A performance security bond needed for a transaction with Ethio-telecom is cancelled without any reservations for four multinational companies including ZTE, Huawei, and Ericson, by a sourcing committee which is composed of high telecom officials; the Chief Operation Officer, Chief Legal Officer, Chief Sourcing Officer and Chief Facility Officer, Chief Finance Officer, and the CEO. The committee is authorized to pass a decision on a transaction up to Birr 270 million.

Ato Assefa Selemon, public relations deputy director at the Federal Public Procurement & Disposal Service (PPDS), said, “The reason that the law requires a performance bond is if the company who wins the procurement can’t meet the terms of the contract, they will be given a chance to compensate their loss.” According to Ato Assefa, the procurement agency said that it did not have the authority to deal with the issues of public enterprises. However, though the agency said it did not have the jurisdiction, the Ministry of Public Enterprises (MoPE) sent the issue back to the agency.

According to Ethio Telecom the four companies are important partners of the telecom which works in vendor financing. Ato Abdurahim Ahmed, the telecom’s communication officer, said, “The procurement policy of the telecom didn’t forbid doing so.”

The performance bond usually is between 5% up to 10% of the total transaction and the amount of the performance bond will not exceeds 270 million birr.

Source: Capital Ethiopia