Home Local News Major proposed hotel ask for govt. help to secure loan

Major proposed hotel ask for govt. help to secure loan


Tsemex Hotels and Business plc (THB), which is having trouble accessing the disbursement of overseas loans, has asked for the involvement of the federal government and PM Abiy Ahmed (PhD).
In the letter the company sent to the PM early this week it expressed its concern about the effect the delay would have on their hotel.
The company formed as a subsidiary of Tsemex Global Enterprise to become a player in the growing chain hotel industry has had its potential five star hotel delayed, even though it secured extraordinary finance from the International Finance Corporation (IFC), the World Bank’s private financial wing, to undertake the project.
According to the letter that the company sent to Abiy, it asked for the support of the federal government for the approval of an external plot of land around the hotel project at Lideta area.
In its initial agreement in 2012 with Intercontinental Hotel Group (IHG) it stated that TBH would have a parking lot capable of holding 200 cars to be managed under the brand of Crowne Plaza. However, the IFC has signed a deal of close to a USD 20 million loan for the development of the hotel which would be considered a hard currency generator.
According to Rezene Ayalew, Managing Director of TBH, the first portion of the USD 18.86 million loan was disbursed after  the Office of the Mayor of City Government of Addis Ababa gave a confirmation letter in 2015 for the allocation of the requested 1,000 meter square plot.
However because the legal dispute over the name of Crown and Crowne forced TBH to select another manager,  the French based international hotel manager AccorHotels group to manage a brand of the MGallery by Sofitel, the plot was never awarded to the company.
“Meanwhile the city administration has tried to support us but we could not secure the requested land,” he told Capital.
He says due to the delay of accessing the land which is set as a precondition of the second phase of loan disbursement the entire project has been delayed. “We are now forced to pay an interest of 5.38 percent for the disbursed loan and 2 percent commission for the balance unreleased,” the letter that the THB sent to the PM on Monday June 18 reads.
“The delay has also escalated the cost of the project from USD 37 million to USD 46.5 million,” Rezene said.
“It was the responsibility of the government to push such kind of projects to include ample parking as observed in other countries, but the opposite occurs in our country,” the Managing Director complained.
“We are now frustrated waiting for the final decision from the government,” he said. The company head said that about three months ago we have been submitted a similar letter to the former PM.
When IFC approved the loan it has considered the capacity of the hotel that could gross over USD 14 million per annum. The hotel, which has 221 rooms, is expected to be opened within 12 months for service, if the balance of the loan is released.

Exit mobile version