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The two Indian companies that were to construct the Tendaho Sugar Factory are being threatened by the government with losing the job if they do not start the work that is already two years overdue.
The project was enabled by a loan of 640 million dollars from Exim Bank of India, granted on 1.75pc interest. Out of this, 400 million dollars was for the construction of the factory while the remaining was to be used for the expansion of the Fincha and Wonji sugar factories.
The construction project had different parts, including a juice extraction plant, steam generation plant, power generation plant, processing house plant, and related modernisation packages. It was stated in the bid document that whoever made the winning offer for two or more of the parts would win the engineering procurement contract (EPC).
Tenders were invited only from Indian contractors because the loan was provided by India. The Overseas Infrastructure Alliance (OIA) and Uttam Sucrotech International Plc offered their tenders and the EPC was awarded to OIA in a contract signed on January 10, 2007, with Tendaho Sugar Factory.
Under that deal, construction was expected to begin within 35 days. That did not happen, however, as the two companies were embroiled in a court dispute initiated by Uttam, which was not satisfied with the contract.
Sufian Ahmed, minister of Finance and Economic Development (MoFED) met representatives of the two companies in his office on Monday, January 25, 2009.
The minister together with Belay Dechasa, general manager of the Ethiopian Sugar Development Agency (ESDA) passed on a stern message to go back home and resolve their differences and that they are to start work or lose the contract, according to an official at the agency.
The sugar factory had 64,000ht of land which is expected to cost a total of eight billion Birr. The factory is to have its own sugarcane plantation on 54,000ht, while another 10,000ht is to be developed by local farmers for the same purpose. There will also be construction of residential quarters for 40,000 workers and a dam with a capacity of 1.19 billion cubic metres of water.
All of these projects are to be undertaken by local firms, in the Afar Regional State. Only the dam is located at Tendaho, which lent its name to the factory, while all the rest are located in Dubti.
“We are going good with the construction of the houses, the preparation of the land and the planting of the sugarcane,” said Belete Alemayehu, general manager of the factory.
The Tendaho Houses Development Agency, established under the Ministry of Works and Urban Development (MuWUD), is responsible for the construction of the houses, while the Water Works Construction Enterprise, under the Ministry of Water Resources (MoWR), is undertaking the preparation of the land and the construction of the dam. The factory is planting the cane.
The construction of the factory is to be supervised by the ESDA, which is under the Ministry of Trade and Industry (MoTI). Girma Birru, MoTI’s minister, had repeatedly warned OIA and Uttam verbally and in writing to no avail. That led the case to be referred to MoFED, which signed the financial contract with Exim Bank.
The results of Sufian’s stern warning will depend on the resolution of the court case between the two Indian companies.