Wheat imports to mitigate drought impacts

ETHIOPIA – Ethiopia is breaking its own wheat import record with the latest invitation by the government to 11 companies to supply one million tonnes.

The Federal Public Procurement & Property Disposal Service (PPPDS) is handling the procurement on behalf of the Ministry of Agriculture & Natural Resource (MoANR), which has ordered 400,000tn to respond to the drought, and the Ethiopian Grain Trade Enterprise (EGTE), which has ordered 605,000tn for market stablisation.

It has received 10 offers from the 11 at bid opening on October 23, 2015. An earlier award to Phoenix and Promising for the delivery of 222,000tn, made early in September, is expected to be delivered after the belated letters of credit opening by the MoANR last week.

A report made by United Nations Office for Coordination of Humanitarian Affairs (UNOCHA) on October 13, 2015 shows that the number people in need of assistance has reached to 8.2 million.

But the government is not expecting donor money to come earlier than the beginning of 2016, says Mitiku Kassa, state minister for Agriculture & Natural Resources.

“For most donor countries the season is the end of fiscal year, so it is difficult to have their support,” he said.

The Ministry had earlier bought 50,000tn of maize from the EGTE. It is also preparing to buy 20,000tn of edible oil. EGTE, too, is now receiving delivery of 400,000tn of wheat it bought in June, 2015.

Phoenix Commodities made the lowest offer of 233.26 dollars per tonne to be delivered in three lots of 50,000tn each.

Hakan made the second and third lowest prices, at 234.13 dollars and 234.34 dollars a tonne, each for 40,000tn.

Glen Core Grain offered to supply 40,000tn for 265.25 dollars a tonne, the highest among all the bidders. It might be difficult for the PPDS Board to award the purchase at prices that are higher than the three offers as the price difference between the lowest and the highest offers is wide, according to a procurement expert at PPPDS.

Usually when such offers are made by bidders the service will negotiate with bidders to supply at the price made by the company with the lowest price offer based on their price rank.

He nevertheless expressed concern related to the fact that the two bidders that offered the three lowest prices will supply only 230,000tn between them.

This may force PPPDS to give delivery priority to the relief effort because of its urgency, while announcing other tenders to procure the remaining quantity of wheat, the expert said.

The Board, chaired by Abraham Tekest (PhD), state minister at Ministry of Finance & Economic Cooperation (MoFEC) is expected to be assembled this week, on October 28, 2015.

Just over two weeks ago, on October 12, 2015, the government announced that it had allocated four billion Br in an effort to reduce the impact of the drought on people’s livelihoods.

The weather forecast from UNOCHA has also indicated that the impact of the ongoing El Niño may continue till the next Belg, the short rainy season from February/March to April/May.

The MoANR is undertaking an assessment to determine if additional supply of grain will be required, said Mitiku.

Winning bidders for the latest order will be expected top deliver the wheat in four months from award.

October 27, 2015; http://addisfortune.net/articles/wheat-imports-to-mitigate-drought-impacts/

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