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The Ethiopian Roads Authority (ERA) will undergo a
major organizational transformation, which will
split its operational activities and regulatory
roles, sources disclosed. The idea of breaking up
the authority into two first surfaced about five
years ago, although it is only this year that the
authorities pushed hard on the issue, according to
these sources.
The change follows the finalization by the
organization of a study on Business Reengineering
Process (BPR); one of the recommendations of which
is to separate the corporate functions of ERA from
its supervisory and regulatory roles. ERA’s District
Engineering Division (DED), a supervisory body
reporting to the board of directors, will continue
to do regulatory jobs, while the District Road
Maintenance Contractor (DRMC), the operational wing
of the authority, will become a corporate entity,
these sources disclosed.
Scheduled to be launched in July 2009, this will be
a fundamental change in the organization’s 58-year
history. ERA was established in 1951 as the Imperial
Highway Authority (IHA). It was an organization that
had inherited the legacy of the Italian occupation:
In the 1930s, the national road network was 1,040Km,
and later was upgraded, in the 1970s to 2,480Km of
bitumen-surfaced and 5,250Km gravel-surfaced roads.
ERA, under the direct supervision of the Ministry of
Works and Urban Development (MoWUD), now manages an
annual budget of 9.5 billion Br; the national road
network has reached close to 45,000Km. It has 10
districts across the country and a workforce of
13,000.
However, this is not the first time the government
has split state owned enterprises, separating their
regulatory roles from their operational functions.
The Ethiopian Aviation Authority (EAA), the
Ethiopian Light and Electric Power Authority (EELPA)
and the Ethiopian Telecommunications Authority (ETA)
have gone through similar transformations.
The regulatory body will continue to operate with
budgets allocated by the Federal Government, sources
disclosed. Its primary task will remain achieving
the government’s 10-year road sector development
program launched in 1997. The national road network
when the programme was launched was 23,500Km, which
increased to 44,355Km in 2008.
The government wants the District Road Maintenance
Division to be registered as a corporate entity with
the Ministry of Finance and Economic Development (MoFED)
raising the equity and initial capital. The amount
has yet to be determined though.
“The initial capital with which the operational
section will start running is not a problem,” said a
senior official at the MoWUD.
ERA currently has machineries, a training centre,
and a garage. This will put the pressure off the
requirement to raise huge capital or seek loans from
banks, the senior official told Fortune. The
new corporate entity is expected to function on a
profit basis like any state enterprise, bidding for
road project contracts against both local and
international construction firms.
The study proposes three years to be granted to the
existing ERA in order for the latter to phase out
the ongoing construction projects it is undertaking.
The litmus test is the 125Km road from Kombolach to
Woldya, which is under construction by ERA’s own
workforce. Should this project, a tough assignment
in a very difficult terrain, succeed on schedule,
authorities will have the confidence to let the
operational branch of the authority branch out and
get incorporated, according to industry experts.
The authorities hope that the corporate entity will
be able to construct roads of better quality than
the roads being constructed by foreign firms, the
senior official said.
“We also expect the separation will enhance the
accountability of own-force of the authority,” the
senior official at the Ministry said.
The proposal, made by the Planning and Programming
Office of ERA, has been presented to Board of
Directors, chaired by Kassu Illal (PhD), also
minister of Works and Urban Development, and won
support, sources disclosed. The study conducted on
the operational section has also been finalized and
presented to the Board of Directors which is
expected to meet in two weeks to make its final
decision before it is sent to the Council of
Ministers for final approval. |
