State projects in power, irrigation, roads, and higher education requested close to 300 billion Birr in supplementary financing over a period of three and half years, according to a new report from the Office of the Federal Auditor General.
The compliance audit report covering public project oversight and control systems under the Ministry of Planning and Development between 2021 and midway through the last fiscal year highlighted repeated requests for additional financing, excessive allocation, and cases where disbursed funds were not utilized for their intended purposes.
Among its key findings was more than 297 billion Birr in additional budget requests for a range of projects over the reporting period. The report indicates that two projects under public universities were given close to three billion Birr in additional funding despite having already been completed and operational.
Similarly, five other universities were found to have received more than one billion Birr for projects that never began.
Officials under Minister Fitsum Assefa responsible for overseeing these projects pointed to weak monitoring, legal limitations on their authority, and structural challenges when prompted for an explanation, according to the report.
The Auditor General indicates the state-owned Ethiopian Electric Power (EEP) accounts for the bulk of the additional funding requests, with more than 20 projects under it petitioning for more than 267 billion Birr in supplementary funding during the reporting period.
Nine of these projects sought between 100 to 200 percent more than their planned budgets, according to the report.
A striking example is the Grand Ethiopian Renaissance Dam (GERD), which is slated to go fully operational in the coming month. Project managers requested 200 percent more than the initial budget, according to the report.
Similarly, the Koysha hydropower dam project, which is exceptionally authorized to take a non-concessional loan of USD 950 million as part of Ethiopia’s IMF-backed economic reform program, registered a 151 percent budget overrun.
Other major projects, including Aluto Geothermal, the Tulu Kapi power project, and Gondar–Dansha Agro-Industry, showed cost escalations between 136 and 170 percent, according to the report.
Beyond power generation, irrigation and university projects also exhibited cost overruns ranging from 78 to 760 percent, with a combined excess request of around 17.3 billion Birr.
The Arjo–Dedesa dam project in Oromia, initiated more than a decade ago to develop 80,000 hectares of farmland, showed a 760 percent cost increase, making it the highest overrun case.
The project was originally expected to cost 4.4 billion Birr and be completed by June 2024, but the audit included it among projects demanding major additional budgets without proper progress justification.
Similarly, other irrigation projects such as the Gidabo Dam and Zarema Mayday Dam, alongside their associated irrigation schemes, registered massive overruns.
The Gidabo Irrigation and Social Infrastructure Construction Project (Lot-2), which originally had a contract value of 273 million Birr, saw its expenditures escalate by a whopping 195 percent to 808 million Birr.
The Zarema Mayday Dam, which started with a contract value of 4.26 billion Birr, has run up 14.5 billion Birr in costs.
The report notes fresh feasibility studies were not conducted before the supplementary funding was injected.
Heavy overruns are also common in public universities. The report spotlights a sports complex at Wolaita Sodo University which saw its budget balloon by 50 million Birr and a hotel construction project at the same institution overran its 93 million Birr budget by 78.5 percent.
The flagship Addis Ababa University was also cited in the report for 220 million Birr in overruns involving a building for its geophysics department and a nine-storey office and laboratory complex, according to the report.
It notes that more than 180 road projects exceeded their budgets by a total of 13 billion Birr, with seven of them requiring more than 75 percent in additional financing.
The Auditor General’s report notes that officials from the Ministry of Planning and Development were asked to provide explanations regarding these overruns, to which they responded through written reports and exit meetings.
In their reply, they stated that energy projects, in particular, face significant government oversight, but delays mainly arise due to loan disbursement delays, security issues, foreign currency shortages, high domestic inflation, and financial flow problems.
Lack of timely compensation and right-of-way complications, security problems, design changes, inflation, forex shortages, limited contractor capacity, and inadequate monitoring were the culprits behind cost overruns in road projects, according to Ministry officials.
The audit report also emphasized that projects launched before Proclamation No. 1210/2012 were not subject to the new cost adjustment limits. However, after the law was enacted, any adjustments exceeding the legal threshold should have required approval, and responsible bodies should be held accountable when such approvals were bypassed.
The Auditor General’s team has also found that even after the proclamations (1210/2012 and 1263/2014) came into effect, many projects—including 18 power generation projects, more than 20 irrigation projects, and about 210 road projects—had been initiated without the proper feasibility assessments, approvals, or adequate monitoring by the Ministry of Planning and Development.
The audit report concluded that weak coordination between the Ministry of Planning and Development and the Ministry of Finance, lack of information exchange, and failure to conduct joint problem-solving consultations had worsened the situation.
