Authorities in Addis Ababa chose to maintain the China Communications Construction Company (CCCC) as the main contractor for the Kality and Tulu Dimtu road projects, despite the project’s funder, China Ex-Im Bank, placing a freeze on funds disbursed to finalize the construction of the projects.
Federal authorities took the loan from the Ex-Im Bank on the behalf of the city administration, which are obliged to give the contract to Chinese firms as long they access the fund from the China-based multinational lender.
With a temporary suspension placed on the loan following Ethiopia’s application for debt restructuring last year, authorities had the right to terminate the contract, despite making a decision to keep the Chinese company as a main contractor.
The construction of the Kaliti-Tulu Dimtu and Kaliti-Kilinto road projects has been suspended for a year as China Exim Bank has not released any payment for the past four years, according to Moges Tibebu (Engineer), head of Addis Ababa Roads Authority. However, “we will keep the contractor to continue the construction of the road.”
While 50 percent of the project has been completed, the City Administration has allocated two billion birr for the remaining works of the project. “The more it is delayed, it require more budget as inflation is growing,” added Moges.
Initially, the two road projects were expected to consume over 4.7 billion birr budget. While the City Administration covers half of the project, the rest was supposed to be covered by the Chinese Ex-Im bank.
The two roads are also among most expensive projects in the country. On average, the Chinese contractor was given a contract to finish the project for 235 million birr a kilometer.
After Ethiopia decided to restructure its debt last year, the Ex-Im Bank suspended a loan to the country totaling over 339 million birr. The Modjo-Hawassa Expressway project, which was started five years ago with a budget of 13 billion Br and was funded by the government, the World Bank, the African Development Bank (AfDB), China’s Ex-Im Bank, and South Korea, is the biggest loser from the suspension.