Companies setting up data centres at the Addis Abeba ICT Park are embroiled in a dispute over lease payments after a Corporation administering the park revised lease prices.

Raxio Data Plc, RedFox Web Solution, ScutiX and Wingu Africa Group Ltd. had signed a memorandum of understanding (MoU) with the Ethiopian Investment Commission (EIC) in November last year. They were granted over 26,000sqm of land inside the Park, located in the outskirts of northeast Addis Abeba, as part of the agreement.

Though the companies had already begun civil construction works on their respective sheds, they did not have advance agreements on lease pricing with the Industrial Parks Development Corporation (IPDC), which administers the 200ht Park opened six years ago. The Corporation revised lease prices, setting the fee at 30.24 dollars for a square metre a year for foreign firms. Domestic clients have their lease rate at 21 dollars.

The Ministry of Innovation & Technology is building a large National Data Centre in the Park, with a budget of one billion Birr.

Other manufacturers and tenants already operating in the Park have been paying one dollar a square metre and the terms will remain unaltered until their contractual period ends. However, this does not apply to the four firms setting up data centres. Their management teams are unhappy with the revised fee.

Wingu Africa Group Limited has been granted a 15,000sqm plot; its representative, Teshome Worku, is displeased with the dramatic rise in the lease fee.

"The purpose was to attract investors, not to profit from the land-lease," Teshome told Fortune. "We don't know how we should continue."

Wingu Africa managers had expected "reasonable payment" and planned to lease the land for 40 years, but what the Corporation demands has cast a shadow of uncertainty over the entire project, says Teshome.

Following the announcement from the Corporation, the representatives of Wingu and the other companies have appealed for reconsideration. They are in negotiations with the government officials, according to people who follow the issue.

Sandokan Debebe, CEO of the Corporation, has confirmed that his office received the appeals from the companies and forwarded them to a committee in charge of reviewing the issues.

"If it's not workable, there might be reconsiderations instead of leaving the land idle," he told Fortune.

To those overseeing the ICT Park, the new lease fee is nothing out of the ordinary. The revision stems from a study conducted in 2018, according to Surafel Shimelis, the Park's general manager.

"The new lease payment will apply to these companies and anyone who has the interest to invest," he said.

The objections from the companies do not convince executives of the Corporation.

"When they received the permit for their investments, they had agreed to operate based on the lease fee set by the government," Sandokan told Fortune.

The Corporation revised the fees after taking employment opportunities, land value, investment volume, and potential returns into consideration, he told Fortune. The data centres will not have much effect in terms of employment, with all four combined expected to hire no more than 250 people. The CEO says the data centres require a high voltage of electric power.

An industrial park dedicated to other investments may use between 20mw or 30mw of power; and, a single data centre could consume the same voltage of electric power.

The revised lease fee will subject the Ministry of Innovation to 21 dollars a square metre; however, no decision has been made thus far, according to Abiyot Sinamo (PhD), director of ICT development and administration.

"We're going to request for an exception given the importance of the Centre,” Abiyot told Fortune.


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