The board of Privatization and Public Enterprises Supervising Agency (PPESA) has approved the privatization of seven enterprises. Five of the seven enterprises will be transferred to Sheik Mohammed Al-Almoudi’s firms for the total amount of 1.3 billion birr. Meanwhile the bid for Awash Winery has been disqualified for a fourth time.
PPESA’s board is chaired by Aster Mamo, Government Whip at the House of Peoples Representatives, with a ministerial portfolio. It approved the sale of Upper Awash Agro Industry, Ethiopian Coffee Processing and Warehousing Enterprise, Kality Metal Factory, Bilito Siraro Agricultural Development Enterprise, Abobo Agricultural Development Enterprise, Gojeb Agricultural Development Enterprise and Ethiopian Marble Industry, for the winning bidders.
The Ethiopian born Saudi billionaire Sheik Mohammed Al-Almoudi’s firms have been able to collect four state farms and one mining industry for the total cost of close to 1.3 billion birr. The other companies that won the bid of the two enterprises are Tsehay Industrial Share Company and Morrell Agro Industrial, a US based firm.
According to the bid document that opened a month ago, Al-Almoudi’s giant firm MIDROC offered 830 million birr to buy Upper Awash excluding the vineyard, the major orange production farm in the country located in southeast of Addis Ababa. Based on the board approval MIDROC will pay the initial 35 percent when it secures the enterprise and the 65 percent of the payment shall be effected over five years.
Saudi Star Agricultural Development, the youngest agricultural firm of Al-Almoudi has also secured Abobo Agricultural Development Enterprise at the cost of 90 million birr on a 45 percent first payment and the rest in four and half years. Abobo is a cotton farm located in Gambela regional state where Saudi Star has already begun its project.
For the acquisition of Ethiopian Coffee Processing and Warehousing Enterprise Al-Amoudi’s Horizon Plantation offered the largest amount of 228.2 million birr. It proposed to pay 50 percent up-front and the rest within two and half years. The next bidder Ambassel Trading Company, an endowment fund affiliated with the ruling Amhara National Democratic Movement (ANDM), had offered only 135 million birr for the coffee enterprise and as a result lost the bid.
Horizon Plantation has also won the bid for another state farm, Gojeb, at the cost of 35.1 million birr with 50 percent upfront and the rest to be paid over two and half years. Gojeb located in western Ethiopia at Gojeb Valley is a coffee farm administered under the Coffee Plantation Development Enterprise (CPDE). The other coffee farm under CPDE, Limu Coffee Plantation is expected to be on the bid table before the end of this budget year.
The billionaire’s mining firm, National Mining Corporation Private Limited Company, has also won the procession of Ethiopian Marble Enterprise at the cost of 110 million birr. National Mining will pay the full amount before it takes over the marble industry located in the capital.
PPESA’s board has also approved the deal of Kality Metal Factory for Tsehay Industrial Share Company at the cost of 555.5 million birr. The company has proposed to buy the metal factory with 35 percent upfront payment and the rest to be paid in five years.
The board’s approval however is set on a precondition. According to Wendafrash Assefa, public relation head of PPESA, Tsehay has to provide some sort of assurance for the 65 percent balance payment, which is expected to be made within five years. “In addition the company should have other investments in the country to evaluate its capacity to pay the balance,” Wendafrash said. “Or else Tsehay Industrial Share Company has to pay the full amount to secure the metal enterprise, if it can’t submit the preconditions,” he added.
The sale of Bilito Siraro farm, which produces cereals under Awassa Agricultural Development Enterprise, is approved as well on a precondition for the US based farm Morrell Agro Industrial, who offered to pay 6 million dollars (103.2 million birr) with 50 percent upfront payment and the balance to be paid in three and half years. “The American firm must have other investments in Ethiopia to acquire the state farm,” the public relation head said. According to the agency regulation, foreign firms have to have other investments in the country to benefit from a differed payment option, unless the company should pay the full amount to secure the deal. The US company has introduced dry farming to Ethiopia about two years ago and has set up offices in the country that work in agriculture.
Elsewhere, the bid for Awash Winery has been canceled for the fourth time as it did not fetch the expected price as compared to the floor price of 397.4 million birr.
For the acquisition of Awash Winery, Mulugeta Tesfakiros and Tigist Deneke had jointly offered 202 million birr with a 35 percent upfront payment and the remaining 65 percent to be paid over five years period.
The state winery has two wineries in capital and Sebeta, 25Km west of Addis. It does not have its own vineyard.