The Ethiopian government is to form a Chemical Corporation that will be responsible for managing governmental chemical and related industries that come to fruition in the coming years.
The main idea for the formation of the new corporation that will be under the Ministry of Industry is related with instigation of the complex fertilizer project.
Tadesse Haile, State Minister of Industry, told Capital that the fertilizer complex will be controlled by the Chemical Corporation that is expected to be set up before the end of the current budget year.
The State Minister said that studies have been conducted to establish the new corporation. “We expect the government will ratify its formation very soon,” Tadesse added.
Previously, controversy was brewing between the Ethiopian Metal and Engineering Corporation (MetEC) and the Privatization and Public Enterprises Supervising Agency (PPESA) both state owned institutions, over the Yayu fertilizer project. The project is located in Yayu Wereda, Illubabor zone, Oromia Regional State, 600Km West of Addis Ababa.
The disagreement was over who is responsible for the project. Sources said that the disagreement arose after PPESA, a responsible body for public enterprises, wanted to oversee the operation.
The Metal Corporation, a collection of industries which used to cater to the Ministry of Defence (MoD), agreed with the Ministry of Industry during the last fiscal year to take charge of the endeavour. According to sources, MetEC argues it should be in charge and PPESA is overstepping its mandate.
“The agency is saying that they are responsible for signing the contract agreement with the corporation for the project,” sources explained.
“Even if PPESA has a mandate to control public enterprises MetEC will sign the contract deal with MoI for this specific project, and the newly formed chemical corporation will follow the rest of the projects and the commissioning in the coming years,” Tadesse said.
Recently PPESA appointed a new head, Kefyalew Berhanu, previously manager at Ethio-Plastic, to implement the project within the Coal Phosphate Fertilizer Complex Project Office. However he resigned after only four months before things could get underway, according to sources at the project office and PPESA wants to appoint a new manager to oversee the endeavour.
Experts close to the issue say the fertiliser complex should be established under an independent entity. “This is a huge investment so it should be managed under a neutral party that answers to the head of state,” experts told Capital.
The billion birr project was overseen by the Coal Phosphate Fertilizer Complex Project Office, which was established about 12 years ago. The project office had been managed by Kassaye Yeshitla until Kefyalew took over and the name was changed to Fertilizer Complex Project.
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 design work of the project was conducted by MetEC last year after the two parties – the Ministry of Industry and MetEC – agreed to realize the project.
The 12 million birr study from COMPLANT reported that around 100 million tons of coal is found in the Yayu area.
The fertilizer factory that will produce 1.5 million tons of Urea and Dap per year will minimize the amount of fertilizer that the country imports every year. Before MetEC revised the feasibility study the project was aimed to produce 300,000 tons of fertilizer per annum. According to the State Minister, the new MetEC study revised the production capacity up to five fold.
The project that will be conducted in different phases will also produce 20,000 tons of ethanol and 90MW of electric power annually. This would cost close to 730 million dollars, although the report was conducted in 2008 and prices have likely gone up.
Ethiopian farmers started using Urea and Dap fertilizer regularly over the last ten years, increasing foreign exchange expenditures. The use and the amount of fertilizer is growing every year. The country is importing close to a million tons of fertilizers every year with Dap taking the major share.
The corporation, under the Ministry of Defence is expected to undertake many large governmental projects, including part of the Grand Renaissance Dam; a power project at Abay River. In addition the corporation is responsible for building the new sugar factories throughout the country.
Ethiopian Electric Power Corporation EEPCo has also an interest in building an energy plant in the area to generate electric power from coal.
The government has formed two corporations since the beginning of the GTP. The Chemical Corporation will be the third state corporation formed in the past two years. Currently the government has some chemical industries but there are not major chemical industries in the country. Due to that chemicals in one of the major import items for industries input and other purposes. In this GTP the government has planned to manage two chemical industries on JV. The two corporations that were formed in these past two years are MetEC, which is under the Defence Minister and Sugar Corporation. EEPCo, Ethiopian Railway Corporation that is handling the railway projects are the other corporation established. Other new corporations like Wholesale and Retailing Corporation are expected to be formed in the coming years.