Ethiopia Probes Alleged Dam Misspending That Slowed Construction

(Bloomberg) -- Ethiopian authorities are probing missing funds a military contractor already accused of graft was meant to spend on a showpiece dam on a Nile tributary that’s raised tensions with Egypt.

Military-linked Metals & Engineering Corp., which was replaced as a contractor on the Grand Ethiopian Renaissance Dam in August 2018, said it could only account for spending of 9 billion birr ($305 million) of the 16 billion birr it received from a state-owned power company for mechanical and structural works. Work on the project on the Blue Nile is running about five years late, with Ethiopia planning to finish it in 2023.

The money may have been used for some “administrative” or other purpose, Metec’s director-general, Ahmed Hamza, said of the unaccounted for funds in an interview in the capital, Addis Ababa. Ethiopia’s auditor-general, Gemechu Dubiso, said the transfers from Ethiopian Electric Power Corp are being investigated.

Metec, which had played a crucial role in projects to develop Africa’s fastest-growing economy, has been roiled by corruption allegations over the past year and its leadership has been comprehensively changed.

The GERD, which is set to be the continent’s largest power plant, is currently 68.5% complete, according to project engineer Kifle Horo. The civil part of construction by Italy’s Salini Impregilo SpA has overtaken work international contractors are doing after Metec’s replacement.

Tensions over the dam have flared in recent weeks, as Egypt has accused Ethiopia of dismissing its concerns over the timescale for filling the project’s reservoir -- a key issue in sustaining a reliable Nile flow to Egypt -- and called for an external mediator in talks.

Ethiopia proposes filling the reservoir in between four and seven years, according to Gideon Asfaw, water ministry adviser and Ethiopia’s head of negotiations on the dam with Egypt and Sudan until earlier this year.

To contact the reporter on this story: Nizar Manek in Addis Ababa at nmanek2@bloomberg.net

To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Michael Gunn, Mark Williams

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