By Mikias Sebsibe

Awash Construction SC, the state-owned construction enterprise, filed a lawsuit against Wegagen Bank and Project Design Innovation Trading for the recovery of nearly 800,000 birr plus interest for a failed construction project. The construction company signed a nearly 1.3 million birr contract for the supply and fixing of swimming pool works at the National Bank project in January 2010 with Project Design Innovation Trading.

It also claimed that it has extended 30 percent of the advance payment in two installments after receiving a guarantee of nearly 400,000 birr from Wegagen Bank for a period of four months. The state-owned construction company also claimed that the bank signed up a performance guarantee of nearly 130,000 birr for the same period.

However, Awash Construction S.C. terminated the agreement on August 2010 alleging a breach of contract. Despite repeated notices given to Project Design Innovation Trading, the project was not finalized within 120 days of the signing as agreed in the contract, claims Awash Construction. It also alleged that the bank, which extended its guarantee period for a further period of six months, failed to make the payment after notice was sent to it on September 2010.

Awash Construction S.C., which was established in 1993, instituted the lawsuit against both Wegagen Bank and Project Design Innovation Trading as the first and second defendants, respectively at the Ninth Civil Bench of the Federal High Court early last week. It claimed a little over 500,000 birr from the bank for failing to pay for the advance payment guarantee and performance bond. The plaintiff also sought nearly 300,000 birr from the second defendant for the delay which caused the value of the contract to increase by 22 percent due to the devaluation of the birr.

The defendants are expected to present their statements of defense at a hearing which will be held on October 29.

Ethiopian Report