Ethiopia’s mushrooming sugar plants fete Mesfin Engineering with billions of birr in contracts

27 Mar

by Keffyalew Gebremedhin

ERTA reported today that TPLF’s Mesfin Industrial Engineering (MIE) has signed ETB 3 billion ($162.2 million) worth contracts with state-owned enterprises to deliver machineries for the Tana Beles Integrated Sugar Development Project (Tana Beles II) and the Kuraz Sugar development projects that are under construction in the Amhara region and the Omo Valley in SNNPR, respectively.

Tana Beles Development

The Tana Beles Integrated Sugar Development Project, launched in Jawi Woreda of Amhara State, costs the nation over ETB 30 billion ($1.62 billion), totally financed by the government, with about $400 million loan financing by India and China advancing another $500 million.

Work at break neck speed at Tana Beles (Courtesy of Ethiopian Sugar Corporation)

Work at break neck speed at Tana Beles (Courtesy of Ethiopian Sugar Corporation)

The Tana Beles project lies on 75,000 ha of land and would establish, according to the Ethiopian Sugar Corporation , three sugar factories with capacity to process 12,000 tonnes sugarcane a day.

Kuraz Sugar Development

The largest of the 10 sugar projects is the Omo Kuraz Sugar factories Project, which consists of, among others, six factories and sugar plantations – sprawling on 150,000 hectares. It is expected to start crushing sugar cane by 2013/14, according to Addis Fortune.

It is reported that the study and design of the Kuraz Sugar Factories was prepared at a cost of ETB 118.3 million ($6.4 million) by the state-owned Ethiopian Waterworks Design & Supervision Enterprise (EWDSE), in collaboration with the Southern Ethiopia Design & Supervision Enterprise (SEDSE), 40pc shareholder in the project. Overall, the government has earmarked $225 million for each of the six sugar factories in the Omo Valley. The construction work is assigned to the Metal and Engineering Corp (MetEC) run by the military, according to Addis Fortune.

Ethiopia’s investment in sweeteners and MIE’s bite of the cake

Overall, the planned expenditure by Ethiopia on its sugar factories by 2014/15 is estimated to reach ETB 100 billion ($5.5 billion), half of it in foreign exchange, according to Bloomberg. The government plan is to get as many loans as possible, aiming to pay 40 percent of it from future income from sugar.

By the terms of its contracts, Mesfin Engineering has just signed with the Sugar Corporation, it is required to assemble produce/machineries for these mushrooming sugar factories, as it would also be responsible for delivery and installation of railroad tracks, according to ERTA.

In line with the growth and transformation plan (GTP), the Ethiopian Sugar corporation has indicated that by the end of 2013 Ethiopia would become self-sufficient in sugar production, while by mid-2015 it would export about 1.3 million tonnes of sugar. Given the less than 40 percent reliability of targets provided by the government, for now the on paper this sounds good.

Looking beyond sugar development, Mesfiin Engineering is in the process of negotiating to get a bite of the work in the fertilizer factories, the construction of some of which has already been underway in some part of the country, according to the ERTA news report.

Sour ways of going about the sweetener: The human cost

Ethiopia’s hunger for development, as starkly shown by the country’s profound poverty, leaves no doubt about it being the nation’s urgent and pressing necessity. The way it has also been articulated by those in power and the technocratic applications thereon, charted and applied by those advising them, are as enticing. Moreover, they are consonant with what the country needs and its future demands – assuming that they are realizable.

Unfortunately, the road to Ethiopia’s development goals has not been free of obstacles and controversies. Putting aside the lack of the nitty-gritty of knowhow and monies, the problem largely is in the unresolved politics of equality, absence of accountabiliy and the issues of trust and confidence in the country’s governance.

While this is not unique to Ethiopia, our’s borders the extreme. This is not only because it is a society of humans and the country governed by human beings with all human failings. But also because their excesses are aided by the lack of respect to the law. Therefore, no one with any degree of credibility in Ethiopian politics could claim to be above suspicions or beyond reproach, while promoting these paths to power and enrichment of the few.
 

Progress greeting children of Omo Valley (Courtesy of Ethiopian Sugar Corporation)

Modernity and the progress that have greeted children of Omo Valley (Courtesy of Ethiopian Sugar Corporation)

For instance, due to absence of accountability, the building of these projects has started with the wrong footing in the Omo Valley. The first is the massive dislocations of people and human sufferings that have occurred, in worse ways especially in the Omo Valley. There have been many reports about forced relocation of the tribal groups, who have lived all their life in a state of nature. The point is not against ameliorating their subhuman conditions or getting them possibilities to receive services toward a better life.

Rather it is how their transition has been handled or arranged. The Ethiopian state is normally heavy-handed and denial of any of such taking place to the many accusations out there have not to date provided convincing evidence otherwise.

