By Mahlet Mesfin

Addis Ababa, Ethiopia - United Insurance SC (UNIC) gave Magercon Construction Plc a 42 million-Br contract for the first part of the construction of a four-storey mall in Akaki Kality District.

UNIC had been in a dispute with district officials for three years over the 20,000sqm plot where the construction is to take place. It had requested a revised site plan, after it said that it lost about 200sqm of the 11,944sqm land due to road construction.

The district authorities demolished the fence around the plot as the dispute lingered on. The fence was worth 600,000 Br, UNIC had claimed, although it did not press charges over its claim.

Instead, UNIC appealed to the City Administration, which decided that it should be awarded its revised plan and must start construction within six months. The deadline was set for July 2012.

Last year, UNIC floated a tender to hire a contractor, but even the lowest bid it received out of 10, 141 million Br, was beyond its budget of 100 million, according to Eyessuswork Zafu, advisor to the president of United.

The management then decided to split the construction into structural and finishing parts and selected seven companies in a limited tender for the structural part of the building from the previous tender. These included Zamra, Magercon, Tidrahar, Santamaria, Fish, and Teklebrehan Ambaye construction companies, which revised their financial offers, accordingly. Of the seven, however, only Zamra and Magercon ended up negotiating with the insurer, the latter winning the contract, beating out Zamra, which had offered 52 million Br.

“It (the purpose) was to be cost-effective, and we succeeded,” Eyessuswork claimed.

Magercon, established in 1999 with 1.5 million Br, by Getnetleul Gebeyehu and Mulugeta Ayele, each contributing half of the capital, will start work in a few weeks’ time.

He had hoped to get both the structural and finishing contracts in one, Mulugeta, shareholder and managing director of Magercon, admitted.

“It would have been easier to finalise it on time, instead of going for two contracts,” he said.

The building, which is going to be a four-storey mall and recreation centre, is to be constructed on 3,000sqm. The design was made by Geretta Consults Plc, which also won, two years ago, the design competition for its UNIC’s headquarters, planned to be built around Tewodros Square, on Churchill Avenue. The construction of the headquarters was not given priority because there was no government imposed deadline on the Tewodros Square plot, which had been occupied by the insurer for years.

“Since Akaki’s land is leased, there are consequences if we do not start soon,” Eyessuswork told Fortune.

The four-storey building, which is to rest on a plot currently used as the insurer’s site for damaged cars and goods, is designed to have a restaurant and a twelve-lane bowling centre on the roof, a shopping centre, a parking lot, and a kids centre.

“The people will not see the damaged vehicles on the plot anymore,” Eyessuswork said. “The board will decide on the fate of the insured cars in the future.”

The building will be a game changer for the area, he claimed.

“We want the company that does the structural work to take the finishing part as well, if possible,” he said.

Because significant investment can be a source of financial risk, insurance companies are allowed to invest only 10pc of their admitted assets. Admitted assets include any property, security, or item recorded in the financial statements of a company.

UNIC, had assets totalling 258.9 million Br  at the end of June 2011.

Source: Addis Fortune