Fortune News | Jan 23,2021
Three dozen buses formerly belonging to Alliance Transport Services S.C. have been put up for auction by the state-owned Commercial Bank of Ethiopia (CBE). The eight-year-old company defaulted on its debt and pushed the CBE to foreclose on the buses, which have been idle for over a year and a half.
The company acquired the Chinese assembled SunLong brand buses, with the capacity to seat 34 passengers, in 2016. They are now up in the auction block for a floor price of 680,000 Br
Of the 125 buses Alliance formerly owned, 100 were acquired around five years ago at the cost of nine million dollars, 70pc of which was borrowed from the CBE. The remaining buses were bought with advanced capital from the company's 2,500 shareholders.
Alliance, whose founding CEO was Birrenesh Abay, eventually failed to service its debts, leading the CBE to take possession of 100 buses a year and a half ago. Another 25 buses, acquired with a loan secured from Dashen Bank, have already stopped working due to deterioration.
Adil Abdela, board chairperson of Alliance since its establishment, blames political and civil unrest in 2016 and 2017 in the suburbs of Addis Abeba and neighbouring areas, such as Burayu, Sululta, Lege Tafo and Sebeta, for his company's woes. His company had communicated its concerns to the CBE's management, requesting a grace period to service the loans. With the CBE management passing the issue to the Board, Alliance appealed to the prime minister's office for help.
“Our buses mostly used to connect Addis Abeba with the neighbouring cities," said Adil. "We had to stop during these times of protests. We then were forced to default on payments for some months, which the [Bank's] previous management could not accept.”
The bid will stay open until Tuesday.
The Bank has a different version of what transpired in the loan portfolio of Alliance Transport. Not only was the case not brought to the attention of the Board, but there was also no record of a request the management made to the CBE, says Yeabsira Kebede, corporate communications director at the CBE. Foreclosing on the buses was the final step the CBE took after Alliance had failed to respond to repeated notice the CBE, the Director told Fortune.
The company ran into trouble servicing its loans even before the protests cited by Adil as the root of Alliance's problems, according to Yeabsira.
This is not the first time the Bank has tried to sell off Alliance's buses—previous efforts hit a dead end after bidders offered below the threshold amount. The Bank has only been able to sell three buses that were auctioned off through a bid announced a year ago.
The buses could not attract buyers because they were not parked in "a good place initially," and exposed to damage before they were eventually moved to better-suited areas, Adil alleged.
“It's been a year and a half since the buses stopped working. They could be used for the service even though they are under CBE's administration,” Adil told Fortune.
The buses have been parked at CBE's vehicle storage facility in Qality.
The CBE could have used the buses to generate revenue and provide public service had it let them continue to be in service instead of letting them stand idly, says Birhanu Zeleke (PhD), a transport management expert teaching at Kotebe Metropolitan University. He sees the country’s transportation issues as a failure of an administrative system.
PUBLISHED ON Jun 26,2021 [ VOL 22 , NO 1104]
Fortune News | Jan 23,2021
Radar | Nov 14,2020
Radar | Mar 14,2021
Radar | Mar 12,2022
Fortune News | Jul 23,2022
Radar | Feb 20,2021
Fortune News | Aug 10,2019
Radar | Jul 11,2021
Fortune News | Aug 07,2021
July 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...
August 6 , 2022
Few initiatives by the administration of Prime Minister Abiy Ahmed (PhD) have been pu...
July 30 , 2022
Ethiopia’s banking industry is not merely underdeveloped. It has historically regre...
July 23 , 2022
The flip side of a government spending plan is financing. Behind the campaign promise...
July 17 , 2022
Messrs Ahmed Shide and Eyob Tekalegn (PhD), minister and state minister for Finance,...
PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize
May 6 , 2019
As the rainy season gets wetter, accompanied by heavier rain showers, it is not unusual to see folks with umbrellas. Little do they know tha...
Or see contact page