Contractors Call for International Bid Threshold Adjustment

Local contractors plea for the international bid price threshold to be raised as the conversion rate has made it easier for foreign-based companies to outperform.

The proposed entry is to be set up to two billion Birr as discussed in a meeting that saw the attendance of officials from the Ministry of Urban Development & Infrastructure and the Ethiopian Roads Authority a fortnight ago.

Gebeyaw Yitayew, head of the Public Procurement & Property Authority, agree the threshold does not reflect the current purchasing power even though it was tripled to 600 million Br over a year ago by the Ministry of Finance.

"The experts at the Authority will assess and adjust," he told Fortune.

Gebeyaw also disclosed the door has not been closed for contractors that are able to work on projects requiring more than the appropriated amount.

Ethiopian Contractors Association, which lobbies for 2,500 members, presented a study focused on the challenges of the sector that was conducted over the span of six months.

It reveals the local contractor's participation is only three percent in federal projects although the capital budget accounts for up to 70pc of the total.

According to Girma Habtemariam, head of the Ethiopian Contractors Association, local contractors possess high tolerance during delayed payments, seeking bank loans to remain operational.

"We're struggling," he said.

Over 25,000 construction companies are operating in the country. A report from the central bank shows the sector's growth rate has plummeted to 4.9pc, the lowest in the past five years.

Wendimu Seta, state minister for the Ministry presented an assessment conducted by the experts, which received a 60 billion Br budget for the current budget year.

The assessment reveals that the number of national bids retendered due to insufficient bidders was six in 2018 rising for consecutive years and reaching 38 in 2021.

"Competence is declining while infrastructure appetite is increased," said Wendimu.

Of the 32 major construction projects five years ago, 80pc were contracted to Chinese firms, known for their better performance and delivery records outdoing local and international competitors.