In an oil backed deal, Ethiopia has just recently revealed that the construction of the $738 Million Ethiopia-South Sudan Road will proceed. This road is set to link Gambella to Paloch in Upper Nile State will be executed by contractors from Ethiopia.
Moreover, as revealed by media reports from Ethiopia, “The Ethiopian House of People’s Representatives gave an approval for the agreement that was made by the government of Ethiopia. This would foresee the issuing of a $738.2 million to the neighboring South Sudan.”
$738 Million Ethiopia-South Sudan Road Length
This road project will run from the border of Ethiopia to South Sudan stretching a total distance of 220 kilometers. This loan would be used to fund the road project that is set to link Ethiopia to South Sudan. The loan issued to South Sudan signifies a big step towards the strengthening the economic ties between the countries.
The ground-breaking agreement reached by the two countries is set to be repaid by the South Sudan gas through cash and crude oil.
In June 2024, the National Legislative Assembly ratified a loan agreement of $738 million. This was to be used to fund the construction of the 284-kilometre Ethiopia-South Sudan road.
Furthermore, this loan agreement which entails repayment by crude oil, was presented to the South Sudanese law makers by Changkuoth Bichiek Reth. Reth was the country’s former Chairperson of Finance and Economic Planning Committee. Moreover, it is important to note that this project necessitates consent from the participant countries in order to proceed.
Also read: $730 Million Addis-Djibouti Corridor Funding Agreement Signed by Ethiopia and World Bank
“On the part of South Sudan, this road is expected to link Paloch, Guelguk, Mathiang-Maiwut, and Pagak to the areas at the border of Ethiopia,” a report indicated”. This agreement signed that will facilitate the development of this road was signed by Eyob Tekalign who is the State Minister of Finance of Ethiopia. He signed in company of former Minister of Finance and Planning of South Sudan, Dier Tong Ngor, ” the report added.
Significance of the Loan Issued
This loan has a grace period of four years and is expected to be repaid within a period of ten years. Additionally, this loan highlights the innovative approach of Ethiopia towards financial diplomacy. This very strategic partnership facilitates improving connectivity. Furthermore, it also tends to serve as a model for resource-backed funding in the African continent. This is greatly portrayed by the way South Sudan has utilized natural resources to fulfil its financial obligations.
Lastly, the support provided by Ethiopia to ensure the stability and development of South Sudan is a very crucial move. It portrays the region’s ongoing efforts to foster cooperation and integration. This creates way for other upcoming future collaborations that could enhance economic prospects for the two countries.
Also read: Construction of the Multimillion 220-Kilometer Ethiopia-South Sudan Cross-border Road Takes Shape
