Following the failure by Horizon Plantation PLC to pay up close to 1.3 billion birr on time, the Ministry of Public Enterprises is to re-instigate legal proceedings against the company.
This payment is part of an unsettled 1.4 billion birr the company owed the government following the former’s purchase of business entities.
It is to be recalled that the then Privatization and Public Enterprises Supervising Agency sold off entities such as the Limu Coffee Plantation Development Enterprise (Limu), the Coffee Processing and Warehouse Enterprise, Horizon Addis Tyre and 36.7pc of the government’s share in Bebeqa Coffee Estate and Gojeb Agricultural Development which are now under Horizon Plantation.
Horizon, a subsidiary of MIDROC Investment Group, originally bought the enterprises for a total of 2.03 billion birr. The arrangement was for Horizon to make a 35-percent down payment upfront, and pay off the balance within five years.
The company failed to settle payments that were supposed to be effected during the first year. In this respect, it did not pay with interest 376 million birr for Limu and 460 million birr for Bebeqa.
After years of delay in making payment, Horizon was given a deadline of July 7, 2017, and to settle by then all outstanding dues. However, the company has only managed to pay 174.5 million birr so far.
This payment was made after an amicable arrangement was reached between Horizon and the ministry whereby the latter agreed to temporarily cease its court case with the former. In return, Horizon agreed to make all outstanding payments owed to the Ministry by July 7, 2017.
“Now since the company failed to live up to its promise, we will re-instigate the court proceedings,” Wondafrashe Assefa, communications director with the ministry, told The Reporter.
A couple of years ago, the agency took the case before the Federal High Court, accusing Horizon of breach of contract.
Then last year, the eighth bench of the High Court ordered Horizon to pay up the money. Upon the execution of the decision by the court, two options were on the table to collect the money.
One was for Horizon to pay the money in cash; and failing that, to auction off its property. At that time, Horizon was in financial difficulties and went with the auctioning option. Later, the two parties reached an agreement that saved Horizon’s properties from the auction board.
As part of the country’s transformation from a command to a free-market economy, the Ethiopian Privatizing Agency was first established in 1994, and was later restructured as Privatization and Public Enterprises Supervising Agency (PPESA). Two years ago, the agency was again restructured to assume a ministerial portfolio. Since its establishment, the office has managed to transfer close to 370 public enterprises to the private sector.
By Dawit Endeshaw