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The South Korean global giant, Daewoo Engineering and Construction Co (Daewoo E&C), joined the Ethiopian construction sector with a winning bid for the construction of part of the express way to connect Mojo to Hawassa. Popular for its large-scale projects elsewhere, mainly in East Asia and the Middle East, the construction deal is Daewoo’s first in Ethiopia.
Sources at the Ethiopian Roads Authority (ERA) told Capital that Daewoo has selected to construct the 37kilometer road that stretches from Meki to Batu (Zeway). Back in February 2015, Keangnam Enterprises Limited, working with Ethiopian businesses for nearly two decades, was initially selected for the project. But the award was revoked with the South Korean government interest, who is the main financer for the particular project via its Export Import (EXIM) Bank.
Since then, the project was tendered again for second round to select another company. On the latest bid, the two South Korean companies Daewoo E&C and Hyundai Engineering and Construction Co, another construction giant based in Korea, were on the final short list.
A week ago the Korean government selected Daewoo, according to sources. The company is said to have offered the lowest price as compared with other offers submitted including the previous offer by Keangnam. However the exact amount is not mentioned. Daewoo was engaged in several big projects in the world since its formation in 1973.
Keangnam Enterprises was at the center of a bribery scandal involving several political heavyweights and is now under investigation on suspicions of embezzlement in its home country. The scandal is said to be linked to the company’s connection with the previous government.
According to reports, out of the USD 31 million Keangnam received from overseas projects, the enterprise allegedly misappropriated USD nine million. Most funding for these projects came from Export-Import Bank of Korea.
Creditor banks of the cash-strapped Keangnam have since turned down its petition for an additional USD 99.2 million in operating funds. The creditors, led by the policy maker Export-Import Bank of Korea, had previously poured in USD two billion for its rescue.
The company’s shares have also been suspended from stock markets as its cumulative loss has eroded its equity capital as of March 11, 2015.
Daewoo’s construction will be within the first part of the four-phase project – construction of the 56.8 km Mojo-Meki expressway – which commenced on Thursday December 10 with a launching ceremony that boasted Prime Minister, Hailemariam Desalegn’s attendance.
Once complete, the road will have four laneways going in both directions, with a nine-meter median in the middle. The Mojo-Meki project, financed by the African Development Bank and public funds, will cost 3.67 billion birr and is expected to be complete within 42 months.
China Railway Seventh Group Co is leading the project, which will include different inter exchanges, huge bridges and pedestrian pass-overs. According to ERA, the project will link on the first expressway that link Addis to Adama.
The third phase of the project, the Batu-Arisi Negele, project has also secured USD 370 million of financing from the World Bank. The 60.2km Batu-Arisi Negele road project is on bid process.
The final phase of the project that connects Arisi Negele to the capital of Southern Nations, Nationalities and Peoples Regional State (SNNP) is also in the bid process.
The bid for the 55km Arisi Negele-Hawassa road, financed by the Chinese EXIM Bank, is expected to go to a Chinese company. The 202km road that connects the southern capital to the center will go through12 towns with over one million inhabitants.
The rundown Mojo-Hawassa road is part of a continental road link in the route from Cape Town to Cairo.