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Case Study

Feasibility study for revitalization of Djibouti-Ethiopia railway

railway

Our railway engineers worked on behalf of Citadel Capital to assess the current condition of the 781 KM Ethiopian-Djibouti Railway track, bridges, rolling stock, workshops, business systems, and employee staff.

The Situation

We were asked to identify a series of upgrades and expansions that would be required to return the railway to four alternative levels of performance: as originally designed, minimally functional for current market, modern narrow gauge, modern standard gauge.  We estimated the bill of quantities, unit prices, and total capital cost for each package of investments. 

Approach

Our railway economists assessed the markets, competition, trade flows, economic growth patterns, and future outlook for the region to derive a detailed traffic forecast for the revitalized railway.  The traffic forecast model allows users to run various scenarios and projects future rail flows given a certain set of economic, service, and price conditions. A tangential study by our port experts evaluated the port-rail interface, ensured that the port could sustain and grow capacity to serve the projected volumes, and developed recommendations around developing terminals and free-trade zones around the port.

Our railway business planners constructed a business case model that captured the proposed capital investment and the traffic forecast to create a train plan, an operating plan, a rolling stock plan, a staffing plan, and an operating cost model for each year into the future.  Each of the proposed business plan scenarios were fed into a financial model to yield pro-forma annual income statements, balance sheets, and cash flow statements over a 40-year planning horizon.

Our policy experts worked with attorneys, government regulators, shippers, and the current railway management to examine alternative concession structures, evaluate proposed terms and conditions, and made recommendation based on their experience with other successful and mediocre railway concessions from around the world.

Results

In the course of this study and in support of the Final Report, we interviewed over 70 key stakeholders, catalogued over 600 supporting documents, and created a searchable GIS database of 5,000 photographs.

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