Accepts high risk in telecom sector
The Ethiopian government rejected the World Bank (WB) report on corruption, in regards to the massive telecom project the country embarked on, in the past few years. However, a government official who has close knowledge of the subject, acknowledged that there was a high-risk probability for corruption in the sector.
The recently released WB report stated that the process the telecommunication expansion project underwent has exposed it to a high risk for corruption and noted the project as having a weak procurement system።
The report stated that several cases have been reported in the media of follow-up contracts being awarded to non-performing suppliers and of stipulated procurement procedures being manipulated, bypassed or simply ignored.
The report continued by indicating that some domestic and international observers of Ethiopia’s telecom sector have expressed concern at the possible market distortions arising from Ethiopia’s increasingly close political relationship with China.
Debretsion Gebre Michael (PhD), Deputy Prime Minister responsible for the economic cluster and Minister of Information Communication Technology (ICT), has rejected the claims made in the report. He said that every project had been awarded based on free and transparent bidding processes.
“For the USD 1.5 billion project that the Chinese telecom giant ZTE undertook, about eight international telecom firms participated in the bid for the vendor financed project, before we selected the Chinese firm,” he said. “By any international standard, this is an acceptable practice,” the deputy PM informed Capital.
He said that after the Chinese company commenced working on the project, the Ethiopian government had assigned an international Canadian company as an independent third party, to audit the ZTE project.
“The auditing firm made several suggestions on what had to be changed or readjusted, and we accordingly made the corrections, based on the auditor’s report,” Dr. Debretsion explained.
According to the PM, based on some discrepancies identified by the audit report on the project, the government has also penalized ZTE by reducing the agreed total amount of payment to the company.
However, he accepted the part of the World Bank report that mentioned ‘high risk for corruption in regards to procurements’, not only on the ZTE project but other projects as well, although he criticised the Bank’s report for not explicitly stating and providing evidence of actual corruption cases.
“We have always fought against corruption and fraud and have taken measures when such a case is discovered,” he stated.
The WB report stated that all the factors that inherently make the international telecom sector prone to corruption are largely present in the Ethiopian telecom sector as well. “As a result, telecom can be considered, in general, to be a moderately high-risk sector,” the report added.
The report claims that the USD 1.5 billion project was awarded with no competitive tender. “This contract was given to one supplier, apparently on a direct procurement basis, with no competitive tender for either the financing element or the equipment supply,” the report stated, while the deputy PM countered that the project was awarded based on international bidding standards and practices.
On the other hand, the WB report accusation revolved around the fact that the procurement process for the project was not in accordance with the Procurement Policy Directives and Procurement Manual of the Ethiopian Telecommunication Corporation (ETC), the former name of Ethio Telecom.
“The manual specifies comprehensive and detailed procurement procedures to ensure that the equipment to be provided by a supplier is in accordance with the specification and that the overall price, quality, and program offered by the supplier are evaluated as the best out of a range of competitors,” it added.
The report stated that there is no evidence that such an exercise was carried out in this case. But the deputy Prime Minister, who is also responsible for the telecom industry, pointedly said, “Based on the audit report and our deal with ZTE, we have evaluated the project implementation from several directions; for instance, we have scrutinized the bill of quantity, specifications, delays on the project and other measurements, as specified in the deal,” he said. “Accordingly, when contradictions were found, we reduced some amount from the payment to the contractor,” Dr. Debretsion added.
According to him, the government would also designate and assign an independent audit firm for the coming nearly USD 1.5 billion project, that is officially expected to be awarded to ZTE and Huawei, both Chinese firms.