The Oromia Roads Authority (ORA) has started handing over 366 Sino trucks including spare parts worth 367.7 million Birr, to contractors organized under the Universal Rural Road Access Program (URRAP) through a lease agreement on Friday October 19, 2012.
ORA placed orders for the dump trucks around three months ago from CGCOC Hansom Beijing Trading Co. Ltd, to assist the contractors when they are moving material through hilly and stone filled terrains, according to Chala Hordofa, general manager of the Authority.
The contractors are supposed to pay off the cost of the trucks in four years time after which ORA will transfer ownership.
In addition to the cost of the trucks, worth a million Birr each, contractors also have to pay an additional five per cent for the paperwork processed by ORA when it purchased these trucks.
The lease price will be cut from the paychecks contractors receive from ORA for construction of road projects completed under the URRAP.
This program was implemented last year, by the Ethiopian Roads Authority (ERA), to execute the government's Growth and Transformation Plan (GTP) of connecting all the nation's kebele's to major all-weather roads by 2014/15, in addition to interlinking the kebele's themselves with gravel roads.
The program encourages construction professionals with four or more years of experience to group themselves into four and form a contractor's company comprised of two civil engineers, a foreman and a surveyor.
These contractors are given 15km to 20km gravel road projects with a width of between 4.5 metres to six metres in the region.
The program also encourages construction to be labour intensive using the efforts of inhabitants' in the regions where the roads are being constructed.
Oromia region, is supposed to construct 42,000km of the 11,212km of new rural roads and 71,523km of kebele roads ERA plans to build by the end of 2014/15 fiscal year. Accordingly, ORA had trained and licensed 1,876 construction professionals divided into 469 groups. The Authority had allocated 3.3 billion Birr budget last year.
It is to these contractors that ORA will distribute the dump trucks, which started arriving in the first two weeks of the Ethiopian New Year, which started on September 11, 2012. ORA had picked CGCOC, the company that supplies these trucks, following in the footsteps of the Amhara Rural Roads Authority (ARRA), which had ordered 150 trucks after floating a tender and selecting the company, just after a budget of 1.2 billion Birr for the region's URAAP program was released.
CGCOC Hansom Beijing Trading Co. Ltd, was founded in 2005 out of a consortium of five Chinese companies with a capital of 16 million dollars. Primarily basing its business inAfrica. CGCOC is involved in leasing of engineering equipment and vehicles.
ARRA received the trucks from this company and distributed them in February, 2012.
In the four states where URRAP is active, Amhara, Oromia, Tigray and Southern regions, the Roads Authorities usually order tractors, trailers and tankers from the Metals and Engineering Corporation (MetEC). But in Amhara, the orders had been given to other companies in Bahir Dar and Debre Markos because of the work load on MetEC, according to Biyazen Enkahone, deputy general manager of Amhara Rural Roads Authority (ARRA), told Fortune.
ORA itself had ordered 2,474 graders, pickup trailers and tractors of different sizes from the MetEC. However, due to late delivery, less than half had been delivered, according to Alemu Bekele, acting URRAP co-coordinator at ORA.
The machineries were barely enough for the 469 contractors comprised of 1,876 construction professionals. Most of them had elected not to buy the machinery. Instead they are kept under URRAP project offices in Zones and Woredas.
The 366 dump trucks will also be able to reach only 78pc of the contractors in Oromia.
"We will give priority to those that had performed well last year, and make sure to distribute equitably within the 18 zones in the region," Alemu told Fortune.
ORA had conducted an evaluation of its URRAP contractors' performance last August. It was expected to construct 9,338km during the 2011/12 fiscal year out of which it had completed 5,757km.
Accordingly the Authority has identified 33 good and 69 low performers among the contractors. Out of the low performers, it has terminated the contracts of eight, and is preparing to terminate the contracts 10 other contractors after they finish their existing projects. Warnings have also been given to 51 others.
To ensure equitability in the distribution of the trucks, ORA will also use a lottery system to pick which contractors will get picked within zones. For those that passed evaluations but will still not get one of the 366 dump trucks, ORA will order additional ones very soon, according to Alemu.
"Since we will also replace those whose contracts are terminated, it is necessary to order additional trucks," he explained.
CGCOC has been giving training for driver's hired by URRAP contractors. Distribution of 166 of the trucks is currently being handled by the Chinese company.
A URRAP engineer in West Shoa zone whose company was one of those selected through the lottery to receive the dump trucks, stated that the trucks will be a great help in cutting down equipment rental expenses.
"The Sino trucks will be a great help since we used to pay around a 400Br hourly rent, excluding the cost of fuel," he said. "Since the contractors that work near us will also get the dump trucks, we will no longer rent, but borrow each other's equipment to do our work."
It is yet unclear what percentage of contractor's paychecks will be cut, to cover the cost of leasing the dump truck.
The money will be used for achieving URRAP road projects under the ORA, according to officials there. The Authority is expected to construct a total of 12,000km gravel roads during the current fiscal year including 3,581km rolled over from the previous year. It is currently assigned a budget of 4.2 billion Birr.