It has been announced that seven huge state-owned factories offered for sale by the Ministry of Finance will be handed over to investors who compete and win in international auctions despite the huge debt they have borrowed from the Commercial Bank of Ethiopia and foreign governments.
Ministry of Finance, August 13, 2014 In his statement, he mentioned that the government is doing various incentives and reforms to increase the participation of the private sector in the economy. He also announced that one of the efforts being made is to support the participation of the private sector in the sugar industry and make reforms that will help this.
In this regard, he mentioned the government’s decision to transfer sugar factories owned by the government to local and international investors, and issued an international call for investors who want to participate in the auction to transfer the factories to submit an Expression of Interest.
There are eight state-owned sugar factories that have been decided to be sold, namely Omo Kuraz 1, Omo Kuraz 2, Omo Kuraz 3, Omo Kuraz 5, Arjo Dedesa, Kasem, Tana Bals and Tandaho sugar factories.
The Ministry of Finance has announced that there are currently 12 state-owned sugar factories producing a total of 450,000 metric tons of sugar per year.
In the year In 2021/2022, Ethiopia’s sugar demand per capita is estimated at 11 kilograms, and accordingly, the country’s total annual sugar consumption is 1.3 million tons. This demand for squash per capita is expected to grow by one percent every year until 2029/30, according to which Ethiopia’s total annual sugar demand will be at least 1.7 million tons.
As the factories in the country are not covering the domestic demand, the Ethiopian government states that it will make purchases from abroad to meet the country’s annual sugar demand.
For example, in In order to meet the domestic demand for sugar in 2020, the government has announced that it will spend 153 million dollars and not buy sugar from abroad. In the year The information indicates that it has purchased 100,000 metric tons of sugar in June 2022. The data indicates that India, Brazil, United Arab Emirates, Brazil and South Africa are the main countries where sugar is bought for the government.
Therefore, if foreign companies enter Ethiopia’s sugar industry, they will at least get their hands on a market that can meet Ethiopia’s annual sugar consumption deficit.
However, he pointed out that there are convenient markets in the East African countries that are Ethiopia’s neighbors as well as in Europe, and most of them are looking for Ethiopian sugar.
For example, in In 2021, the markets of Kenya, Somalia, South Sudan, Sudan and Djibouti had a deficit of 3.1 million tons of sugar production, according to the Ministry of Finance.
He also mentioned that the European Union and the Gulf countries had a production deficit of 2.24 million tons and 6.12 million tons respectively.
As a result, the Ethiopian government announced that foreign and local private investors who buy the eight sugar factories that they intend to sell will have a ready market that can supply 11.46 million tons of sugar per year.
It is said that the eight sugar factories offered for sale will be transferred to private investors free of debt. Ethiopian Reporter Reporter
Therefore, he announced that interested investors can buy Ethiopian sugar enterprises individually or in partnership.
The same information mentions that most of the sugar factories offered for sale are newly built, and all the factories have sufficient water and the best conditions for sugarcane cultivation.
Factories have a total of hundreds of thousands of hectares of land, and the private companies that will be the owners of the factories will compete for tenders and make long-term leases and payments for the land.
However, the information of the Ministry of Finance reveals that the domestic and foreign debts owed by the factories will be freed and transferred to the buyers.
Although this information does not indicate the amount of debt the factories have and how they can be transferred free of debt, another government document seen by the reporter indicates that the debts of the factories will be transferred to the Liability and Asset Management Corporation (Liability and Asset Management Corporation).
The government’s original plan was to sell all 13 sugar factories (including the Wolqait sugar factory in Tigray region), and to change this into action, it had the total assets and assets of all factories estimated by an independent audit company.
According to the documents obtained by the reporter, an English company called Booker Tate was hired to carry out this assessment of wealth and property. The report was completed a year ago and submitted to the government.
The total assets and property of the 13 sugar factories in the year 2010 It is estimated to be 88 billion birr till 2019.
However, during the same period, the total domestic debt of the sugar factories was 81.6 billion birr, excluding interest, and the total foreign debt of the factories during the same period was 2.1 billion dollars, excluding interest.
Therefore, the total domestic and foreign debt of the 13 sugar factories will be more than 190 billion birr at the current foreign exchange rate. However, after this estimate was made, the government spent more on sugar mills and made efforts to improve the quality of construction of selected mills, so it can be understood that it will cause a change in the previous amount of wealth.
“The government decided to sell these factories not to pay back the debt, but to sell them as they are to meet the demand for domestic sugar production and to capture the wide market in East Africa and Europe.”