Ethiopia Courts Foreigners for Sugar Plant as Army Sidelined

(Bloomberg) -- Ethiopia’s government plans to hire foreign companies to help develop the country’s sugar industry, after canceling a military-industrial conglomerate’s contract on a key project.

Prime Minister Abiy Ahmed, in office since April 2, has signaled he plans to reduce “favoritism” toward the security forces when awarding contracts and ensure development projects are “more inclusive for the people.” The state-run Ethiopia Sugar Corp. is looking for a new contractor to develop Tana Beles II in Ethiopia’s Amhara region, which has been hit by protests over the past two years by residents who say they’re being excluded from economic power.

“We’re looking for foreign contractor for Tana Beles II,” Sugar Corp. spokesman Gashaw Aychiluhim said by phone Tuesday from the capital, Addis Ababa. The government halted military-run Metals & Engineering Corp.’s role in the project “because of poor performance and delay,” he said.

Metec Marketing and Sales Director Shegaw Mulugeta directed a request for comment to Director-General Kinfe Dagnew’s assistant. The assistant, Sisay Zaid, and Metec’s head of public relations, Michael Desta, each didn’t respond to six calls and two text messages seeking comment. Addis Fortune, a closely held newspaper, reported at the weekend that Kinfe tendered his resignation from Metec.

Largest Army

Metec is run by the Ethiopian military, one of Africa’s largest armies, and has been involved in projects including the $6.4 billion Grand Ethiopian Renaissance Dam and a fertilizer complex in the Oromia region. Officers connected with the rebel movement that overthrew Ethiopia’s junta in 1991 have dominated senior government positions for the past quarter century.

Abiy succeeded Hailemariam Desalegn, who quit as prime minister in February after failing to end protests in the Amhara and Oromia regions that began in 2015 amid demands for greater economic inclusivity. He signaled on Sunday that the government plans to reduce the military’s role in the economy.

“The security forces have to be freed from any type of favoritism and serve the people according to the constitution,” Abiy said in a speech broadcast on state television.

Metec has signed contracts for 10 sugar projects in Ethiopia, Gashaw said. Of those, the company has agreements to construct Tana Beles I and Omo-Kuraz I in southern Ethiopia, he said.

Project Delay

Omo-Kuraz I had been expected to enter production by early 2017, according to Sugar Corp.’s website. The construction of Omo-Kuraz I has been delayed because of unspecified disagreements with Metec, the ruling-party funded Fana Broadcasting Corp. reported Monday, citing Public Enterprise Minister Girma Amente.

Sugar Corp. and the ministry will give a recommendation to the government to make a final decision about the future of Tana Beles I and Omo-Kuraz I, Gashaw said. China Complant Group Inc. has already built Kesem in the northern Afar region and Omo-Kuraz II in the south, he said.

The Tana Beles II project involves the construction of two factories with the capacity to process 12,000 metric tons of sugar cane per day, according to Sugar Corp.’s website. It’s expected to start operating by 2020.

Neither Information Minister Negeri Lencho nor Defense Minister Siraj Fegessa responded to two calls and two text messages seeking comment.

©2018 Bloomberg L.P.

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