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348 Diagnosing Corruption in Ethiopia
• There is no evidence of a formal tender procedure for the finance package.
The supplier selected by the ETC to supply the finance package
was the only company that offered a financing package that suited the
ETC’s purposes.
• As described above, the equipment supply element of the vendor
financing contract was not put out to competitive tender.
This analysis does not comment on the fairness or suitability of the
financing package, equipment prices, and quality because consideration of
such issues is not within the scope of this study. However, several aspects
of this contract point toward equipment supply as an area at particularly
high risk of corruption. The current structure, policy, and regulation of
the sector do not appear to be adequately guarding against that risk. The
aspects of concern in this case are the following:
• No competitive tender. This contract was given to one supplier, apparently
on a direct procurement basis, with no proper competitive tender
for either the financing element or the equipment supply.
International best practice would suggest that a project of this size and
nature would normally involve full, competitive, separate tenders for
provision of finance (for example, from banks) and for supply of equipment
(from equipment suppliers) and possibly also combined competitive
tenders for financing and supply of equipment from suppliers
willing to provide financing as well. This absence of competitive tender
means that there is a considerable risk of overpricing and unfavorable
contract terms for the ETC. The competiveness, or otherwise, of
the agreement could readily be determined through an independent
unit cost study.
• No competitive tenders on subcontracts. The ETC committed to purchase
all telecoms equipment over a three-year period from one supplier.
Such a wide-ranging commitment without competitive tender is highly
unusual. There does not appear to be any commercial necessity to place
the whole US$1.5 billion contract with one supplier. The nine different
equipment packages being sought (for example, mobile, customer data
center, and Internet) could have been placed with different suppliers
and still have resulted in a compatible and efficient network. This solesourcing
commitment means that there is a considerable risk of overpricing
and unfavorable contract terms for the ETC in relation to each
supply contract.