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Federal officials allege widespread fraud in regional compensation claims

Legislation tabled to Parliament last week proposes to relieve the federal government from its duty to pay compensation to landowners in regional states whose properties are appropriated for development projects.

Federal institutions have long been complaining of excessive compensation costs for development projects in the jurisdiction of regional administrations. Officials say claims are often exaggerated, and state-owned enterprises such as Ethiopian Electric Power (EEP) have previously alleged that compensation costs often exceed project costs in some regions.

The amendment to the ‘Expropriation of landholdings for public purpose, payment of compensation and resettlement’ proclamation seeks to make regional administrations wholly responsible for compensation payments, including for displacement and moral compensation, even if the project in question is federally-run.

The proclamation was initially ratified five years ago, but experts from the ministries of Justice and Urban and Infrastructure Development, as well as the Ethiopian Roads Administration, presented the terms of the proposed amendment to the parliamentary standing committee for Urban Infrastructure and Transport last week.

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An amended article entails that legal disputes over land expropriated for infrastructure and social service development to be carried out by the federal government may be appealed to the head of the Federal First Instance Court in the relevant jurisdiction.

It seeks to empower the Federal First Instance Court to freeze the bank accounts of institutions who refuse to pay compensation to individuals and businesses who are affected or forced to relocate by development projects.

Federal authorities have long accused their regional counterparts of inflating payouts for land sequestered for federal-funded projects such as roads, which often cut through farmland and other properties.

In July 2023, heads of the Roads Administration said that around 4.4 billion birr was spent last financial year on disputed land compensation payments.

Presenting to Parliament last week, Mohammed Abderahaman (Eng.), director-general of the Roads Administration, said he hoped the amended proclamation will create a sense of ownership over federal projects across all levels of government, in turn reducing expenditures on compensation.

The draft’s preamble states the burden of compensation payments on federal institutions is unnecessarily weighing down their work and wasting precious working time.

It claims that the land clearing procedure involves one too many stakeholders taking extended periods of time to conclude their work. It also states that those who estimate the costs of compensation (cities and woredas) are overinflating the prices, while alleging widespread fraud in calculating compensation value using dubious farm productivity data.

Officials argue the amendment can help cut down on the cost and lifespan of development projects.

Chaltu Sani, minister of Urban and Infrastructure, told members of the standing committee that overinflated compensation payment requests are the main reason behind delays in federal development projects. The Minister alleges compensation sometimes exceeds the project budget.

“The ratification of this proclamation will be the solution we have been waiting for,” said Chaltu.

Regional officials, land experts, and the general public have yet to discuss the draft with policymakers and parliamentarians.

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