The federal auditor has uncovered severe contract violations, weak oversight and major financial waste in two large irrigation projects under the Ministry of Irrigation and Lowlands, with illegal price adjustments and additional expenses totaling 3.69 billion birr.
In a performance audit covering the ministry’s operations from 2018 to 2025, the Office of the Federal Auditor General said the Welmel and Chelchel irrigation projects were plagued by repeated contract amendments, unjustified variation orders and budget overruns that directly violated contract clauses stating that no price adjustments would be made.
The audit found that some construction lots recorded budget inflation of up to 168.64 percent, while consultancy contracts rose by as much as 276.84 percent. It said the projects were delayed by more than 38 months because of poor pre-construction planning, weak design work, ineffective monitoring, poor decision-making and capacity limitations among contractors and consultants.
Despite the delays, the ministry did not impose liquidated damages on the contractors as required under the contracts. The auditor also said the ministry lacked a standardized system to assess contractor and consultant performance in terms of cost, quality and time, leaving it unable to take corrective action.
The report said public funds were also diverted to purchases that were not part of the original contracts. In the Chelchel irrigation project, more than 132 million birr was used to buy luxury vehicles through a contract amendment. These included a 2023 V6 model valued at more than 49 million birr, including a 10 percent contractor profit margin, and two 2023 Toyota Prado vehicles valued at 83 million birr. Although these vehicles were justified as being for technical monitoring services, they were left with the contractor.
On another part of the Chelchel project, 75 million birr was spent on seven field vehicles that were not in the original contract. The auditor said the transaction was processed through a fraudulent interim payment certificate that presented the purchase as completed construction work, generating an additional 6 million birr in profit and service fees for the contractor.
The report further said both mega-projects bypassed mandatory legal safeguards, including environmental and social impact assessments and permits from the Environmental Protection Authority.
The Chelchel rock-fill dam project, located in Bale Zone between Rayitu and Ginir woredas, was designed to irrigate 4,145 hectares of land and support more than 9,000 farmers. After the contract with the Defense Construction Enterprise was terminated in 2021/22, the project was re-awarded to Alemayehu Ketema Contractor. By June 2025, spending had reached more than 1.16 billion birr for Lot 1, 1.12 billion birr for Lot 2 and 114 million birr for consultancy services.
The Welmel River diversion and main canal project, located in Delo Mena and Harena Buluk woredas, was intended to irrigate 12,040 hectares of land. Initially awarded in 2018/19 to Alemayehu Ketema Contractor and Oromia Construction Corporation for a total of 2.9 billion birr, the project’s budget expanded sharply under the claim of unforeseen design challenges. By 2025, the government had spent more than 2.4 billion birr on Lot 1, 2.3 billion birr on Lot 2 and 164 million birr on consultancy services, yet progress remained limited.
OFAG blamed institutional governance failure for the spending spree, saying the ministry began highly complex, capital-intensive projects without a modern irrigation policy, a comprehensive strategy or a standardized quality control manual.
The auditor also said the feasibility studies and engineering designs for both projects were never subjected to rigorous review or formal approval by an independent technical body, allowing billions of birr in public money to be managed without a proper regulatory framework.
It warned that if the ministry fails to comply with corrective measures, the matter could be referred to the House of Peoples’ Representatives for legal and criminal accountability.
