(Bloomberg) -- Ethiopia is investigating possible misappropriation of funds meant for the expansion of 10 state-owned sugar factories that are part of the industry now slated for privatization.
The planned sale of factories now run by Ethiopian Sugar Corp. is part of a drive by Prime Minister Abiy Ahmed's government to reduce national debt, generate foreign exchange and strengthen the economy of Africa's second most-populous nation. A stake in the telecommunications monopoly and two mobile-phone licenses are also up for grabs.
“We are looking at all aspects of utilization of the funds,” Auditor-General Gemechu Dubiso said, referring to 10 of 13 state-owned factories he didn't identify. “We are looking at potential theft as well.”
Ethiopia May Use Privatisation Funds to Repay State Lenders
Sugar Corp. debt amounts to about 70 billion birr ($2.37 billion), according to Brook Taye, a senior adviser to the finance ministry, which guarantees the company's debt. The first sugar assets are expected to be partially or fully privatized by March 2020 after the government invited sealed responses, he said.
The ministry will receive a final valuation report on the sugar factories from Oxford, England-based Booker Tate Ltd. by mid-December, Brook said by email on Tuesday.
Advance Payments
Sugar Corp. made advance payments of 11 billion birr to Metals & Engineering Corp., or METEC, to build three sugar mills, according to the Ethiopian military-industrial conglomerate's director-general, Brigadier-General Ahmed Hamza.
Construction of three factories -- Omo-Kuraz I, Tana Beles I, and Tana Beles II –- stalled after METEC's contracts were canceled last year, METEC's Ahmed said. Sugar Corp. managers approved advance and excess payments to METEC for incomplete work, according to Gemechu.
Sugar Corp. Chief Executive Officer Woyo Roba, deputy CEO Abraham Demissie, and spokesman Gashaw Aychiluhim declined requests for interviews.
To contact the reporter on this story: Nizar Manek in Nairobi at nmanek2@bloomberg.net
To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, John Bowker, Helen Nyambura
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