The Ethiopian Privatization and Public Enterprises Supervising Authority (PPESA) has terminated the 512 million dollar deal with Aklile Berhan Mekonnen (Prince), who had entered a contract to take over the Ghion Hotel Enterprise.
By Muluken Yewondwossen, Capital
Wondafrash Assefa, Public Relation head of PPESA, told Capital that the deal was terminated when the investor failed to settle his initial investment. The agency says they waited patiently for the investor for the last several months. “The investor did not clarify why he delayed the payment. Because of this the agency has made a decision to terminate the deal,” Wondafrash said.
The deal between the two parties was concluded in late August 2010 and the investor was supposed to come up with 210 million dollars, as his first registered initial capital, by the end of September 2010.
PPESA wrote a letter in November to the investor, demanding payment or threatening to terminate the deal. The investor waited for more than three months before asking for more time even after receiving the warning letter. According to the public relation head, the agency has decided to put the hotel up for another auction. But he said that the exact time has not yet been determined.
According to the deal, Aklile, an Ethiopian born investor based in Italy, had to come up with 210 million dollars as his first registered initial capital. The total investment sum would be 310 million dollars, which includes 100 million dollars for the government-shared hotel. The deal added that if the investor spends an additional 300 million dollars in the next five years, he will own 80 percent of the Ghion Hotel. The rest will be state-owned.
According to the investor’s proposal, accepted by the board of PPESA, the current swimming pool was to be closed down for the public and make way for a new four star hotel, counting five floors, which will be accompanied by another five star hotel. The latter would be built at the location of the current Ghion building. During the construction, the hotel would not be closed down, the deal states. Aklile, who says he is one of the last sons of Prince Makonnen Hailesellasie, who was one of the favorite sons of Emperor Hailesellasie, had promised that the two hotel buildings will be completed within five years.
The unsuccessful deal for Ghion, one of the biggest state owned hotels and located in the prime corner of Addis Ababa, bordering the National Palace, is not new for the business.
Ghion has grabbed the attention of many high profile businesspeople and companies in the past couple of years, after the government invited interested parties to be part of a joint venture in the hotel. PPESA had made various deals with different foreign and local investors but they all failed.
The Ghion Hotels Enterprise was established in 1951 and used to operate a chain of eleven hotels, which were all found in northern Ethiopia, except the National Hotel in Addis Ababa, sold to the Ethiopian Athletics Federation a year ago. Roha Hotel, one of the hotels administered by Ghion Hotel, was transferred to Ethiopian Ayat Real Estate a year ago.