Work is set to start soon on the construction of a $1.4-billion oil pipeline connecting Ethiopia and Djibouti, after the two neighbouring countries signed a memorandum of understanding (MoU) on its implementation.

Ethiopian Minister of Mines Tolosa Shagi says the signing of the MoU paves the way for the implementation of the 550-km-long pipeline, which will greatly reduce the cost of transporting petroleum products. The pipeline is expected to be fully operational by the first quarter of 2018.

“The pace at which the Ethiopia economy is developing means we need an efficient system to transport petroleum products. This is why the pipeline project is of importance,” he says.

The Horn of Africa nation entirely depends on road transport to move petroleum products from the Port of Djibouti. About 500 trucks transport fuel to the load centre in the greater Addis Ababa area, travelling 800 km on a narrow two-lane road every day.

According to a brief prepared by Black Rhino, a US-based infrastructure development company that is developing the project, the project involves the construction of a multiproduct fuel pipeline that will supply Ethiopia with jet fuel, diesel and petrol.

Projections indicate that Ethiopia’s demand for refined oil products is growing at a rate of more than 15% year-on-year. The country’s petroleum products demand currently stand at three-million cubic metres.

“The project will improve import efficiencies and capacity, immediately unlocking gross domestic product growth potential by filling nascent demand and providing the country with its cheapest option for fuel transportation,” states the Black Rhino brief.

It adds that the current fuel transportation system will reach its ceiling and start curbing Ethiopia’s economic growth within the next two years.

Black Rhino is developing the project in a joint venture with Mining, Oil & Gas Solutions, a wholly owned subsidiary of Royal Bafokeng Holdings, of South Africa.

Black Rhino was founded to address the critical needs for infrastructure and energy development across the African continent.

Ethiopia has decided to accelerate the implementation of the project owing to delays in the construction of the Kenya–Uganda–South Sudan pipeline, which is part of the Lamu Port–South Sudan–Ethiopia Transport Corridor project.