Capital Ethiopia Newspaper

MetEC outsources civil works at fertilizer plant

Teklebirhan Ambaye signs 792 mln birr contract

The state owned Ethiopian Metal and Engineering Corporation (MetEC), has outsourced some of its civil works worth billions of birr at Yayu Fertilizer Factory, to local contractors. Early this week the Corporation, which is under the Ministry of Defense, signed a 792 million birr civil construction deal with Teklebirhan Ambaye Construction PLC.
According to the new deal the construction firm will be responsible for the civil work of the first part of the Yayu factory endeavor. According to sources say, the construction company’s experts are expected to travel to the manufacturing plant in Yayu Wereda, Illubabor zone, Oromia Regional State, 600Km West of Addis Ababa, early this week to complete the preliminary work.
Sources also disclosed that other local contractors are also expected to take part in similar assignments in different sections of the fertilizer industry.
MetEC recently held discussions with 82 contractors about the subcontracted task at Yayu. After the discussions the corporation formed a consortium that included seven contractors; “15 points were set by the corporation to select capable contractors,” sources said, and contractors who meet over 70 percent of the criteria will be permitted to work on the undertaking.
About 12 years ago, the government set up a Coal Phosphate Fertilizer Complex Project Office led by Kassaye Yeshitla who studied the potential of a fertilizer factory at Yayu. For over ten years, the office conducted feasibility studies including socioeconomic impacts, geological and environmental studies with Chinese companies such as Ging Sion Explorer and China National Complete Plant Import and Export Corporation (COMPLANT). 
The 12 million birr study from COMPLANT reported that around 100 million tons of coal was found in the Yayu area.
The coal has the potential to produce 300,000 tons of Urea, 250,000 tons of Dap fertilizer, 20,000 tons of ethanol and 90MW of electric power annually. This would cost close to USD 730 million, although the report was conducted in 2008 and prices have likely gone up. 
When the study was made, however the selling price of Urea was much lower than what it cost to make it. Thus there was little incentive for the factory.
According to sources at the corporation, the total cost of the endeavor has reduced from first estimates, although the exact amount has not yet been disclosed. “The main reason for the cost minimization is it being handled by a local firm,” sources said.
Recently the government appointed a new head for the implementation office within the Fertilizer Complex Project. The new office that is managed by Kefyalew Berhanu, who served as head at Ethio-Plastic and came into the new position a few months ago, will oversee the work’s implementation.
The fertilizer factory will produce Urea and Dap and will minimize the amount of fertilizer that the country imports every year.
Ethiopian farmers started using Urea and Dap fertilizers regularly over the last ten years. The use and the amount of fertilizer are growing every year. The country is importing close to a million tons of fertilizer every year with Dap taking the major share.
MetEC is expected to undertake many large governmental projects, including part of the Great Renaissance Dam; a power project at Abay River. In addition the corporation is responsible for building new sugar factories throughout the country. The project that will rest on 129 hectare is expected to finalize in the end of the GTP. 
Ethiopian Electric Power Corporation also wants to build an energy plant in the area to generate electric power from coal.