Ethiopia to halt $3.6 billion oil deal with US firm after investigation
Ethiopian government is set to rescind an agreement with a US-based self-described energy firm after an investigation
senior officials at Ethiopia’s Ministry of Mines and Petroleum said the government is set to rescind an agreement with a US-based self-described energy firm after an investigation by Quartz Africa revealed the company had no petroleum industry expertise or technical credentials.
“We are in the process of canceling our agreement with the company,” says Dr. Koang Tutlam, Ethiopia’s state minister for Petroleum and Natural Gas, in a statement sent to Quartz Africa.
GreenComm Technologies, a Virginia-based firm run by an Ethiopian-American former car dealership employee, Nebiyu Getachew, was poised to oversee the construction of a $3.6 billion oil refinery in Ethiopia’s Somali region, after entering into an agreement with the Ethiopian government on April 28.
That agreement had followed at least two years of talks between the entity and the Ethiopian government that included an examination of the company’s profile by prominent members of the ministry and an Ethiopian state-run oil firm.
“GreenComm wanted the Ethiopian government to put forward a $100 million letter of credit because they sought to get billions from lenders. But we refused to give in.”
But the investigation revealed the company had made misleading statements about its capabilities and its connections as part of an elaborate scheme. It portrayed itself as an industry leader despite having never completed an oil-related project anywhere, and despite the company being delisted from the Virginia state-corporate database when it signed the deal on April 28.
After Quartz Africa’s story was published one local social media user drove to the company’s listed address in Virginia, and found empty office space, with no sign of an extraction company in the area.
Many ordinary Ethiopians at home and in the diaspora were concerned GreenComm had managed to get through the Ethiopian government’s vetting process despite multiple red flags.
When probed about the agreement earlier this year, Ethiopia’s minister of Mines Takele Uma told Quartz Africa he was unaware of GreenComm’s existence, saying he had “no clue.” His predecessor, Samuel Urkato who has since gone on to become Ethiopia’s minister of Science and Higher Education, acknowledged the existence of the deal when reached by phone, but refused to speak any further, hanging up and ending the call with Quartz Africa.
However, with the revelations made public, ministry representatives have been far more open to addressing press inquiries on the matter. According to Dr. Koang Tutlam, whose office is under minister Takele Uma, there had been resistance to allow GreenComm to operate coming from within the ministry.
“Although the so-called GreenComm Technologies project preceded most of us at the ministry, some of us were skeptical about their genuineness from the beginning,” Dr. Koang tells Quartz Africa. “As such, some of us worked hard to prevent the [government] entering into a commitment that would cost the country.”
Koang says the parties agreed to commence with a one-year feasibility study period before any construction would begin. GreenComm executives, he says, were very keen to pursue a huge advance before delivering any work.
“First, the company wanted the Ethiopian government to put forward a $100 million standby letter of credit, which we learned was because they sought to get billions from lenders. But we refused to give in, despite immense pressure from some heavy quarters.”
Dr. Koang declined to clarify who he meant by “heavy quarters.” However, another official, Mulugeta Damtew Seid, head of state agency Ethiopian Mineral, Petroleum and Biofuel Corporation (EMPB), told Quartz Africa company officials had taken the matter to the Foreign Ministry and even the prime minister’s office. Mulugeta also identified prime minister Abiy’s former chief of staff and Ethiopia’s current ambassador to the US, Fitsum Arega, as having lobbied on GreenComm’s behalf.
Although Fitsum Arega has not previously responded to Quartz Africa’s queries, in a series of social media postings in response to the story, the ambassador wouldn’t confirm or deny his proximity to GreenComm Technologies but stated that no deal had been struck to allocate the company with funds. Instead, he claimed, the agreement was solely to assess the feasibility of the project.
“As this study is a private sector foreign direct investment initiative,” Ambassador Fitsum wrote, “no financial resources are committed or promised by the Ethiopian federal or regional government for its implementation.”
Local media reports and statements by the company, however, suggest the agreement went beyond a study agreement and that it had actually encompassed the refinery’s construction. Reports stated the American company had recruited Korean construction giant Hyundai Engineering and Construction to assist with its implementation. Hyundai later clarified that this was false and that it had refused an offer to collaborate jointly with GreenComm Technologies after establishing that the company had no active operations.
But Dr. Koang told Quartz Africa that after growing concerns, GreenComm included a clause in their April 28 agreement, obligating the company to deposit a $5 million performance bond as insurance. Something, he says, the company failed to do.
“We are canceling the agreement, but we are also taking legal measures against the company for its failure to release the performance bond,” Dr. Koang explained. “Rest assured, Ethiopia has not lost a penny and wasn’t about to lose anything.”
Greencomm Technologies had first pitched the oil refinery project to the Ethiopian government in 2018, as part of a joint endeavor with the Texas-based Innovative Clear Choice Technologies (ICCT) firm, which similarly had no credentials and was dissolved by February 2020.
Dr. Koang Tutlam was part of the team of officials that studied the joint pitch in 2018. Two years later, there was suddenly no further mention of the existence of ICCT, but this didn’t hinder the remaining company’s ability to hash out a deal.