State enterprise sues Saudi Star

Sheikh Mohammed Hussein Ali Al Amoudi, owner of Saudi Star. His company plans to increase its landholdings in Ethiopia to 500,000ha over the next 10 to 14 years.
Addis Fortune | 7 August 2011

Saudi Star Agricultural Development is being sued by Agricultural Equipment and Technical Services (AETS) for 35.2 million Br due to failure to pay for land the latter had cleared for Saudi Star in the Gambella Regional State.

Saudi Star had twice been the sole bidder for AETS offering 171 million Br the second time. Both times its bids were rejected by the Privatization and Public Enterprises Supervising Agency (PPESA) which valued the company at a higher price.

AETS, which employs 525 people and maintains and rents heavy-duty farming and construction machinery, signed a contract worth 43.5 million Br with Saudi Star Agricultural on January 20, 2010, to clear 4,000ht plot of land located in Alwero, Gambella Regional State, 721Km from the capital, a plot which has been idle for 18 years.

The land that will be used to grow rice using irrigation dams and canals made by the government, was given to Saudi Star Plc, which was registered at the Ethiopian Investment Agency (EIA) on August 20, 2009, with a start up capital of 500 million Br. The plots are covered by a forest of juniper of medium density and other indigenous trees.

AETS, which was established in 1993 with the merger of two companies with an estimated asset of 249.5 million Br, and with a total land holding of 200,544sqm, including 79,800sqm in Nekempt 355Km from Addis Abeba, submitted the charge at the Federal High Court’s Eight Civil Bench through its lawyer, Moges Lemma.

AETS claims that it has not been paid by Saudi Star, which is obliged to make a full payment once the duty is performed according to the contract agreement.

The plaintiff attached the contractual agreement it had signed including letters of notice dated March 23, 2011, and June 8, 2011, and a letter written on April 1, 2011. Saudi Star admitting the debt, requested additional time to pay the amount.

Saudi Star plans to increase its landholding to 500,000ht over the next 10 to 14 years at cost of three to five billion dollars, and received a 10,000ht of land in Alwero, where it has planned to grow rice using the Alwero Dam, which was constructed by the military regime to grow cotton in the area.

AETS, which is also involved in the importation of heavy machinery, was valuated to be more than 200 million Br by the privatisation agency. AETS claims that its two demands for payment were ignored by Saudi Star, which had agreed to pay 9,000 Br for every hectare cleared.

AETS has demanded 35.2 million Br in payments from Saudi Star, a figure which includes nine per cent interest.

The presiding judge, Ayeshesum Mellese, adjourned the case to October 19, 2011 ordering the defendant to respond to the charges.

Original source: Addis Fortune

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