Fortune News | Jul 03,2021
A 1.2 billion Br building that was under development by Tekleberhan Ambaye Construction Plc (TACON) is to be handed over to the Ethiopian Construction Works Corporation (ECWC) as a result of the contractor's inability to deliver the building on time. Originally planned to serve as the headquarters of the now-defunct Government Communication Affairs Office, the building is now slated to become the Ministry of Trade & Industry head office.
The building rests on 14,000sqm of land in Arat Kilo and will consist of 16 storeys, four basement floors, and a workshop. Under construction since mid-2017 by TACON, a grade one contractor founded by its major shareholder, the renowned businessperson Teklebrehan Ambaye, barely a quarter of the work has been completed. It is one of the 15 government office projects that are being carried out under the watch of the Federal Building Construction Project Office, which has recently finalised the concept design of 80 public offices.
The state-owned ECWC, which has managed to sign contracts for 22 billion Br worth of construction projects in the last nine months, was handed the contract after bid invitations floated by the project office in charge of federal construction projects under the Ministry of Urban Development and Construction, which has the mandate to administer contracts, failed to garner any results.
The Project Office has advertised the invitation to bid at least five times on television and 45 times on newspapers since the beginning of this year. Although four Chinese contractors and a domestic one, YOTEK Construction Plc, initially showed interest, their bids never materialised.
“The current market is uninviting and unpredictable. The shortage of foreign currency and inflation probably caused the contractors to lose appetite on the project,“ said Surafel Shiferaw, an engineer with over three decades of experience.
The Corporation takeover has been approved by both the Urban Housing Ministry and the Public Procurement and Property Administration Agency. The price for the project is yet to be decided on, although the Office expects that it will be significantly more than what it had agreed to pay TACON, according to Tekeletsadik Teklearegay, head of the Project Office.
There are, however, other complications involved with the latest addition to the Corporation's portfolio that still need sorting out. For instance, TACON received over 284 million Br in advance payments after securing a guarantee bond from Enat Bank and the Office is demanding a refund on the payment from the Bank.
“We're working to solve the matter amicably," said Tekletsadik.
According to Biruk Melaku, assistant to the president of Enat Bank, they are looking for alternative solutions to the problem. Paying the bond would put a significant dent in Enat's business – the Bank made 208.6 million Br in profits over the last fiscal year, almost 30pc less than the value of the bond.
"We're negotiating with the Ministry to allow us to proceed as the security guarantor for the newly assigned contractor," he told Fortune.
TACON may be forced to sell off assets in order to pay compensation for its failure to deliver the project. Though interest rates vary depending on the contract signed, the company is likely looking at one percent daily, according to Surafel.
"The failure of contractors is the failure of the sector and directly affects the country’s economy," he said.
Representatives of Tekleberhan Ambaye Construction Plc were unavailable for comment.
PUBLISHED ON
May 23,2021 [ VOL
22 , NO
1099]
Fortune News | Jul 03,2021
Radar | May 08,2021
Radar | Oct 17,2020
Films Review | Jan 01,2022
Fortune News | Nov 23,2019
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Jan 18 , 2025
Adanech Abebie, the mayor of Addis Abeba, addressed last week a warm-up session for h...
A severe cash shortage squeezes the economy, and the deposit-to-loan ratio has slumpe...
Jan 4 , 2025
Time seldom passes without prompting reflection, and the dawn of 2025 should nudge Et...
Dec 28 , 2024
On a flight between Juba and Addis Abeba, Stefan Dercon, a professor of economic poli...
Loading your updates...