The Ministry of Industry (MoI) awarded a 633 million Br contract to a total of 13 domestic construction companies to develop part of the Bole Lemi Industrial Zone that covers around 156 hectares of land, for investors that have shown interest to build medium and large scale industries including eight South Korean companies engaged in textile and garment sectors.
The ministry, which is entrusted to manage the plots given for industrial purposes, selected the companies out of 26 contractors along with the Ministry of Urban Development & Construction (MoUDC), Ethiopian contractors Association (ECA) and MH Consultant, by assessing their previous performances on government projects such as construction of universities and government office.
"This is because a bidding process will take time," Yaregal Misker, Industrial Zone & Environment Safeguard Directorate of the ministry said.
After securing such a waiver from The Public Procurement & Property Administration Agency (PPPAA), a federal agency established to ensure that public money is invested and utilized to maximizes benefit, the ministry evaluated the companies profile and selected seven from grade-one construction companies to undertake the lion's share of the construction and five other companies that have three to five grades licenses.
The first-grade contractors are entrusted to construct standard five factories and four office blocks. Of the five factories two of them rest on 10,000sqm each, while the remaining will occupy 5,000sqm each.
These companies include Teklebrehan Ambaye Construction Plc (TACON), Sahle Mariam Construction, AMB Construction, Rama Construction Plc, TNT Construction and the China-based CGCOC Ethiopia Ltd.
Two of the largest factories, that cost around 80 million Br, are to be constructed by Teklebrehan Ambaye Construction Company, which is recently awarded for the construction of the tallest branch office of Commercial Bank of Ethiopia (CBE) on Equatorial Guinea Street, and AMB Construction Plc established in 2006, and currently constructing Wollega University.
Except Rama and CGCOC, the remaining grade one contractors are assigned to construct the three factory shades that rest on 5,000sqm each. Rama is assigned to construct the four offices blocks while the Chinese company is awarded for a 12km of alleyway road construction inside the industrial zone.
The remaining third to fifth grade contractors signed a contract to construct the fence, five lounges, police stations, six guard houses and six toilet and shower houses.
These companies are Haber Construction Plc, United Construction Plc, Fufa Legesse Construction Plc, Kasu Gebretsadik Construction Plc, Amha Sime Construction Plc and Keshamo Construction Plc.
However, some of these companies were not happy with the contract allotment arguing that they are made to construct below their capacity.
"We did not expect a two million Birr contract while the MoUDC certified us for doing up to 20 million Br contract on a yearly basis," Kasu Gebretsadik, managing director of Kasu Gebretsadic Construction Company, awarded to construct the guard houses, told Fortune.
Such a complaint, however, is not accepted by the ministry.
"We cannot give one factory shade for more than one company since it is not convenient for us to manage," Yaregal told Fortune.
In fact the job could have been done by a single contractor. It is because the government wants to finish the works as quickly as possible that it hired this many, he argues.
Unlike the other contractors, grade-one contractors that are expected to finalize the five factory shades and office blocks within three months were displaying frustration over the deadline.
"This is going to be historic for us," Seifu Ambaye, deputy general manager of TACON told to Tadesse Haile, state minister of Industry, at the event of the signing ceremony held at the headquarters of MoI located in General Tito Street on Thursday November 15, 2012.
The responsibility that we shoulder did not seem to match with the period of time that we are given; however, we will try our best to make it happen, Saifu promised at the ceremony with frustration.
Tadesse, nevertheless, was not in the mood to entertain their frustrations, asserting to the contractors instead that they were perfectly capable of fulfilling their responsibilities.
"It is with critical evaluations that you are selected and we believe in your capacities," Tadesse told the contractors.
The ministry's urgency, however, is prompted by the delay of the project, according to sources at the ministry.
The development of Bole Lemi industrial zone was first instructed by the late Prime Minister Meles Zenawi after his trip to Seoul, the capital city of South Korea, where he lobbied the Korean investors to invest in Ethiopia amplifying the investment opportunities in the country in the last fiscal year.
Although his instruction to the ministry was to make the area ready for the investors in September 2012, it was not realized though the ministry contacted the construction companies in June, 2012.
"The plan was to conduct the construction until August and make it ready for September," Mengistu Hailu, general manager of United Construction Plc, awarded to construct the lounges told Fortune. But since we did not contact us, thereafter, we even thought that the project is postponed for another time.
Confirming that the project has actually delayed, Yaregal from ministry said that the delay occurred because relocating the households who reside in the area has taken a lot of time.
Though, around 180 households are relocated so far, there are still residents in the area who are not yet relocated.
Clearing the whole 157ha of land, the ministry plans to construct around 50 factories fulfilling the necessary infrastructure. The construction process will underway by phases.
Aiming at encouraging the frustrated contractors, Yaregal promised that companies that perform well in the first phase might continue working with the ministry for the remaining phases.
The development of the whole Bole Lemi industrial zone is estimated to cost around 1.2 billion Br. However, the ministry might also give plots fulfilling all the necessary utilities and roads without constructing factory shades.
In the utilities sphere, the ministry has already concluded contract agreement with the Ethiopian Electric Power Corporation (EPPCo) for the supply of 20Mw power needed for the area. To date the corporation is erecting electric poles in the zone, according to Tadesse.
Although the industrial zone needs 10,000 cubic meter water on a daily basis, the Addis Abeba Water & Sewerage Authority (AAWSA) also agreed to supply 1,200 cubic metre for the first phase.
If all goes according to the plan, Bole Lemi will be opened, to the South Korean investors who showed interest starting from January 2012. It is open for other local or foreign investors as well.
Interested investors should submit their project proposal to the ministry for evaluation. If a company comes up with a sound proposal, the ministry will offer the area needed for the requested investment.
Companies who are willing to invest in the manufacturing sector and for export purposes will be privileged, according to Yaregal.
The ministry that has received 5,130ha of land for industrial purposes is yet to establish industrial zones in Dire Dawa, Kombolcha, Amhara Regional State; Shinelle, Somali Regional State; Hawassa, Southern Regional State; and Akaki Kality in Addis Abeba.
However, the government aims at developing and administrating these industrial zones by a federal agency, the Ethiopian Industrial Zones Development Corporation (EIZDC). The corporation is expected to be realized in this fiscal year after the parliament approved its establishment proclamation.
Tadesse Haile, state minister of Industry briefing the contractors about the importance of the project for the development of the country before the signing the contracts with the 13 contractors on Thursday November 15, 2012.