China Lost Billion Dollar in African Belt & Road Initiative Rail project

Ethiopian Railway Line Project became Chinese Cash Burning Machine

Reference -
https://www.scmp.com/business/banking-finance/article/2170549/botched-chinese-railway-project-africa-warning-belt-and
https://en.wikipedia.org/wiki/Addis_Ababa%E2%80%93Djibouti_Railway#Main_issues
https://en.wikipedia.org/wiki/China%E2%80%93Ethiopia_relations

Transcript - 


Hello Friends, welcome to Real Quick Info channel. Lets discuss our Original Real Quick Analysis.






Until now, there is wide spread belief that Chinese belt and road initiative is part of Chinese debt trap diplomacy.



For example, In between year 2000 and 2014, China gave 12 Billion Dollar loan to poor Ethiopia.



Since the announcement of Belt and road initiative, it was believed that China will be able to exploit African countries without any loss to it self.



Now lets look at 4 Billion Dollar railway line project Addis Ababa – Djibouti Railway line, which provides land locked Ethiopia with access to the sea.



Construction on this project started in the year 2011 and completed in year 2016. Finally, on 1st January first 2018, this railway line has been inaugurated.



As per South China Morning Post News paper, China Export and Credit Insurance Corporation has provided majority of funding for this project.

Now you see, though This project has been in operation for last 10 Months. yet as per its chief economist, Chinese corporation has already lost 1 Billion Dollar in this railway project.



You invest 4 Billion Dollar and lose 1 Billion Dollar in first year itself. its 25% loss in the first year . Will you call it a good investment decision?



Over the years, China has carefully built the image of having remarkable ability to plan and execute huge infrastructural projects.



We all know, Belt and road initiative is all about building infrastructure which no one needs. But here is a project, which no body planned properly.



759 Kilometer long railway line has been laid without access to road, spur lines, branch lines, storage facilities or dry ports.



The official policy was to build cheap railway first, and integration with other infrastructure was considered to be easy and quick in the planning stage.



For example - most railway stations are far outside the city centers and even outside the towns and cities they are intended to serve.



For transport of bulk goods railway line has been built, but infrastructure for handling bulk goods  was totally missing.



More interestingly, after the railway line was inaugurated,  Ethiopian Railway Corporation   found itself with debt equal to one-third of Ethiopia's annual state budget.



As a result, there was no additional funding available to complete the surrounding infrastructure necessary to place the railway into commercial operation.



Making matter worse, the railway line remained underused due to power shortages.



Thanks to all these reasons, rail way line has become another cash burning machine for China. Since Project is not making money, China had to restructure the loan.



You tell, if a country builds a railway station far out side the city without road connectivity , would you  call it smart infrastructural planning?

When a country is sitting on a mountain of cash, it spends more but thinks less.

No matter, whether Ethiopia owns this railway line or China, it will continue to remain under utilized and keep making losses.



As you know, a badly designed project cannot change from loss making to profit making by only Changing its owner. Needless to say, Rampant Corruption prevalent  in China and Ethiopia will keep driving cost up.



In fact, you take example of Hambantota port, It was swimming pool when Sri Lanka owned it, and its a swimming pool now, when China is owning it. No ship wants to waste its time there, no matter who is operating the port.



Poor Chinese are working hard day and night and earning money, so that one ambitious leader at the top can burn it in other countries.



We wish good luck for Chinese people for surrendering their right to think to one authoritarian ruler.



As per your analysis, will china be able to make profit from this poorly planned railway line project.



Please let us know your views in comment section below.



Please find the reference links of this video in the description box below. Thank you friends for watching this video.

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