After protracted negotiations Ethiopia and Djibouti, its neighbor bordering on the northeast, have signed an agreement for a 550 km products pipeline importing gasoline, diesel and jet fuel from Djibouti's port. The venture is estimated at $1.55 billion and construction forecasted to end by 2018.
Growth in landlocked Ethiopia has surpassed every other sub-Saharan country over the past decade, and the government has boosted spending to expand infrastructure. Fuel is typically delivered over 500 km from Djibouti to Ethiopia by tanker truck.
“The pipeline will increase energy security, aid economic development and reduce harmful emissions,” Black Rhino Chief Executive Officer Brian Herlihy said in the statement. The 50-50 joint venture with MOGS, a unit of Johannesburg-based Royal Bafokeng Holdings, will seek to raise at least $1 billion of senior debt financing.
The project, known as the Horn of Africa Pipeline, includes an import facility and 950,000 barrels of storage capacity in Damerjog, Djibouti, linked to a storage terminal in Awash, Ethiopia.
The 20-inch (51-centimetre) line is capable of transporting 240,000 barrels a day of fuel. The concession period after commercial operations start is for as many as 30 years.