Ethiopian regional chamber of commerce eyes ownership of government owned sugar factory

ETHIOPIA – The Tigray Chamber of Commerce & Sectoral Associations of Ethiopia has started mobilizing investors to take part in the bidding process for the privatization of Welkait Sugar Plant, one of the sugar factories the government of Ethiopia is working to privatize.

Last year the Ethiopian government 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 Berhe Arkebe, secretary of Meqelle Chamber of Commerce & Sectoral Associations, the regional chamber has coordinated all sectoral associations at the weredaand town level to mobilise potential investors to raise equity to buy the plant.

Before deciding to take part in a bidding process, the Association has commissioned a study to assess the feasibility of the plan, profitability and total assets of the factory.

The assessment also includes identifying which ownership arrangement is feasible i.e. share company, joint venture or private limited company (Plc).

The Welkait Sugar Plant, located 1,030Km from Addis Ababa is 95% complete.

When it begins to operate at optimum crushing capacity of 24,000tn of sugarcane per day, it will produce 484,000tn of sugar and 41.6 million litres of ethanol a year.

It will utilize sugarcane planted on 40,000ha of land and irrigated by water from the Tekeze, Kalema and Zarema rivers.

Ethio-Sugar Manufacturing S.C., another share company, is also mobilising resources to raise funds from 40,000 shareholders to take part in the bidding process to acquire sugar plants.

Other heavyweight industry players such as Coca-Cola Company under its subsidiary in Ethiopia and Nigeria-based Dangote Group have expressed their interest in the privatization process.

The state-owned sugar factories produced four million quintals of sugar in the last fiscal year, while the demand was 7.2 million quintals. To fill the gap, the country imported 4.1 million quintals of sugar.

By the end of the current fiscal year, the government intended to increase sugar production to 4.9 million tonnes and generate US$586.2 million from export.

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