OIA had been arguing with Uttam because it requested a 15 percent administration fee from the subcontract winners, and wanted to receive all the incentives the Indian government provides to its export companies involved in the Tendaho project. This dispute took the case to the Bombay High Court a year ago.

The government of Ethiopia awarded the engineering, procurement and construction (EPC) contract for what will be the country's biggest sugar factory, Tendaho, to OIA. The contract makes OIA responsible for hiring other Indian companies and managing the procurement, construction and engineering aspects of the project.

In line with its responsibilities, the company awarded contracts to two Indian companies, IJAC for steam generation and Uttam Sucrotech for processing house installations. However, Uttam was not happy with Overseas' role in the project and queried the evaluation of the EPC tender.

A few months ago, through the intervention of the Indian government, the conflict between the two companies was resolved.

Currently, Ethiopia has only three state-owned sugar factories - Wonji Shoa, Metahara and Fincha - which are producing 2.8 million quintals of sugar per annum, while the demand has reached 4.6 million quintals.

Recently, the government gave priority attention to sugar and ethanol development at a total cost of 15 billion birr. It is managing the expansion projects at these three factories and constructing the new Tendaho sugar factory in the basin of Awash river, which also hosts Wonji and Metahara.

Tendaho, which cultivates on 64,000 hectares of land, has been allocated eight billion birr out of this budget. When completed, it will have the capacity to crush 26,000 tonnes of sugarcane. When the projects in all the sugar factories are finished, Ethiopia will produce 800,000 tonnes of sugar annually.

(Groum Abate can be contacted at groumabate@gmail.com)