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Benefits And Challenges Of Privatizing Ethiopian Sugar Factories

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Ethiopia: Benefits And Challenges Of Privatizing Ethiopian Sugar Factories 

The Ethiopian government has embarked on the process of privatizing 13 sugar factories that are operational or under construction as it seeks to enhance efficiency and improve productivity.

According to Addis Fortune, the ministry of finance and the Ethiopian Sugar Corporation have released a request for information (RFI) which will be used to collect information about the capabilities of potential investors.

“The questionnaire helps to identify interested potential investors as well as promoting transparency and uniformity of the evaluation,” said Eyob Tekalign, state minister for finance.

“The questions have been designed to give respondents opportunity to bring their ideas to the table, as well as enable the Ministry to prepare a suitable tender,” Eyob elaborated.

The minister said that this will also allow potential investors to present the nature of engagement- whether full ownership of a sugar factory, partial transfer or a public-private partnership- in the privatisation.

Ethiopia currently has eight active sugar plants after the completion of Omo-Kuraz III which has a production capacity of 800 to1000 tonnes of sugar a day at following a US$290 million investment.

The aggregate annual production capacity of the factories is 400000 tonnes against the country’s demand of 720000 tonnes.

The government is also set to complete negotiations with the Ethio-Sugar Manufacturing SC to privatise Wonji Shoa Sugar Factory, which has a capacity of producing 750,000 tonnes of sugar a year.

The share company has offered an estimated  US$382.7 million (Br11 bn) for the Ethiopian oldest plant.

Being a net importer of sugar amounting to about 410000 tonnes annually, the government unveiled plans of setting up additional ten sugar plants with a target of producing 4.07 million tonnes of sugar production a year.

Notably, is the construction of the Tana Beles I Sugar Factory which will have a production capacity of up to 1000 tonnes of sugar a day through a tender recently awarded to China CAMCE Engineering.

According to Gashaw Aycheluhem, corporate communications executive officer of the Sugar Corporation the factory will be fully completed in 14 months.

In addition to the sugar factories, the state is set to partially privatise some of its most profitable state enterprises with the government retaining majority stakes industrial parks, hotels and manufacturing plants.

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