METEC and purchase of two old ships from ESLSC – maritime perspective


Ethiopia’s Metal & Engineering Corporation (METEC) has been the subject of an investigation into an allegation of corrupt conduct and embezzlement of public funds. One of the allegations was METEC involvement in the purchase of two old ships from Ethiopian Shipping Lines (ESLSC) for demolition of the ships and recovering scrap metal, however, later METEC changed the plan and brought back the two old ships in to service and engaged in alleged illegal trade in a blatant breach of international law.

The ships, named ‘Abay Wonz’ and ‘Abyot’ were sold and transferred to METEC in 2012 to be scrapped for a source of parts and reuse, following a viability assessment that took into account their life cycle cost, which was more than 28 years. At the time another foreign company, Global Marketing Systems offered 3,300,000 dollars to buy the ships but the idea was dropped on grounds that the offer was low; METEC was chosen to demolish the ships and use them for raw materials, it was revealed in the documentary.

However, METEC had its own plan, deciding to return the two vessels to service, claiming they could still be in service for at least five more years on condition of providing additional repair and maintenance. The vessels were kept anchored in the Port of Djibouti for more than six months, costing the Ethiopian government more than 1 million dollar bill in port fees, generator fuel, services and employee salaries, Ambassador Suleiman said on FANA broadcasting documentary.

METEC-operated vessel, Abay flying an Ethiopian flag, has made seven routes from the port of Bandar Abbas in Iran to Port of Berbera, from Berbera to India’s Port of Mundra, from Mundra to Dubai’s Port of Khalid, from Khalid to Iran’s Bandar Abbas, from Bandar Abbas to Berbera, from Berbera to India, then to Doha Qatar, carrying unknown goods, most of the areas subject to stringent sanctions, the state-controlled Fana Broadcasting Corporate documentary aired last week revealed.

For those of us close to the shipping industry, we can clearly see that there are few points which require more detailed investigation. The purpose of this article is not to make METEC the lesser Devil or undermine the fact that METEC alleged involvement in corruption and other embezzlements of public funds. The purpose of this article is to see METEC issue from a maritime perspective and get closer to facts so that we can learn lessons out of this.

1. Ship Nationality – National Flag

Any ship trading in coastal or international waters is required to be registered in a country and fly its flag. Ship registration is the process by which a ship is documented and given the nationality of the country to which the ship has been documented. The nationality allows a ship to travel internationally as it is proof of ownership of the vessel.

Obvious questions are – when METEC purchased those two ships for scrapping, why those two ships registration was not cancelled immediately after purchase or within a time frame for scrapping the ships? Which government body controls registration of ships in Ethiopia? Who controls the movement/trade of ships registered in Ethiopia? What action was taken once those ships resumed sea trade?

2. Was METEC capable of Scrapping ships?

Another interesting point is METEC was allowed to purchase those two ships in order to demolish/scrap the ships and recover the steel or other useful machinery from the ships. However, the scrapping of ships is not an easy task as it sounds. First, you require a coastal area to beach the ships and then with some labour-intensive procedure ships are cut into pieces and taken to ashore for recovering steel or raw materials. Famous ship scrapping countries are Bangladesh, India and Pakistan with huge coastal areas dedicated for this purpose. You can not just scrap only two ships. In addition, as a landlocked country, Ethiopia doesn’t have any coastal area. So which other countries would have allowed METEC to scrap those ships? Knowing the fact that ship scrapping causes environmental pollution, Which country would allow METEC to pollute its coastal area just to scrap two ships? Above listed questions lead us to believe that from beginning METEC intention was not to scrap those ships. Those who facilitated the purchase should have asked the same questions at that time. Once the ships started trading illegally flying Ethiopian flags, Maritime Authority should have cancelled their flag promptly.

3. Was METEC involved in illegal arms trade?

METEC purchased those two ships and resumed sea service around 2012-2013. This was also one of those times Somali pirates dominated areas around Somali waters in the Gulf of Aden and the Indian Ocean. Equally, at the same time, this area was also highly patrolled by coalition Naval forces including EU forces, US Navy and other highly equipped Naval forces. These Naval forces were monitoring the area 24×7 for any sign of piracy activity/attack and illegal arms trade. Hoe METEC managed to involve in illegal arms trade in such highly patrolled area without raising a red flag? Simply it is not an easy task. For one reason coalition naval forces were boarding randomly any ship transiting this area and conducting thorough ship search at that time. On the other hand, METEC officials knew very well the implications of the illegal arms trade. This doesn’t add up and it is most unlikely illegal arms trade was carried out during those voyages.

4. Private ship ownership

Even though there are no words to express the damage METEC corrupt conduct and embezzlement caused the country, I think no one has ever thought of buying/ owning/operating ship as a private entity in Ethiopia. For most of us, we know only our government owning/operating ships. If a corrupt and disgusted company like METEC can run a ship, why not other private business owners are not able to see shipping as a lucrative business? Why not the government encourage private business owners to participate in shipping activities? Our government-owned shipping company is one of the lowest performing shipping company in the world and probably will not last a week in the international market if not for the protection it is enjoying at all times. Why is shipping activity in Ethiopia is so misunderstood that we do not even see that we are always on the losers side?

In conclusion, we may not be able to undo what damage METEC has done to the country. However, one thing is clear. We can always learn from past mistake and then do our best to improve things for the future.

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