Gem Corp, Agro Corp secures Ethiopia’s 600,000 tons wheat supply contract

ETHIOPIA – The Ethiopian government procurement agency has awarded two companies, Gem Corp Commodities Trading SA and Agro Corp International, to supply 600,000 metric tons of wheat valued at US$116.53 million (3.38 billion birr)

According to The Reporter, this is the latest and largest purchase to be awarded by the Public Procurement and Property Disposal Service (PPPDS) under a single supply contract, so far this year.

Under the wheat supply contract Gem Corp will supply 500,000 metric tons from the total bulk of 600,000 metric tons at a price of US$97.07 million while whereas, the remaining 100,000 metric tons was awarded to Agro Corp for US$19.4 million.

This brings the total supply contract award to GEM CORP to 900,000 metric tons after it was also recently awarded to supply 400,000 metric tons at a price of US$78.5 million.

However, industrial players have raised concerns over the size and status of the award, citing that the government may be taking a high risk especially considering the volume and the actual track record of recently awarded contracts Ethiopia.

“It is very clear that it is very difficult to handle such a big quantity, especially for a first timer in Ethiopian wheat market,” said industry source familiar with the situation.

“It may not be easy especially for GEM CORP to supply the 400,000 metric tons of wheat in two months’ time and again another 500,000 metric tons in another two months,” he said.

In the past years, the country has plunged into wheat shortages following the lethargic procurement process and supplier’s failure to deliver wheat as per their contracts. 

Following the recent delay in the procurement process, the government is now expecting to get 1.4 million metric tons of wheat in the coming few months

The wheat is purchased on behalf of the National Disaster Risk Management Commission and will be used to ease the wheat shortage experienced in the country.

Meanwhile, Wifag, which a few months back was awarded to supply 400,000 metric tons of wheat with US$108 million (3.04 billion birr), has finally managed to submit a performance guarantee.