Enat Bank has to pay hundreds of millions of Birr to the Ethiopian Roads Administration (ERA) to make the latter recover losses from road projects it awarded to contractors but failed to realise.

The Bank lost a court case with the Roads Administration for the second time last month. It was liable for issuing an unconditional retention money guarantee of six million Birr for SATCON Construction Plc in December 2018.

ERA should be compensated with 117.8 million Br to reclaim from a road contract it awarded to Tekeleberhan Ambaye Construction Plc (TACON), Federal High Court judges ruled on October 14. Enat Bank had issued a 30pc unconditional advance guarantee bond on behalf of the construction company, contracted to construct a four-kilometre road from Hawassa to Bishan Guracha (Tikur Wuha) with an estimated cost of 390 million Br.

TACON undertook the project in 2017 but completed 2.29pc of the construction, covering only 0.28Km of the road three years later. Officials of the Roads Administration, who were unhappy with the dawdling progress, terminated the contract. Lawyers representing the Administration filed a civil suit before the High Court in February last year, claiming the Bank's liability to pay the guarantee bond amount, with interest and punitive damages as of February 2021.

The defendant argued against making repayments according to the contract, withstanding terms that were not in the contractual agreement. The plaintiff contended that TACON's failure to mobilise construction equipment was in breach of the contract. Despite the contractual agreement to mobilise 40 Machineries, a witness told the Court TACON only mobilised two.

The defendant's lawyer pleaded for the construction company to intervene with its legal representatives during litigation, an appeal dismissed by the Presiding Judge, Gezahegn Terefe. However, representatives of the construction firm testified that the Hawassa City Administration failed to clear demarcation issues with residents along the road in time. They told the Judge it would be unfair to claim reimbursement before fulfilling the requirements.