Ethiopia: Authority Awards Road Projects With Sizeable Price Gap

A nine-fold difference in the average cost of a kilometre between road projects awarded to local firms by the Ethiopian Roads Authority (ERA) earlier last week raised some eyebrows.

The Authority signed agreements worth 18.2 billion Br with contractors this past week to complete eight road projects that span a total length of 738Km. Of the eight contracts, five were with local contractors such as Oromia Construction Corporation and Yotek Construction Plc. Three were with foreign firms, including Chinese contractors China Tiesiju Civil Engineering Group and Zhejiang Communications Construction Group.

Project completion times range from one to four years, and the Authority will be paying out an average of 24.4 million Br a kilometre. However, there is a glaring difference in the average price for a kilometre of the 18.5Km Guder-Ambo road project being carried out by Oromia Construction Corporation and the 70.5Km Awash-Qulbi-Harar road project taken on by Yonab Construction.

The first has a completion time of one year and comes at the cost of over 56 million Br a kilometre, while the latter is to be completed in three years for under seven million Birr a kilometre.

The cost for a road project depends on different factors like geographical location, soil type, road width and completion time, according to Abebe Dinku (PhD), a professor of civil engineering at Addis Abeba University.

Swampy black soil and solid rock incur much higher costs in constructing the base and sub-base sections of the road in contrast to compacted clay soil and crushed rock, Abebe said.

Completion time is also a factor in determining the cost of building a road, he added, citing that shorter delivery times often mean higher prices.

Because Guder-Ambo road is built on a type of black soil and has a short completion time, it needs more money to finalise, Abebe countered, but he was also taken aback by the gulf in pricing between the two projects.

"Two-fold or three-fold differences in price are common in road projects depending on the factors involved," said Abebe. "This issue needs further investigation."

According to sources close to the case, the Guder-Ambo road has high costs, because it is a wide road conforming to highway standards being constructed in an urban setting and the project includes a bridge and pedestrian walkways. Besides, the bids submitted when the project was tendered all offered similar prices, and that also determined the cost, people knowledgable of the project say. The cost for the Awash-Harar road project is attributed to it consisting of low-cost asphalt laying and maintenance work.

Nonetheless, Abebe believes the high price offered for the Guder-Ambo road is still questionable.

The Authority and government bodies need to cultivate a system of regular road maintenance rather than the pattern of major maintenance work being done now, according to Abebe.

The deals signed this week bring the total number of contracts administered by the Authority to 21 over the past six months, covering a length of 1,774Km at a total cost of 43.3 billion Br. Close to 68pc of these projects, representing more than half of the combined length, were designated to domestic contractors.

The federal government will fully cover all costs other than the 80Km Jimma-Chida road, which has been contracted out to the China Tiesiju Civil Engineering Group for over 2.4 billion Br. The funding for this project, in large part, is sourced from the Japan International Cooperation Agency, the African Development Bank and the World Bank.

The projects will help foster strong connections with neighbouring countries, according to Habtamu Tegegne, director-general of the Authority.

More From: Addis Fortune

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