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A. LE FLOCH
Shell Ethiopia will have to wait to recover nearly half a million in debt owed to it by the Tendaho Sugar Factory, a court determined. The factory, which is still under construction, still has no assets or cash at its disposition to settle the debt for oil and lubricants supplied.
The Tendaho Sugar Factory, which is under development to be the country’s largest sugar plant, is unable to pay a little over half a million Birr in debt to Shell Ethiopia because it still has no capital or liquefiable assets, a court determined.
Shell filed a lawsuit against the sugar factory at the Federal High Court demanding payment for oil and lubricants it supplied to Tendaho Agricultural Development SC, whose assets and debts have been transferred to the factory. The court later closed the file, giving the mandate to Shell to activate the case when the sugar factory develops assets.
Shell had agreed with the former Tendaho Agricultural Development to get the payment a month after it supplied the products in 1996. The oil supplying company charged the debtor on July 25, 2007.
The bench ruled on August 17, 2007 that the Tendaho Sugar Factory is a debtor, and should therefore service its debt. However, Shell which was not paid by the factory, appealed to the court again, requesting the auctioning of properties of the debtor.
The court, which summoned the general manager Belete Alemayehu of the factory, ascertained that the factory does not have any property or money in its account.
Before Tendaho Agricultural Development settled its debts, the council of ministers on April 27, 2006, decided to liquefy it, transferring its properties as well as its debts to the Tendaho Sugar Factory.
“The construction of a sugar factory is financed by the Development Bank of Ethiopia and an Indian financier,” said Belete, stressing the factory does not have its own assets. “The financiers will not release the funds if they find out that it is used for other purposes.”
EXIM bank has agreed to finance 640 million Br for the project.
The court ruled that Shell has the right to demand its money when the factory acquires its own assets in the future.
A legal expert commented that Shell would inevitably secure its money in the future, if not now.
“It is a legitimate ruling,” said the expert.
Shell has requested the payment of a nine per cent interest as well as expenses related to opening a line of credit on the principal.
“This huge factory will definitely have the capacity to service its debt,” says an employee at Shell, who accepted the ruling.
Tendaho Sugar Factory, located in the Afar Regional State, will be the largest sugar factory in the country when completed.