Ethiopia

Ethiopia and South Sudan announce ambitious road project to foster economic integration

Ethiopia PM Abiy meets the country's council of ministers on March 5, 2024. (Photo: PMEthiopia)

By Terry Muriuki | Thursday, June 27, 2024

Under the terms of the five-year agreement, South Sudan will repay the loan using proceeds from its crude oil exports

Ethiopia and South Sudan have unveiled plans for a transformative infrastructure project, marking a significant milestone in their bilateral relations.

The two nations have agreed to construct a 220km road known as the Paloch-Mathiang-Maiwut-Pagak road, linking Western Ethiopia with Northeastern South Sudan.

This development follows the signing of a substantial $738.2 million agreement on May 18, 2023, spearheaded by Ethiopia's Prime Minister Abiy Ahmed and South Sudan's President Salva Kiir.

The agreement, signed by Ethiopian Minister of Finance Eyob Tekalign and South Sudan's Minister of Finance Dier Tong Ngor in Juba, underscores a strategic initiative aimed at enhancing connectivity and economic cooperation between the two countries.

According to South Sudan's Minister of Justice and Constitutional Affairs, Ruben Madol Arol, this landmark deal designates South Sudan as the borrower and Ethiopia as the financier, focusing on infrastructure pivotal for regional trade and development.

"This project will not only facilitate easier access for South Sudan to the Port of Djibouti but also streamline the export of oil and fuel to Ethiopia," stated Minister Arol during a briefing to the South Sudanese Transitional National Legislative Assembly earlier this year.

Under the terms of the five-year agreement, South Sudan will repay the loan using proceeds from its crude oil exports, with repayment terms linked to prevailing Arab Gulf oil prices at the time of delivery, ensuring a mutually beneficial financial arrangement.

The road project is poised to significantly bolster economic ties and unlock vast potential across various sectors, including oil and gas, energy, agriculture, and telecommunications. This ambitious initiative reflects a broader commitment by both nations to deepen collaboration and harness synergies for sustainable development.

The agreement, having received unanimous approval from the assembly, is now awaiting final authorization from President Salva Kiir, marking a pivotal step towards realizing enhanced regional integration and economic prosperity between Ethiopia and South Sudan.