Last week, the World Bank country office in Addis Abeba advised Ethiopian authorities in the ministries of Water Resources, and Finance and Economic Development, as well as managers of the Ethiopian Electric Power Corporation (EEPCo) to watch out for Lahmeyer International, a German consulting firm with solid presence in Ethiopia, when they award projects financed by its funds.

This was followed by a decision made at the headquarters in Washington DC, barring Lahmeyer from any World Bank financed projects anywhere in the world for seven years, although good behaviour and cooperation in further investigation would bring this down to three years.

“The World Bank has declared Lahmeyer ineligible to be awarded Bank-financed contracts for a period of seven years, because of corrupt activities in connection with the Lesotho Highlands Water Project (LHWP),” said a press statement issued by the Bank on November 6, 2006.

Lahmeyer is on of the list of 330 firms and individuals barred by the Bank since the creation of Sanctions Committee in 1998. The Bank’s Department of Institutional Integrity said it found the firm guilty of bribing the Chief Executive of Lesotho’s Highlands Development Authority, Masupha Sole, the government official responsible for contract awards and implementation under the LHWP.

The LHWP is a multi-billion dollar water transfer and hydropower project implemented by governments of Lesotho and South Africa. It is designed to transfer water from the Maluti Mountains in eastern and central Lesotho to the Gauteng Province of South Africa. Lahmeyer, which had received two World Bank contracts pertaining to the water transfer component that related to detailed design work, construction supervision, project studies and technical assistance in connection with the Water Delivery Tunnel South and the Mohale Tunnel, was found by Lesotho courts in 1999 to have arranged bribery payments to Mr. Sole.

Lahmeyer is not an unfamiliar name to Ethiopia: it has accomplished several infrastructural projects in consulting hydroelectric and irrigation projects. Since 2001, the company consulted EEPCo on its Beles Hydropower Plant, while it is working on the feasibility studies for the Chemoga and Halele Werabe projects. The latter, a recommendation on resettlement action plan, has brought it a dispute with EEPCo, after Lahmeyer delivered its work late, and a few days before the World Bank’s announcement two weeks ago.

The German firm is also working on the studies of wind energy, supported by GTZ, and the supervision of the rural electricity access project, a job it has taken with the Canadian Texelt.

The Ministry of Water Resources is one of the largest clients Lahmeyer has in Ethiopia. It did the feasibility studies on the Baro hydropower project, and a pre-feasibility study on Karadobi hydropower, in partnership with the Norwegians Norplan and Norconsult.

Lahmeyer has also conducted the pre-feasibility studies on the Genale and Dawa rivers.

The matter is indeed delicate for Ethiopian authorities as they find an international firm barred due to corruption, turn-up as one of the nine bidders participating to win the feasibility study on the same project.

A public tender opened last week, November 13, 2006, at the head office of the Ministry on Haile G. Sellasie Road, saw nine international companies turnout of with their technical proposals, from the 12 that have bought the bid document.

The Ministry desires to conduct a feasibility studies on the two rivers that cross the Oromia Regional State to neighboring Somalia, to determine whether they could support the construction of hydro plant and dams with generation capacity of 6,000mw.

Should the studies confirm that there is a good possibility that hydroelectric power could be generated, the Ministry will then transfer the project to EEPCo for the latter to undertake the design and construction phases, disclosed officials at the Ministry.

The latest tender was put out to select a firm that could study the sub-programme and could see the construction of a dam in the coming five years with a 460mw power generation capacity.

The German Fichtner paired with the Italian ELC; the Norwegians Norconsult and Norpaln; as well as the Canadian RFW together with the Indians Wabcos and Beta have appeared bidding against the now infamous Lahmeyer. The selected firm will do studies on the hydro power part, at a projected cost of 4.5 million dollars.

Officials at the Ministry told Fortune that evaluation of the technical proposals will be completed in a month, before bidders are short listed to present their financial offer. The selected bidder will be disclosed after two months from the short listing, according to these officials.

What course of action Ethiopian authorities will be taking if Lahmeyer becomes a successful bidder is not clear. Nor are officials both from the Ministry or EEPCo willing to comment at this stage.

Neither was Lahmeyer’s local representative for the Genale and Dawa projects, housed inside the head office of the Ethiopian Metrology Agency, on Yared Street, up the Black Lion Hospital. However, in a press statement the company issued from Germany the same day the World Bank announcement came out, Lahmeyer promised to ensure a professional business in itself and among its staff.

“We have made corporate and communicative preparations for the eventuality of a debarment,” said the press release. “We have secured that neither the economic impacts nor the possible associated damage to reputation would endanger our company.”