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The Board of Directors of the state-owned Ethiopian
Insurance Corporation (EIC), chaired by Mesay Girma,
rejected last week the selection of Luigi Varnero
Impresa Costruzioni, a.k.a. Varnero, to build a
multifunctional structure, while terminating the
firm’s relationship with the consulting company,
Seleshi Consulting Architects and Engineering.
The Board made these decisions during its meeting
held on Wednesday, November 14.
“We do not know why the Corporation rejected our
offers but we have been informed to collect our bid
bonds,” a technical staff member at Varnero told
Fortune. “It is not for us to demand
explanation; the client has the right to reject bids
for whatever reasons.”
There is a combination of factors behind the
rejection, according to reliable sources. The
management pursued the construction process of a
12-storey edifice on a 4,621sqm plot, located off
Ras Desta Damtew Street (in front of Ambassador
Theatre), without first securing the approval of the
Board of Directors, chaired at the time by Tekeda
Alemu (PhD), state minister of Foreign Affairs.
Neither was the process that led to the management’s
decision to select the construction firm consistent
with the federal government’s procurement rules,
according to Board members.
Seven local construction companies had shown
interest when the Corporation floated a public
tender for the construction of this building dubbed
“Life House”, in May 2007. Upon completion, the new
building is planned to house the Hiwot Branch of EIC,
which is currently operating in the ground floor of
the company’s headquarters, located on Ras Mekonnen
Avenue. Part of the building would also be rented
for offices and businesses.
The committee entrusted to evaluate the bids had
short listed only two of the bidders, MIDROC
Construction Ethiopia and Varnero. The two firms
were selected based on the technical offers the
seven bidders had submitted.
This did not please the Board of Directors.
“The bidders should have submitted their technical
and financial offers at the same time,” Mesay, also
general manager of the Ethiopian Standards
Authority, told Fortune. “However, the two
bidders were informed of their qualifying to the
next phase without first giving financial offers;
this violates the procedure.”
Though there are two ways to offer bids - two
envelop and one envelop - both require the
attachment of financial offers, together with the
technical offers, according to government
procurement experts.
MIDROC and Varnero, nonetheless, made their
financial offers to the committee later on, and only
after the five bidders had already been
disqualified. Varnero’s offer of 160 million Br was
lower than its rival’s, thus its subsequent
selection by the bid committee. The management
referred the result to the Board for final approval
in September 2007, only to have it rejected last
week.
The decision by the Board includes the termination
of a contractual agreement the Corporation has with
Seleshi Consult, a consultancy firm that carried out
the architectural design of the structure, again for
procedural reasons. According to Mesay, there should
have been a public tender floated by the Corporation
in order to select a consultant to do the
supervision works during the construction phase,
right after Seleshi Consulting developed the model
of the edifice.
“However, the committee directly pursued
negotiations with Seleshi Consulting and granted the
remaining responsibilities to the same firm, which
again is against the [procurement] procedure,” said
Mesay.
Seleshi Consulting was hired last year to work on
the design as well as supervise the construction
work, for 735,768 Br. Debebe Seleshi, general
manager of the consultancy firm, declined to
comment.
This has caused a series of delays on the launching
of the edifice’s construction that was meant to
begin in 2003; the plot off Ras Desta Damtew Street
has been fenced with corrugated iron sheets and
remained vacant for years. Yet again, the latest
decision by the Board is feared to delay the
construction further. There will be other rounds of
public tenders floated in order to select both the
consulting firm and the construction company, Mesay
disclosed.
“Varnero can participate again,” he told Fortune.
The technical staff member at Varnero that
Fortune talked to seems unimpressed with the
promise.
“I am not aware if and when they are planning to
float the tender,” he told Fortune. “I cannot
say whether we will participate, our workload
determines that.”
The Board’s decision followed the resignation of two
senior management members from the company.
According to reliable sources, heads of the
administration and legal departments have been
forced to exit. Alemseged Abreham, managing director
of the Corporation, recently replaced Tewodros
Tilahun, who has been managing director during the
evaluation process, denied a direct link of the
resignations by the two staff to what the Board has
decided last week.
The 31-year-old EIC came into being after the
military regime expropriated 13 privately owned
insurance companies. The Corporation was
re-established in 1994 with a paid-up capital of 61
million Br; it has built its current 11-storey
headquarters, designed by National Consultants, in
1987, the largest among all buildings it owns in the
metropolis. The addition of the planned 12-storey
edifice will increase the number of commercial
buildings EIC owns in the capital to seven.
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Two Senior Management Staff Follow with Resignations
