Ethiopia seeks US$342.47M for revival of war-damaged Welkait sugar plant
ETHIOPIA – The Ethiopian government is urgently seeking alternative funding sources amounting to 42 billion birr (US$342.47M) to revive the Welkait Sugar Plant, which has remained inoperative since the northern Ethiopia conflict erupted in 2020.
The sugar estate is one of several under the Ethiopian Sugar Industry Group that has been incurring significant losses.
A recent audit by the Ethiopian Audit Services Corporation revealed that the Welkait estate suffered 17.7 billion birr (US$144.3M)in damages due to the war. Physical assets, including machinery, buildings, and irrigation systems valued at close to 18 billion birr, were exposed to destruction.
However, management has not been able to conduct a full assessment due to restricted access to the site.
Construction of the Welkait Sugar Plant, funded through a US$500 million loan from China Exim Bank in 2013, had not been completed before the conflict.
Designed to crush 24,000 tons of sugarcane daily, the plant’s completion now depends on securing an additional 42 billion birr in financing, according to the audit report.
The report further highlights the impact of conflict on other sugar estates. In Oromia, the Arjo and Fincha sugar factories sustained losses of 281 million birr (US$2.29M) and 245 million birr (US$2M), respectively, due to vandalism by rebel groups.
The Tendaho Sugar Factory in the Afar region has also faced severe setbacks, including conflict, adverse weather conditions, and operational disruptions, with its future hanging in the balance.
Construction of the Omo Kuraz 5 factory, initiated in 2016 under the Chinese contractor JJIEC, has been halted due to financial constraints. According to the report, the factory’s management has yet to decide on its future.
Ethiopian Investment Holdings (EIH), which oversees the Ethiopian Sugar Industry Group, is considering selling up to 100 percent ownership in no less than eight sugar estates.
These include the Omo Kuraz, Arjo, Didessa, Kessem, Tana Beles, and Tendaho estates. Estates such as Wonji and Metehara will operate independently under EIH’s supervision.
The audit report comes amid broader financial challenges, as the Ministry of Finance prepares to issue 900 billion birr in bonds to address 845 billion bir (US$6.89B)r in bad loans owed by state-owned enterprises to the Commercial Bank of Ethiopia.
The Sugar Industry Group accounts for over 110 billion birr (US$896.9M) of these non-performing loans, compounding the sector’s financial strain.
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