Gov’t begins negotiation for wheat supply with a foreign company

ETHIOPIA – The government is negotiating with Promising International Trading a United Kingdom based company, to purchase two million quintals of milling wheat.

ETHIOPIA – The government is negotiating with Promising International Trading a United Kingdom based company, to purchase two million quintals of milling wheat.

The negotiation started after the financial opening of the latest government tender in which Promising had made the lowest offer, two weeks ago.

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The Public Procurement & Property Disposal Service (PPPDS) announced the tender in mid-September 2014, on the behalf of the Ethiopian Grain Trade Enterprise (EGTE), to make the second purchase of wheat for the current fiscal year.

The PPPDS floated the tender in five lots, each having a quantity of 40,000ql. A total of 12 companies purchased the bid document and, to date, 10 have submitted offers.

However, during the technical evaluation stage of the bid, three companies were disqualified, leaving only seven financial offers on October 30, 2104. PIT made the least offer for four lots, while Mid Gulf International made the least offer for one lot.

Promising’s offer was 271.8 dollars per tonne, including transportation costs. The highest offer, 474 dollars, came from Glencore Plc.

Promising offered 10.8 million dollars, 11.1 million dollars, 10.8 million dollars and 11.2 million dollars for the four lots, and Mid Gulf offered 10.99 million dollars for the fifth lot. The total cost of all lots will be 1.1 billion Br.

According to sources, PPPDS’s officials and the local partner of Promising were working on the deal negotiation,starting from early last week but Solomon Betre, procurement head at the PPPDS, declined to comment on the issue, saying they were still in the financial evaluation process.

Established in the British Virgin Islands in 2004, Promising began trading milling wheat, sugar, sorghum, peanuts, groundnut oil and cake, sesame seeds and pulses to Ethiopia, Dubai, Ukraine, Syria, Egypt, and Tunisia. Sources claim the company seems to win all lots.

With this two million quintal wheat import, the government will have bought six million quintals out of the 6.5 million quintals it planned for the 2013/2014 fiscal year.

In 2009/2010 it imported 5.3 million quintals, then nearly half, 2.58 million quintals the following year. In 2011/2012 and 2012/2013, the imports were 4.2 million quintals and 5.6 million quintals respectively, which again declined to five million quintals in 2013/2014.

The import price per quintal of wheat has increased from 353 Br in 2009/2010, to 549 Br in 2012/2013.

The EGTE purchased four million quintals at the beginning of the current fiscal year, for 2.4 billion Br, and has distributed 1.2 million quintals to 288 flour factories throughout the country, as of mid-October 2014.

The distribution to the factories takes place every 15 days. The factories in turn supply the flour to 5,000 bakeries identified by the Ministry of Trade (MoT) and regional trade and industry bureaus.

Ethiopia is importing wheat, but has a potential 2.6 million hectares of arable land designated to wheat production, 1.6 million of which is serviced by rain-fed agriculture and the remaining one million hectare by irrigation.

According to the Central Statistics Agency (CSA) current fiscal year’s projections, the cultivated 1.6 million hectares of land will yield 39.3 million quintals of wheat, up by nearly eight million quintals from the 2013/2014 yield.

November 18, 2014; http://addisfortune.net/articles/govt-begins-negotiation-for-wheat-supply-with-a-foreign-company/

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