CHINA Gezhouba Group (CGGC) has begun construction work on a US$270 million water supply project for Mekelle city, capital of Ethiopia's northern Tigray state.

A project commencement ceremony was held on September 23, attended by Chinese Ambassador to Ethiopia Tan Jian.

Chinese media quoted Tan as saying that the project is designed to supply 124,300 cubic meters of clean water daily once it is completed three years from now.

The Chinese government has agreed to provide an interest free loan of US$80 million and a preferential loan of US$150 million for the project, accounting for 85% of the total financing required.

Back in May 2018 the framework agreement on financing the project was signed between CGGC and Ethiopia State Minister of Finance, Admasu Nebebe, in the presence of Prime Minister Dr Abiy Ahmed and Chairman of the Standing Committee of China's National People's Congress, Li Zhanshu.

The project will meet the water needs of the 400,000 residents of Mekelle city, as well as the agricultural sector and the many local manufacturing companies. The project will provide water for the Mekelle Industrial Park.

Mekelle is located 783 kilometres north of Ethiopia's capital Addis Ababa. The city has been rapidly growing in the last several years, and regional authorities have found it difficult to keep up with water requirements.

Chinese contractors have been involved in a number of major transport, energy and water projects in Ethiopia, usually with the backing of debt packages.

The biggest single project is the 756 kilometre electrified railway connecting Ethiopia, which is landlocked, with a port in neighboring Djibouti. The Addis Ababa-Djibouti Railway was inaugurated in January 2018.