MPs Begin Discussing 765km Pipeline Deal with Djibouti

ADDIS ABEBA – Members of parliament have begun to look into a draft agreement between Ethiopia and Djibouti to build a pipeline to transport gas to an export terminal in the Red Sea state.

The agreement to build a 765km natural gas pipeline was signed at the beginning of this year and was tabled for discussion at the lower house of parliament for the first time on Thursday.

Council of ministers sent it to the lawmakers after discussing the bill late last week.
The pipeline is expected to transport up to 12 million cubic meters of gas from the Ethiopian hinterland to the coast of neighboring Djibouti.

The bill says the agreement deals with facilitating the construction, extension, reconstruction, and operation of natural gas pipeline to transit natural gas from Ethiopia to a facility in Djibouti.

The bill grants Ethiopia full ownership and title over the natural gas in the pipeline, and The bill is called ‘agreement between the government of the Ethiopia and Djibouti on the transit of natural gas pipeline ratification proclamation’.

It requires Djibouti to grant and maintain to the investor exclusive right on use, possession, and control of land along the pipeline system corridors.

The land right includes free movement rights such as Vehicular access, right to transport of material within and across the territory, rights of access over any land, according to the bill.

The bill also makes Djibouti responsible to ensure the security of the project activities and the pipeline system in its territory.

Ethiopia anticipates assuaging its foreign exchange shortage created in recent years by exporting the gas. Ethiopia found extensive gas deposits in its eastern Ogaden Basin in the 1970s. China’s POLY-GCL Petroleum Investments has been developing the Calub and Hilala fields there since signing a production-sharing deal with Ethiopia in 2013.

Djibouti and Ethiopia agreement to construct the pipeline construction in February – came more than a year after POLY-GCL signed a memorandum of understanding with Djibouti to invest $4 billion to build the natural gas pipeline, a liquefaction plant and an export terminal.

The terminal will be located in Damerjog, near the country’s border with Somalia.

It was envisaged that production would start last year, but the Ethiopian government said that it was now likely to happen in 2020.

In the same session, members of parliament looked into a bill issued to provide a system for determination of the division of federal subsidies and joint revenue.

The bill says the subsidy is a conditional transfer intended to provide incentives for regional states to undertake ‘specific programs or activities to achieve a specific or intended objective’.

Both bills have been sent to their respective standing committees for further hearings.

By Sisay Sahlu