ETHIOPIA – The Public Procurement & Property Disposal Service (PPPDS), on behalf of Ethiopian Grain Trade Enterprise (EGTE), announced an international tender on March 11, 2015, to purchase four million quintals of wheat following the two million quintals of wheat it already purchased in December 2014.
The tender has 10 lots, each having 400,000 quintals, said Solomon Betere, procurement head at PPPDS.
Out of the total amount of wheat that is going to be purchased, 500,000 quintals is planned for this current fiscal year while the remaining amount is planned for the coming fiscal year, said Yigezu Daba, director of PPPDS.
The former amount will be distributed before June 2015 whereas the latter will be reserved for the coming year.
As of now, two million quintals of wheat have already been transported to the country.
It was purchased from two companies, Promising International Trading, which won the bid to supply 800,000 quintals and Hakan Agro Industry, which won the bid to supply the remaining 1.2 million quintals.
Promising International had offered the lowest price for a tonne. Its offer were 276.8 dollars and 276.4 dollars per tonne for two lots of 400,000ql, including transportation costs.
Promising is a U.K based company with a history of trading in milling wheat, sugar, sorghum, peanuts, groundnut oil and cake, sesame seeds and pulses with Ethiopia, Dubai, Ukraine, Syria, Egypt and Tunisia.
The remaining 1.2 million quintals was divided into three lots, of 400,000 quintals and Hakan made an offer for all the three lots. It offered 287 dollars, 288 dollars and 289 dollars per tonne for each lot.
Headquartered in United Arab Emirates, Hakan is known in supply chain management of agricultural commodities such as pulses, oil seeds and edible oils. It exports 54 food products from 52 countries to 82 countries, according to its website.
“The reason we decided to purchase the wheat at this point in time is because the price of wheat at the international market is cheap in comparison to previous times,” Ali Siraj, state minister of the Ministry of Trade (MoT) told Fortune.
According to index mundi, the price of wheat in February 2015 had declined to 237 dollar per tonne, which is a four percent decline from January 2015, excluding transportation costs.
Mostly, purchases are made from companies originating in Eastern Europe, Middle East and India, and it is unlikely that purchases will be made from U.S. companies, said Ali. This is due to the fact that wheat from the U.S. is expensive and the U.S. is very far away, making transportation too costly.
The shipment of the two million quintals from the country of origin to Djibouti has already been undertaken, said Mersha Tsegaye, head of allocation and transportation at EGTE. The shipment will be made using five ships that have a carrying capacity of 400,000 to 490,000 quintals.
The first and the second ships have already unloaded the wheat while the remaining are expected to reach the Djibouti port soon, added Mersha. The wheat will be transported from Djibouti to Ethiopia by road and will be distributed to more than 300 flour factories and 5,000 bakeries across the country.
As of the latest bid, so far, 20 companies have purchased the bidding document, said Solomon.
The government has been importing different types of wheat for the purpose of market stabilisation. In 2009/10 and 2010/11, 5.3 million quintals and 2.58 million quintals, respectively, were imported.
In 2011/12 and 2012/13, the imports were 4.2 million quintals and 5.6 million quintals, which went slightly down to five million quintals in 2013/14.
For the current fiscal year, 6.5 million quintals was planned for purchase, of which six million quintals has already been purchased.