Ethiopian government disclosed today the cancellation of Karuturi Global Ltd. land lease contract.
The Indian company was granted three hundred thousand hectare land, later slashed by one third, in the Ethiopia’s western region Gambella.
Registered as Karuturi Agro Products PLC., the firm leased the 100,000 Hectare for 2,000,000 Birr/per year (or about a dollar per hectare at current exchange rates).
According to the contract inked with the Ethiopian Agricultural Ministry, the firm was supposed to produce Palm cereals, rice, and Sugar cane for fifty years.
The firm failed to develop more than a percent of the land.
Eight years after the contract, 98.8 thousand hectare remains barren, according to Ethiopian officials,
Karuturi has also delayed in its repayment of about USD three million loan from the state-owned Commercial Bank of Ethiopia (CBE). The Bank started foreclosure procedures on the land to recover its money. Media reports also indicate Karuturi Global itself is going bankrupt.
The company was among the first to engage in Ethiopia’s controversial farmland leasing to foreigners.
The founder and managing director of Karuturi Global Ltd, Sai Ramakrishina, bragged last week to an Ethiopian paper:
The bilateral investment protection agreement between India and Ethiopia protects me. Touch me, then you will see the power of India. This is a threat because enough is enough. I don’t have to defend myself. I challenge [any official of the Ministry of Agriculture and Natural Resources] to touch my land. Then they will face the consequences in the international court of justice.
The remark probably drained whatever good will left for Karuturi in Addis Ababa.