MetEC Cements Buy of Riviera Hotel
By Mahlet Mesfin.
Addis Ababa, Ethiopia -Ã‚Â The state-owned Metals & Engineering Corporation (MetEC) has finally succeeded in cementing a deal to acquire yet another private property, located in Nefas-Silk Lafto District, in south-western Addis Abeba, sources disclosed.
The property, a three-star hotel and a plant behind the hotel that manufactures PVC and plastics, is owned by Riviera International Plc, largely owned by Alem Fitsum, a businessman who also owns a paper packaging plant inside an industrial zone near the hotel.
He agreed to sell the hotel and the PVC plant for over 140 million Br, these sources disclosed to Fortune.
The Corporation, managed by Kinfe Dagnew (BGen), a high ranking military officer, has been in a series of negotiations for acquisitions of hotels from private hands, claiming that it needs them to accommodating foreign guests who come to the country for projects it undertakes.
Part of EthiopiaÃ¢â‚¬â„¢s military-industrial complex, MetEC was established as a state-owned firm in 2010, incorporating other state-owned metal industries including seven from the military.
Incorporating a little over 70 such civilian and military industrial subsidies, MetEC has around 12,500 employees, according to information from the Corporation. There are foreign consultants and advisors it brings in, particularly from Asia, for megaprojects that the Corporation is currently undertaking, such as manufacturing fertiliser and sugar plants as well the electromechanical work at the nationÃ¢â‚¬â„¢s largest dam, dubbed the Grand Ethiopian Renaissance Dam (GERD).
For the fertiliser factory alone, there were around 45 foreign experts that came to the country, according to sources at the Corporation. MetEC mostly booked them in hotels such as Sheraton, Hilton, Tsionat, and Harmony.
Ã¢â‚¬Å“These guests might stay more than a month,Ã¢â‚¬Â said an official of the Corporation who requested anonymity, for not being authorised to speak to the media. Ã¢â‚¬Å“We are responsible for their accommodation, which we are paying for. The acquisition of Riviera will save the Corporation a lot of expenses in guest accommodation.Ã¢â‚¬Â
Rivera Hotel, in service since 2008/09, is the second such property for the Corporation to acquire, after it bought Imperial Hotel from Access Capital Services SC, last year, for over 80 million Br.
Imperial was originally the property of Asfaw TeferaÃ¢â‚¬â„¢s family, acquired by Access Capital for 57 million Br in December 2010. It has remained closed for service since then, for, the Corporation is currently undertaking a complete makeover and renovation with a budget of around 20 million Br, according to information from the Corporate Plant Installation Department.
This property, built in the early 1990s on a 3,411sqm plot in front of Bob Marley Roundabout, has 63 rooms It fulfils the requirements of a four-star hotel in rooms and services, except for not having a swimming pool.
The Hotel is expected to reopen in six months, while senior officials of the Corporation told Fortune that it is to exclusively accommodate its own guests and guests of other government institutions. Whether parts of hotels that the Corporation acquires from private owners, including Riviera, will be open for public use is still under discussion, according to MetEC managers.
With 72 rooms and a hall that can accommodate 500 people, the five-storey Riviera Hotel is less than a 15-minute drive from Bole International Airport. It is built alongside a plastic manufacturing plant, Alemgenet Plastic Factory, which lies on a 4,371sqm plot, in Mekanisa Lebu Industrial Zone, leased from the Addis Ababa city Administration for 240 Br a square metre.
The negotiations were not a smooth ride for senior managers of the Corporation, sources disclosed. There were disagreements over the propertiesÃ¢â‚¬â„¢ values and other factors, which Alem declined to disclose to Fortune two weeks ago. The disagreement had even reached the point where the owner of the property was backing out of the deal.
A week later, however, a deal has been finalised, with the handover of the two establishments scheduled to take place in the next few weeks, sources disclosed to Fortune.
The property owner, Alem, has declined to comment on the deal, despite several attempts by Fortune.
Nonetheless, the acquisition of the Hotel is concluded, while the property owner has outstanding issues that remain unsettled with officials at the MoI, a federal agency currently responsible for leasing and regulating plots given in industrial zones across the country, of which Mekanisa Lebu Zone is one.
A survey was conducted by a committee composed of experts from the Addis Abeba City Administration, the MoI, and Oromia Special Zone, on the use of plots in industrial zones that the federal government has allotted for the manufacturing industry. The plot where Riviera Hotel was built was originally given for the purpose of erecting manufacturing plants, according to the findings of the survey.
There is a difference in the lease price between plots leased for an industrial purpose and for developers of hotels. The committee is yet to form its recommendation on the measure that officials should take on the hotel, according to officials at the MoI.
Ã¢â‚¬Å“We have no such information,Ã¢â‚¬Â a senior official at the Corporation told Fortune.
Nonetheless, the propertiesÃ¢â‚¬â„¢ original owner told Fortune two weeks ago that all of the legal procedures were followed during the period of the construction of the hotel and that the Land Administration Board of the city government had approved the hotelÃ¢â‚¬â„¢s project from its start.