A taskforce under the chairmanship of Girma Birru, minister of Trade and Industry, will be created in order to probe complaints lodged from bidders aspiring to get lucrative turnkey projects in the sugar mill plant installation at Tendaho and major expansion works at the Finchaa and Wonji sugar factories. Members of this taskforce will be drawn from the ministries of Trade and Industry, and Finance and Economic Development, as well as the Sugar Development Agency, the latter administrating the three state-owned sugar mills in operation.
 

"It is indispensable to critically evaluate the bidders and make an informed decision as these are huge projects," Minister Girma told Fortune.
 

Ethiopia has secured 640 million dollars in soft loans from India aiming to double the production capacities of two of the three state-owned sugar factories, Finchaa and Wonji. The three sugar factories - including Metehara - have a capacity to produce 2.8 million tonnes of sugar annually.
 

Half of the loan obtained from the Indian ExEm Bank was also budgeted to erect a brand new sugar mill at Tendaho, a river basin in the Afar Regional State. This loan is, however, conditional that 85pc of the equipment and the companies that would do the job should come exclusively from India.
 

Thus, and to the frustration of those who follow the project, the design of the factory, its feasibility study as well as supervision of constructions at Tendaho is undertaken by an Indian firm, JP Mukherji & Associates Pvt Ltd, which does not have a project office in Ethiopia to date. Its consultants are shuttling between India and Ethiopia - often calling their Ethiopian counterparts late at night to ask for hotel reservations - although the firm is managing projects worth close to 16 billion Br.
 

"We have requested them to open an office here to no avail," Gebre Asrat, manager of Tendaho Sugar Factory, told Fortune.
 

Active in Ethiopia since the 1970s, JP Mukherji is trusted to advise the Ethiopian government in the evaluation and selection process of bidders that will be hired to supply and install the sugar mill plant at Tendaho; this project has nine packages, including juice extraction, steam generator, power generator and processing house.

The bid processes for five of these components have become subjects of controversies, with some of the bidders lodging their complaints to the Prime Minister's Office and the Ministry of Trade and Industry (MoTI), disclosed sources. 
 

The tendering process is mired by controversies of unfair evaluation process and an attempt to pick a company that is far from qualifying to meet the requirements published in the tender document. Following the publication of public tender announcement in the state English daily, The Ethiopian Herald, three Indian companies appeared when the tender for the power generator opened on August 13, 2007.
 

Overseas has offered 51.5 million dollars, while its rival in many of the sugar related bids, UTTAM, offered 49.5 million dollars. The third bidder, TDS, has offered the lowest amount of 43.2 million dollars, but became subject of the dispute for it has proposed to install machineries manufactured in Japan, against the specifications in the tender document. This, the others argue, should disqualify the company from the bid process.

Neither is the bid to select a company to supply and install the juice extraction machinery free from allegations of favouritism. Three Indian companies were short-listed: Overseas (86 million dollars), Fives Cail KCP (69 million dollars), and UTTAM (68 million dollars).

When the financial bid was opened on August 27, bidders were shocked to learn that the project owners would like them to resubmit their proposals, reducing the capacity almost by half. Initially, it was meant to crush 26,000tns of sugarcane a day, perhaps the largest capacity in the world. Experts claim that it is only a sugar mill in Sudan that has a capacity to this at 19,000tns.
 

"We do not need that size of machinery at the beginning," said Belete Alemayehu, general manager of the Tendaho Project, which comprises both the mill and the farm that lies on a 64,000hct plot. "We came to realise that we only need a plant that crushes 13,000tns for the amount of sugarcane we have is limited."
 

Allegedly, this has given the opportunity to Overseas to substantially slash its second offer by 17 million dollars, sources told Fortune. Obviously, representatives of Fives Cail KCP were not pleased.

So were bidders participating to supply and install other juice extraction machinery to Finchaa displeased with what they claim is "a conduct that was not transparent".
 

The federal government has allocated a 1.3 billion Br budget to upgrade the crushing capacity at Finchaa from 4,400tns to 12,000tns of sugarcane. Although three Indian companies originally responded to the tender whose specifications were published on The Ethiopian Herald on July 8, 2007, only two were left to bid, after one was disqualified at the beginning. UTTAM had offered 295 million Br, while its competitor, NHEC, gave a price tag of 310 million Br, according to sources.
 

Observers allege that the consultants have failed to live up to the letter and spirit of the tender document that requires the bidder to submit a financial document that shows the company's worth net of 10 million dollars, and an audit by an independent firm. NHEC has provided a financial statement that only shows a net worth of 2.5 million dollars, sources disclosed.
 

Authorities say it is too early to act now. Many of the tenders are under evaluations for them to intervene on the decision of those in the bid committees.
 

"As the final decision will be given by the [bid] committee, we are going to send the documents to them," Tadesse Haile, state minister for Ministry of Trade and Industry, told Fortune.
 

He is not a lone voice for others echoed what he said.
 

"We have indeed received these complaints," said Gebre. "But we will look into them before we award the projects to the successful bidders."
 

Gebre, however, argues complaints are inevitable in managing bids, for there will always be those losing them who get disappointed.
 

Observers are worried that such controversies and the time they may take to resolve may affect the deadline the country set to complete its largest sugar mill that is hoped to help it export sugar to other countries. When completed in April 2013, provided that construction will progress according to schedule, Tendaho will have a capacity of producing an annual 600,000tns of sugar, more than half of what the three operating factories are producing now.

By WUDINEH ZENEBE

SPECIAL TO FORTUNE