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News: Privatization of state-owned sugar factories progresses, qualified bidders to be revealed soon

Omo-Kuraz Sugar Factory II (Photo: Ethiopia Sugar Industry Group)

Addis Ababa – More than a year after the government issued the first invitation for investors to show their expression of interest, the privatization of eight state-owned sugar factories is starting to bear fruit.

Last week, the Ministry of Finance (MoF) made an announcement stating that qualified bidders who have successfully passed the technical evaluations for the bid will be revealed by the end of this week.

According to MoF’s statement, a team of evaluators is currently reviewing the technical proposals. The findings of this evaluation will be communicated to the qualified bidders by 20 October, 2023. After that, the next step in the bid assessment process will be the evaluation of financial bids for the bidders who have successfully passed the technical assessment.

A year ago, MoF issued an invitation to potential local and foreign investors to submit their expressions of interest in acquiring up to 100% ownership in eight sugar factories. The invitation, issued in August 2022, was initially set to close on 30 November, 2022. However, the deadline was extended to January 2023.

While the identities of the bidders were not announced, a statement issued by the government in July 2023 revealed that around 20 local and international investors had expressed interest. Sources close to the matter indicate that companies such as Dangote Cement, Coca-Cola Beverage Africa, Ethio Sugar Manufacturing Industry, and Abyssinia Group of Industries are among the 20 companies that have shown interest in the bidding process.

In May 2023, the government invited bidders who had shown interest to submit a request for proposal (RFP). The original date for the RFP was slated for 03 August, 2023, but it was later extended to 05 October, as stated by the government, due to the ‘request of potential bidders’.

The Ethiopian Sugar Industry Group, which has been under the management of the Ethiopian Investment Holdings (EIH) since May 2022, oversees the operation of 12 state-owned sugar factories. These factories collectively produce 450,000 metric tons of sugar annually. Among them are the three oldest sugar factories—Wonji, Metehara, and Fincha—along with the recently constructed Kesem and Tana Beles plants. The eight sugar factories currently up for sale are Omo Kuraz 1, 2, 3, and 5, as well as Arjo Dedessa, Kesem and Tendaho.

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Since 2018, the government has been considering the possibility of revitalizing the sugar sector by putting state-owned sugar factories into operation. However, the completion of most of the newly constructed sugar factories has faced significant delays. One example is the Tana Beles Sugar Development Project in the Awi Zone of the Amhara region, which experienced about an eight-year delay in its construction completion.

In 2021, the government commenced the privatization of state-owned sugar factories following the announcement that Ernst & Young LLP had been chosen to provide guidance and assistance in facilitating the sale of these factories. AS

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