The state said the same thing about Gambella’s experiences with state-engineered land grab. The government denied forcibly removing the people. Now in country’s where courts operate to serve justice, the regime’s allies are facing lawsuits for their role in aiding and abetting an authoritarian regime that has chosen to violate the rights of its citizens. Owing to that state violence, people have reacted and Gambella has now ended up bing conflict zone and nearly a military garrison.

I do not believe that this is what our country should plant in its future. People who would seek some form of delayed justice at any point in the future are all right. But our country need not plant into its future those denied of justice and be compelled to find it through vengeful ways. In their eyes, they are being cultivated to dissociate themselves from a country that is good at taking away from them what they cherish, instead of giving them a better life, as promised.

To make matters worse, Ethiopia’s problems have been compounded by the state’s claim to be just and all-knowing, as far as what the needs of the people are concerned. Therefore, on that assumption the state has always been acting, without consultations with citizens, whom it looks upon down. Every time it has done this it has courted more distrust and anger.

What difference is there between uncompetitive award of contracts, nepotism and corruption?

All along, the Ethiopian state has been taking liberty of doling public resources to whom it so chooses, without any accountability. A case in point is this very story about Mesfin Engineering, which is owned by the ruling party, and has been the basis for this article.

In these two three years, the engineering firm has been all over the map, waving all sorts of contracts awarded to it by the state. Probably, it would be more prudent and accurate to say the ruling party. The chiefs and most of the presiding officials at all levels of government, especially where political, economic and security decisions are made and implemented hail from the core of this party that owns most of the huge companies in the economy. These are individuals united by their ‘common cause’, whatever their long-term objective is for Ethiopia.

The point is that, when all these cookies and sweets are pushed into the jar of Mesfin Engineering, we have heard of no bids and competition. As any modern society, however, Ethiopia has laws and regulations, governing public procurements and in businesses sort of norms of corporate governance, the latter of which turns to Ethiopia’s commercial code and other recent pronouncements.

In addition, in 2010 the minister of finance and economic development issued a document known as Federal Public Procurement Directive. While the idea is noble, it is sad to state that it became another living testimony to the fact that in Ethiopia laws are made to be applicable to citizens and in the corporate sense to businesses. But these laws have no power or effect on those running the country.

Should this then irk some and surprise others, when people see and believe that the TPLF is the nation’s first son? It should indeed! It has affected more than 97 percent of the country, reducing them to status of stepchildren or adoptee, only benefitting from grace and derivative rights.

The problem is in modern society, there are also considerable elements of the bigger society’s interests that are incorporated into businesses, what we collectively refer to as the private sector. When that is pushed to the side, instead of receiving opportunities to develop itself and foster the nation’s growth and development, the politics running the nation sentences the whole country to return to a distant era when as a nation half a century ago Ethiopia saw business as profession as motley of shopkeepers.

That mind did not help Napoleon, who saw Britain as a nation of shopkeepers. Knowing as he was of its value, Adam Smith never took any offense from it. The fact that Britain emerged as prominent power of the imperialist era and still is a major power speaks to that.

As a matter of fact, it is not the level of Ethiopian poverty with all its manifestations that shocked the Briton Martin Turner, vice president of the Association of Chartered Certified Accountants (ACCA), when he visited Ethiopia in the summer of 2012. It was rather the backward state of the standard of accounting in Ethiopia, relative to East Africa’s, from which the latter picked from Britain – Napoleon’s nation of shopkeepers.

Plotting sugary future, ignoring the country's (Courtesy of Sugar Corporation)

Plotting a sugary future, ignoring the country’s (Courtesy of Sugar Corporation)

In this TPLF rigmarole of parochial politics, we are preoccupied by the terrible erosion of the nation’s trust and confidence in the integrity of those in power or lack of desire on the part of the TPLF to regain it. So far, it has been pushing it under the rug, as if sugar factories and other development ventures would make up for the grievances the nation has harbored.

Truth be told, irrespective of how far the necessity of fostering the rule of law has been pushed to the background, the fact of it has increasingly become strongly felt need now shows that repression has not helped in either containing or reducing or diminishing it.

Let me be clear that the importance of all these development ventures in combatting poverty and underdevelopment cannot be sufficiently emphasized. Nonetheless, without removing repression and polarization of Ethiopian society, there can never be a sure sense of resolution to the society’s multifaceted ailments.

In that regard, key to Ethiopia’s progress and development are ensuring respect for citizens’ fundamental human rights, individual freedoms and democratic governance of society. These are the most potent means of uprooting poverty, insecurity, inequality, corruption and the ugliness of institutionalized nepotism.

Only on their ashes would Ethiopia spring up as a resourceful nation rallying the united efforts of its people, which would reject the politics of divisiveness and parochialism in all aspects of Ethiopian life, icluding development.

This article is written in a spirit of appeal to our commonsense and common humanity, as citizens of the one country we share in common.

*Updated.

TE – Transforming Ethiopia

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