Bidding for the construction of Adama’s Industrial Park closed in the past week after submission of offers from three local and four international companies.
Among the bidders, Fortune has learnt, were Tekleberhan Ambaye Construction (TACON), Zamra Construction Plc, and China Civil Engineering Construction Corporation (CCECC). The government’s Industrial Parks (IP) endeavour is spearheaded by Arkebe Oqubay (PhD), special advisor to the Prime Minister with ministerial rank. The Industrial Parks Development Corporation of Ethiopia (IPDC), chaired by Arkebe, is expected to develop 20 million square metres of manufacturing space in 10 years.
Development of IPs is a big part of the plan for Ethiopia to increase the share of manufacturing in the economy from five per cent to 20pc.
During the five years of the first Growth & Transformation Plan (GTP I) the government was supposed to have completed five parks, of which it has managed to complete only one. It has taken 23 contractors over five years to complete Phase I of the Bole Lemmi Park, now in operation.
Based on this experience, the approach to developing industry parks has changed. Government now wants to award turnkey projects from design to construction for contractors that come with their own sources of financing, without requiring assistance opening letters of credit for procurement. These contractors will also have to deliver the project in six months’ time.
Clauses in the bid document require the companies to have recorded an annual turnover of six billion birr, and to have already built two other industrial parks anywhere in the world as well as to have a positive track record in Ethiopia.
These requirements are disappointing for Awot Kidane, deputy CEO of Zamra Construction, whose company has joined with Dubai-based steel company, Zamil Steel, to bid for the Adama Park.
“The requirements are not inclusive in nature,” he said, “as Ethiopia is developing industry parks for the first time and projects of that size have not been available in Ethiopia to begin with.”
Domestic contractors are bidding despite Arkebe having said in an earlier interview with Fortune, that it was unlikely for them to get these contracts.
“To be honest, no!,” he had said, in response to a question about the capacity of national companies. “We do not want to repeat Bole-Lemi I.”
Contractors had even submitted a letter of complaint to the Prime Minster’s Office, contesting the process of selection, bidding and the requirements placed. Among them, also among the latest bidders, is TACON, which had briefly won one contract to build a park, until the government cancelled and re-tendered it. Tekleberhan Ambaye formed a joint venture with Zhejiang Southeast Space Frame Co. Ltd., which, despite having completed 6,000 projects in over 10 European, Asian, and African countries since its formation in 2001 (according to its website), has yet to work within Ethiopia. This, in retrospect, is what led to the cancellation of the award. The decision by the Board of Directors of the Corporation, to reject the results and re-bid came on December 18, 2015.
TACON is bidding with the same company which cost it the Dire Dawa contract.
“We do not believe that the decision [to cancel the Dire Dawa tender] was fair,” said Goitom Woldegebriel, TACON’s Managing Director, adding that they had lodged a letter of complaint through the Construction Contractors Association of Ethiopia.
“We did not make the decision lightly,” he commented on TACON’s choice to work with the Chinese company. “The company is one of the best in China, and Ethiopia would greatly benefit from having them work here, both now and in the future.”
The requirements for joint ventures in the latest tender are less restrictive as only one of the partners needs to have 3.5 billion Br in turnover, although the requirement of a track record within Ethiopia still stands for both parties.
Zamra’s partner, Zamil Steel, has built 13 factories in Ethiopia. It works in the fabrication and installation of structural steel and plate works for various industrial and commercial applications. The prefabrication will help the joint venture to meet the short timeline set for construction, Awot said. Their agreement will have Zamil handling engineering components and prefabricated elements while Zamra handles the construction of civil work.
China Civil Engineering Construction Corporation (CCECC) is already working on the Hawassa Industrial Park, which was awarded to it without tender. It was also a runner up in the cancelled tender for Dire Dawa. It is bidding on its own as it is able to meet the stipulated conditions.
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