ETHIOPIA – The Ministry of Public Enterprises (MoPE) has finally decided to privatise Assela Malt Factory and National Alcohol & Liquor Factory (NALA), both of whom have recently had their capitals raised.
Currently, the Ministry is working on evaluating the cost of the companies before taking them up for auction.
The companies have strategic importance with a very dominant market share in the liquor and beverage market. NALA is the major liquor manufacturer, accounting for over 42pc market share.
Assela Malt also satisfies 35pc to 40pc of the local malt demand whereas import covers the remaining.
“The companies are not strategic anymore as other private companies are joining the business,” said Wondafrash Assefa, communication director at the Ministry.
A month ago, the capital of both companies surged by ten fold on the basis of a regulation approved by the Council of Minister (CoM).
The new regulation increased NALA’s paid up capital from 12.2 million Br to 221 million Br. Assela Malt’s paid up capital was beefed up to 232.2 million Br, from 21.3 million Br.
The Ministry and Berhane Gebremedhin, former owner of NALA, are in dispute following the call of the latter for the return of the century old company to him.
Berhane has been calling for the restitution of the company for the past 19 years.
Five months ago, Berhane told Fortune that he was going to sue the government in an international court claiming 250 million dollars in compensation from the government.
Berhane acquired the company from its founding owner Elias Papasinos in 1976 for 50,000 dollars at the time.
But the property was nationalised during the Dergue regime with kelate, an official’s oral or written order to nationalise properties without referring relevant proclamation or any law.
Even after the current government came into power and announced the return of nationalised properties to their original owners, Berhane could not get the company back.
The government declined to return the company claiming, first, fear of monopoly in the market, and later, that an enormous amount of money has been invested in it. The claimant was then offered a compensation.
“Currently, there is no fear of monopoly as there are many liquor factories in the country,” said Wondafrash.
About 20 large and medium scale liquor factories are operating in the country.
Months back, NALA finalised a two-year old expansion project at the cost of 200 million Br. The project raised the production capacity of the company by three fold to 15,000lt a day.
During the first half of the past fiscal year, NALA reported sales of 297 million Br.
Of the factory’s total alcohol production, 96pc of it is used for medical purposes and to clean electronic equipment.
On top of that, it produces 14 types of liquor with alcoholic content ranging from 15pc to 45pc.
The other company which is set be privatised soon, Asella Malt, was established in 1984, in Oromia Regional State near Kulumsa Agricultural Research Center.
It had a 9.3 million Br capital and settled on 14.7ha hectares, aiming to produce malt for domestic breweries.
Currently, on average, it is producing 360,000qls of malt a year up from 100,000 quintals during its establishment.
During the 2015/16 fiscal year, Asella Malt grossed 111.5 million Br profit, from the total revenue of 513 million Br and sold 292,000 quintals of malt.
Gondar Malt Factory is the other malt producer in the country, having been operational in 2013.
The Board of Trustees for Public Enterprises was informed that it will receive the documents for the properties that are not going to be transferred to the buying companies, according to sources familiar with the case.
“The documents are expected to be delivered to the board in a week’s time,” said this source.
When state owned companies are up for auction, the board will hand over documents such as employee informaion, receivables and debts of the enterprises and deteriorated properties that can not be included in the bidding process.
If the two companies are transferred, the number of state owned enterprises under the administration of the Ministry will decline to 18 from the current 20.
September 3, 2017: Addis Fortune