Capital Ethiopia Newspaper

Hibir secures 6,183hct for sugar

Hibir Sugar Share Company becomes the first local sugar Company to receive a large plot of land,  6,183 hectares from the Federal Ministry of Agriculture (MoA) near Tana Beles river basin in Amhara National Regional State, Awi Zone, Jawi Woreda 610Km north of Addis Ababa.
Because the 6,183hct is over the 5,000hct limit stipulated by the recent investment proclamation, the land must be transferred by the MoA. Smaller plots are handled by regional states. Minalachew Simachew Promotion and Marketing Manager of Hibir Sugar Company said that the plot will be leased for 40 years at a rate of 533.30 birr per hectare. 
Hibir chose the plot in June 2009 for its suitability for irrigation. It is near the 460 Mega watts Tana Beles Multi Purpose Hydro electric power plant and the temperature is appropriate for sugarcane. It also is very close to the Bahir Dar-Woldiya-Djibouti port route.
To begin with white sugar will be produced but eventually the factory will diversify it to ethanol production and coefficient electric power generation.
Minalachew further said the project is expected to take three and a half years to finish including irrigation and factory erection. It will have an initial capacity of 4,400 tons of cane per day (TCD) with an eventual goal of 6,600 TCD when completed. The 6,183hct plot of land that Hibir took hold of is from an initial 17,400hct that was allocated to the Brazilian company BDFC several years ago for sugar development. It is now  re-appropriated by the government from the company because it failed to develop it.
The Brazilian firm argued that the international financial crisis had affected it and asked to be given more time to develop the sugar project with Hibir Sugar S.Co. But the argument was not accepted. Hibir Sugar also had discussions with other foreign companies but negotiations failed on questions of majority share ownership, Capital learnt. 
The remaining 11,217hct plot has been incorporated in the government’s Tana Beles Sugar Development Project encompassing two sugar factories and 50,000 hectares.
The investment permit for the plot had taken Hibir one year to finish after completing its study which also had affected its campaign for selling shares.
Minalachew also said the company will have a general assembly meeting this Sunday to discuss the previous Ethiopian fiscal year’s 2011/12 job report as well as the audit report. The first works of the sugar project will include surveying and seed canning.
Hibir plans to ask for a 70 percent equity loan from the Development Bank of Ethiopia once it has completed its share drive.
Hibir Sugar was established in June 2009 with 600,000 birr working capital and 30 founding shareholders and today it has about 5,500 shareholders and a working capital of 90 million birr.
According to Bizualem Bekele Land Administration team coordinator at the Ministry of Agriculture, the plot of land was given to Hibir after an analysis of the company’s capacity and the area’s suitability. MoA also looked at the company’s ability to raise 30 percent equity for the project from its own coffers.
“Sugar investment is an expensive endeavor with it costing at least 300,000 birr or more per hectare. Thus there isn’t a rush of companies willing to invest like in other sectors,” Bizualem told Capital. Still a couple of other companies are willing to invest in sugar on a large scale. Hibir is obliged to develop only one tenth of the stated plot in the first year due to mobilization and preparatory steps but it’s required to finish the project in five years.
Hunan Dafen Yuan Limited a Chinese company has taken a license from MoA in July 2011 to develop 25,000 hectares of land in the western Gambella region of Ethiopia.
Currently there are three state owned sugar factories in Ethiopia producing about 300 thousand quintals of sugar every year but because of the overwhelming public demand the Ethiopian Sugar Corporation imports between 600 thousand and 1.8 million quintals of sugar annually.
However the state owned Ethiopian Sugar Corporation in order to offset the need for imported sugar has planned to construct 10 new sugar factories as per the five year Growth and Strategic Plan (GTP).
It’s also carrying out expansion projects on the existing sugar factories like Wonji/Shewa and Finchaa and it plans to finish in the current fiscal year 2011/12.