Addis Fortune (Addis Ababa)

Ethiopia: Huawei Ordered to Remove Illegally Imported Equipment

This decision came after an initial ruling to confiscate the goods, influenced by the will to maintain bilateral relations

The Ethiopian Revenues & Customs Authority (ERCA) decided last week that Huawei Technologies, the private Chinese telecom giant, must remove the 13 million-dollar telecoms equipment it allegedly imported illegally a year ago. It had previously decided that this cargo was to be confiscated.

The company must pay five percent of the total tax due on the equipment, in addition to the warehouse charges incurred over the past year, both at the Modjo Dry Port & Terminal and the Ethiopian Cargo terminal, according to an official at the ERCA.

Huawei, which is the second largest telecom equipment manufacturer in the world - after Eriksson - imported a total of 235 items through the Ethiopian Shipping & Logistics Service Enterprise (ESLSE) in November 2012. An additional 11,334kg worth of equipment was brought through ET Cargo in December 2012 - described on the commercial invoice as 'ethio telecom network expansion projects'. This was despite the fact that the 1.6 billion-dollar expansion project agreement was signed with Huawei and fellow Chinese company ZTE on July 25 and August 18, 2013, respectively.

The issue came to light when theEnterprisecommunicated with ethio telecom, in order to have the equipment stuck at the terminal for over two months removed so as to relieve congestion. Eventually, successive investigations by theEnterprise, Ethiopian Cargo (ET Cargo) and Parliament identified that the equipment was imported without the knowledge of ethio telecom, even though its projects were cited as the intended destination.

It was following this that the Authority made its first decision, in mid-October, to confiscate the goods.

Following successive talks between the Authority and the company, as well as diplomatic talks, the Authority revised its decision to confiscate the goods and replaced it with the removal order last week, an official at the Authority said.

Any imported property can only stay uncollected for two months at theDryPortor Cargo Terminal. Once that period is exceeded, confiscation can follow, according to the law that outlines the Authority's port and warehouse responsibilities.

"We could have confiscated the equipment, but we decided otherwise, in order not to spoil the bilateral relations between the two countries," an official at the Legal Affairs Department of the Authority told Fortune.

Huawei, which reportedly earned a profit of close to 2.5 billion dollars in 2012, discussed the possibility for ethio telecom to buy the equipment - including energy storage units, various types of batteries and microwave telecommunication products - and use it to replace the old Nokia installations in Addis Abeba, according to a source close to the issue.

The two did not reach an agreement , however, as ethio telecom refused to do so the source disclosed to Fortune.

"The goods were imported illegally, and there is no legal obligation that we buy them," Abdurahim Ahmed, corporate communication directorate director at ethio telecom, said.

Celia Huang, Huawei's spokesperson inEthiopia, has denied that the removal decision has been issued by the ERCA.

Though ethio telecom's network expansion deals with the giant Chinese rival telecom companies, Huawei and ZTE, were signed over four months ago, the specific assignments of the two companies was only made public last week, during a press release at ethio telecom.

In the allocation of the vendors, the whole country will be divided into 13 zones including the capital Addis Abeba, and the two rival companies will each have 50pc share, according to the press briefing on Thursday, November 28, 2013. Huawei will take the Addis Abeba zone, including the installation of 4G technology.

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