Capital Ethiopia Newspaper

Ethio-telecom lifts performance security bond for four multinational companies

The sourcing committee which is comprised of high telecom officials unconditionally lifted the security bond for four companies including ZTE, Ericsson, and Huawei, effective for any transaction they have with Ethio-telecom.
The committee is made up of the Chief Operation Officer, Chief Legal Officer, Chief Sourcing Officer and Chief Facility Officer, Chief Finance Officer and the CEO. It has the jurisdiction to pass a decision on a transaction up to 270 million birr although the board can approve more than that.
Every legal framework of government procurements are made mandatory by the performance bond provision within 15 days.
“The reason that the law requires a performance bond is if the company who wins the procurement can’t meet the terms of the contract they will be given a chance to compensate their loss,” said Assefa Solomon, public relations deputy director at the Federal Public Procurement & Disposal Service (PPDS).
“The procurement agency said that the issues of the public enterprises fall out of its jurisdiction,” he said.
The Ministry of Public Enterprises (MoPE) has forwarded the matter back to the procurement agency. The companies, who have a different history with the on-time delivery of projects, have a long history with the telecoms’ multi-million USD projects.
It was back in 2016 Huawei Technologies Co. took over the expansion project portion which was given to Ericsson in 2014. The portion of the project was initially given to ZTE; prior to terminating and giving it to Ericsson, in 2013 as part of the USD 800 million contract, it won.
Also, back in 2011, the Federal court found the Ex- CEO of Ethiopian Telecommunication and other managers, Tesfaye Biru (Ph.D.) et-al, guilty of corruption crimes in a project awarded to Ericsson which cost USD 47.4 million.
The telecom stated that the four companies are strategic partners of the telecom which works in a vendor financing. “As the bond was there for security, the performance of the company we have established relationships,” Abdurahim Ahmed, Corporate Communication Officer at the telecom said. “The procurement policy of the telecom didn’t forbid doing so.”
The performance bond usually is between 5% up to 10% of the total transaction and the amount of the performance bond will not exceeds 270 million birr.
The sole telecom service provider announced last February that it was able to collect 18.4 billion birr in revenue from sales in six months