Ethiopia Hotel Back on Auction Floor
Ethiopia Hotel is now one of 22 state owned enterprises to be
auctioned from September on
19 August, 2010
Fortune - The Privatisation and Public Enterprises Supervising Agency (PPESA) is auctioning Ethiopia Hotel again, from September, claiming that Bazeto Industry Trading Plc has failed to make the down payment on time.
The hotel is one of three state owned properties for which Bazeto had made winning offers. It won Ethiopia Hotel and Addis Abeba Bottle and Glass Factory offering 91.7 and 60.9 million Br, respectively, in December 2009. Its offer of 187.8 million Br for Akaki Metal Products Factory was also accepted in May 2010. However, the company settled the required 35pc down payment only for the bottle and glass factory on October 2, 2009, and for the metal factory and May 15, 2010.
The PPESA appropriated the 1.8 million Br bid bond Bazeto had given for the hotel and cancelled the sale to Bazeto, which was communicated to the latter in a letter written on July 15, 2010.
“Bazeto Industry and Trading Plc has been contacted repeatedly by the agency since March 24, 2010, to pay the required amount.” Wondafrash Assefa, public relations head at the PPESA, said. “The company, however, has failed to pay. Instead it requested additional time to make the down payment claiming it was not financially ready to pay the required amount.”
Payment was delayed for technical reasons and not for financial ones, claims Bazeto, manufacturer of steel wool and concrete poles.
“Bazeto did not have financial problems,” said Endale Bedada, manager of Bazeto’s Legal, Public Relations, and Administrative Department. “It has paid 87 million Br to the agency for the two companies they purchased in the 2009/10 fiscal year.”
Bazeto requested to delay the down payment for the hotel, according to Endale, because it was busy trying to arrange the letter of credit (LC) and overdraft facilities for the factories; previously they had access to these facilities from the Commercial Bank of Ethiopia (CBE), as state enterprises.
All other offers made for the hotel, other than that of Bazeto’s, were below the PPESA’s expectation. Offers made by Belyeneh Kende, Haileyesuse Tefery, and Asrate Gelete were for 66, 64, and 52.2 million Br, respectively.
Ethiopia Hotel has now joined the list of 22 state owned enterprises to be auctioned from September, including Meta Abo, Harar, and Bedele breweries, National Liquor Factory, and a number of textile and construction companies. The privatisation agency has so far auctioned off 287 government owned development agencies for 4.7 billion Br.
Bazeto has not contested PPESA’s move to auction the hotel again.
