Ethiopia seeks a transaction advisor to oversee privatization plan of its sugar factories

ETHIOPIA – The government of Ethiopia is forging on with its plan of privatizing state-owned sugar factories that are operational or under construction as it seeks to enhance efficiency and improve productivity.

According to reports by Addis Fortune, the Public Enterprise Holding & Administration Agency is seeking to hire a consultancy firm that will oversee the transaction.

To this end, the agency has invited consultancy firms to file their expressions of interest in undertaking the job before December 11, 2020.

The bidders are expected to have not less that 5-years of experience in developing, assessing and advising privatisation activities and be knowledgeable in matters pertaining to legal, regulatory, operational, industry and technical operations in the sugar sector.

The winning firm, which will be selected with a quality and cost-based selection method, will prepare a plan and recommendations for the privatisation transaction.

In addition, they will undertake market research, carry out detailed analysis of alternative transaction approaches and recommend the one best suited to each company.

The transaction advisor(s) will follow up on the privatization process even after securing a strategic investor, to see the completion of the process.

The companies slated for privatisation include Tendaho, Kesem, Omo Kuraz II and III, and Arjo-Dedesa which are operational and Tana-Belese I and II, Welkayit, Omo Kuraz I which are currently under construction.

Initially, the government intended to privatise 13 sugar factories; however, it dropped the plan for three operational plants: Wonji Shoa, Metehara and Fincha sugar factories, and decided to keep them under government ownership.

Also, the privatisation plan of Omo Kuraz VI Sugar Factory, which was under construction was held back due to poor performance by the building contractor, leaving it 20% complete.

Heavyweight food industry players have expressed their interest of owning the sugar factories in the East African country, with the likes of Coca-Cola Company through its Ethiopian subsidiary and Nigeria-based Dangote Group joining in the race.

For Coco-Cola, investing in Ethiopia’s sugar sector will enable it to locally source the product, which is one of the main raw material for producing its beverages, in an efficient and cost-effective way.

Currently, Coca-Cola satisfies its demand for sugar from the local and international market, with the global market having the bigger share of 70 percent which has become a stifling process.

The move comes at an opportune time as the beverage maker is planning to invest US$300 million in the next five years.

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