17 May 2014

Ethiopia: Imported Telecom Equipment Create Disarray

Huawei Technologies, a global telecom giant engaged in a massive telecom expansion project in Ethiopia is said to be defying the government's orders to take back telecom equipment worth USD 13 million, allegedly imported under the pre-text of using it for Ethio Telecom.

The company told The Reporter that it made the last shipment this week but the Modjo Dry Port Administration denied that Huawei removed the cargos and that it has only requested to clear it out.

The alleged equipment has been stored at Modjo Dry Port since 2012 despite the government ordering the Chinese firm to ship it back to China four months ago.

Last week the Minister of Communication and Information Technology, Debretsion Gebremichael (Ph.D.) visited the Modjo Dry Port and was informed of the items by customs officials. The Reporter witnessed that the Minister was disappointed after he was informed that the Chinese firm has not removed and shipped out the alleged items.

While he was visiting the dry port he asked the dry port administration about the containers in the compound.

The minister did not have any reaction on his face but only said "Does this mean that they don't need it?"

After a week The Reporter has learnt from Huawei officials that the items have fully been shipped out this week. However, it could not be confirmed whether the Minister issued an order to Huawei after his visit.

"All of the cargos have been returned, the last shipment was done this week," Celia, head of communication affairs with Huawei at the Ethiopia office told The Reporter via email yesterday.

She further indicated, "we have never refused to remove the items" though they were ordered to be removed four months ago.

However, the port officials confirmed to The Reporter that Huawei has only requested to remove its 24 cargos but the cargos are still in the dry port compounds.

The equipment was said to be allegedly imported into the country in the name of Ethio Telecom, the state-owned telecom company, without Ethio Telecom's knowledge.

Government investigators reportedly said that Huawei Technologies illegally imported USD 13 million worth of telecom equipment into Ethiopia, adding to the number of cases involving allegedly corrupt activities by the Chinese telecom company. It is still unclear whether this was done to avoid paying taxes, the Ethiopian Revenues and Customs Authority (ERCA) earlier said.

The ERCA had first said it would confiscate the equipment and was likely to slap the company with tax avoidance charges. However, after negotiations the government has decided to order the company to ship out its illegally imported items back to China instead of a confiscation. The equipment has been stuck at the country's port since last year.

Ethio Telecom signed a USD 800-million telecom equipment deal with Huawei and another USD 800 million contract with China-based ZTE to expand its mobile phone network only three months ago. The equipment, which has remained stocked for more than a year in Modjo however, was imported into the country towards the end of last year before the two Chinese firms were awarded the undertaking of the massive expansion of Ethio Telecom.

Questions are being asked regarding the timing of the imports. Industry players are asking how Huawei Technologies knew it should start importing the equipment about nine months before the Ethio Telecom tender was actually awarded to the company.

According to sources, Huawei imported a total of 235 items including energy storage units, various types of batteries and microwave telecom communication products. Ethio Telecom told the ERCA that it never told Huawei to import any telecom equipment on its behalf.

The projects with Huawei and ZTE aim to introduce 4G broadband Internet to the capital, Addis Ababa, and increase mobile phones and 3G Internet access across the country.

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