vessels. The Ethiopian Shipping Lines blamed the financial crisis on their decision to terminate the contract.

Meanwhile, it is widely believed that ESL’s ability to sign the purchase is highly dependent on a permission from the MoFED following the government’s decision to authorize the ministry to monitor the country’s new loan contracts. The MoFED is yet to set a ceiling point of foreign borrowing for the fiscal year following an earlier agreement not to exceed 500 million dollars of foreign borrowing. The ministry has also announced its decision to look into loan applications that should be given government priority.

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