CRBC Addis halts construction on three roads

07 April, 2009

Capital - CRBC Addis Engineering Plc, the Chinese government construction firm subsidiary company based in Ethiopia, halted construction of three main roads in Addis Ababa, in relation with its accruing serious financial problem owing to its client's Addis Ababa Road Authority (AACRA) failure in servicing the firms due payments.

The manager of the construction firm sent a letter three weeks earlier urging Addis Ababa city government to take immediate action so that the road authority can release their due payments as per their contractual obligation. The letter was also copied to the road authority demanding to be paid as of March 20.

The construction firm warned them to halt construction on these main roads unless the employer clears up the dues within the deadline.

"We are in a situation where we are unable to cover our construction machineries' fuel expenses and paying our employees' salaries," Fiker Alebachew, deputy general manager of CRBC, told Capital. "We are pushed to the edge and forced to halt construction on the three roads as elucidated earlier to the authority."

The 40m wide road that stretches nine kilometers from Meskel Square to the Kaliti roundabout, which CRBC has been constructing at a cost of 283.6 million birr, the 2.5km road that stretches from the junction around the Coca Cola plant, through Abinet and up to Teklehaimanot, which has been under construction at a cost of 93 million birr, and phase three of the Ring Road project, from Wingate Interchange to Addisu Gebeya are the roads on which the company halted construction as of last week.

CRBC Addis has completed nine major road projects in the capital city since its establishment as a local firm in 2004 and there are seven projects currently on its hand. The employer, however, is said to have been unable to service over 150 million birr to the already completed projects and some that are underway. In line with the agreement made between the two parties, AACRA should make payments for finalized phases of projects.

In addition to unpaid dues the construction firm has been in trouble due to increasing cost of construction materials, combined with the failure of the authority to free the project sites from ownership claims and settlers, that has caused serious setbacks on the projects putting stress on the company's finances, the letter sent to the city government reads.
CRBC claims it is owed 83.7 million birr for phases already completed and the balance for ongoing projects.

The two parties had been settling such financial problems with cooperation and negotiation for the last couple of years. For instance within this fiscal year, the company borrowed 17 million dollars from its head office, the letter highlighted the degree of its effort, however, that was not sufficient to overcome its financial problems.

Though CRBC Addis Engineering Plc, established in 2004 pulled out on three major road projects, currently it continues its engagement on three other road projects.