Ethiopia: German biofuel company fails as employees abscond with assets

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Ethiopian Ministry of Mines and Energy has announced the failure of the German-based Flora EcoPower, the largest biofuel farm and Refinery Company in Ethiopia.

An investigation by the Ministry of Mines and Energy to ascertain the state of affairs at the Flora Eco Power in Oromia Regional State has revealed the closure of a castor bean plantation as well as the company’s inability to pay its employees since, at least, the last five months.

The investigation report follows the company’s failure to pay its bank loans, which amount to about 15 million birr, and reports that the management had not been seen for several months, as well as a nonoperational farm.

The German-based bio fuel company began operating on a controversial 8,000 hectare land in Fedise, with a registered capital in 2007 of 671million birr (US$77 million).

The area the company acquired was the cause of local and international clamour from environmentalists, given that over 80 per cent the land was part of the Babile Elephant Sanctuary that was established 40 years ago.

Despite the controversy, the investment was supported by the regional and federal government, and was even the proud host of Ethiopian Prime Minister Meles Zenawi in early 2007.

The German biofuel venture was expected to open new perspectives for crop diversification and increased income security in a predominantly coffee producing area.

During its whole existence in Ethiopia, Flora EcoPower — which is also active in Israel and China where it was collaborating on the establishment of a 200,000 hectare jatropha plantation in 2007,– exported its product only three times.

The Ethiopian Government has prepared 23.3 million hectares of suitable land for biofuel investment.

According to data from the Ethiopian Investment Agency, over 60 companies wishing to invest in the sector were issued licenses. Presently, only 10 companies are believed to be operational.

Meanwhile, disappointed employees at the Flora EcoPower company who are yet to receive salary arrears have resorted to absconding with some of the company’s assets in the absence of the managerial staff.

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