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CBE to approve loan
The giant Dutch brewery, Heineken Brewery NV, has officially commenced the construction of its new beer plant at Kilinto, Akaki, in the eastern outskirts of Addis Ababa.
The new brewery, which will be completed in the coming 18 months, requires 2.2 billion birr and will produce Heineken beer brands as well as local beers, for distribution throughout the country.
A few months ago, Heineken submitted a loan application of around 3 billion birr to the state-owned Commercial Bank of Ethiopia (CBE) for the construction of the new beer plant and expansion projects of the other two breweries Harar and Bedele it bought in 2011.
At the official construction launching ceremony held Thursday, February 28, in the presence of Lilianne Ploumen, Minister of Foreign Trade and Development Cooperation of the Netherlands, Johan Doyer, General Manager of Heineken Breweries SC, said that the plant will produce 1.5 million hectolitres of beer per annum.
Heineken took a stake in the Ethiopian beer industry by purchasing a couple of local breweries through the Privatization and Public Enterprises Supervising Agency (PPESA) at a total cost of USD 163.4 million, and has realized its plans to erect a large brewery at Kilinto at a cost of 100 million Euros. It has named the project ‘Addis Green Field’. Doyer said that Heineken will start producing its international brands from its new production centre in eastern Addis Ababa. He also noted that, in addition to Heineken and Amstel, the Addis Green Field plant will produce the Harar and Bedele brands.
It was stated that the actual production capacity of the new brewery will be three million hectolitres per annum, though in the first phase it will produce only half of that.
Asked whether their loan request from the state bank was approved, company officials declined to comment. Heineken’s Bedele plant needs 400 million birr for expansion and Harar brewery requires 350 million birr, which is apparently included in the loan request to the state bank.
According to our sources, the bank has given the green light for the approval of Heineken’s request, but has still not disclosed the amount. Currently, work on the project has already commenced, performed by a local contractor, Rama Construction, which has become one of the biggest contractors in the building sector. Rama is also constructing the biggest conference facility at the UN Economic Commission for Africa (UNECA).
According to the feasibility study conducted by Heineken, the production capacity of the two breweries, Harar and Bedele, will each grow by 150,000 hectolitres per annum from current production. Presently, the annual production of the two breweries is 300,000 hectolitres each.
Bedele Brewery, situated 483Km west of Addis, is quite popular for its three brands; Bedele, Bedele Special and Bedele Choice. Harar Brewery, located in the historic city of Harar, 525km east of Addis, also produces three brands of beer: Harar, Hakim Stout, and Harar Sofi, a non-alcoholic beer.
When Harar Brewery was under PPESA, it proposed projects for expansion, but the plans were not implemented due to lack of capital. The Addis Green Field project which Heineken now turned into reality was originally studied by Harar some seven years ago, when the brewery was controlled by PPESA. Harar’s expansion study was initially planned to be erected around the Dukem area, on the eastern outskirts of Addis. According to the study, the new beer plant would have produced canned beer, which is currently not produced in the country.
When built, Heineken’s beer plant will be the second largest brewery in Addis Ababa, with BGI Ethiopia retaining its top spot. BGI Ethiopia produces the popular beer brands St. George, Amber and Castel.
Meta Abo brewery, located 26Km west of Addis, in the town of Sebeta, is the other major beer maker close to the capital and is currently owned by Diageo, after the London based company bought it at a cost of USD 225 million. Diageo is already undertaking an expansion of its holdings worth USD 50 million.
In another news, Heineken, the Agricultural Transformation Agency (ATA) and the Ethiopian Institute of Agricultural Research (EIAR) signed a Memorandum of Understanding (MoU), which marks the start of a 4-year malt barley production programme, expected to improve the quality and quantity plus the end-to-end process of growing malt barley in Ethiopia.
The partnership shares the goal of improving the income of smallholder barley farmers by improving access to markets, input, credits and information.
The basis of the programme is a public-private partnership between the government of the Kingdom of the Netherlands, Heineken and its NGO partner the European Cooperative for Rural Development, with ATA and EIAR.
This public-private partnership aims to improve national self-sufficiency by substituting 20,000 metric tons of imported barley by locally produced barely in Ethiopia. During the signing ceremony, officials of the three foreign partners said that 20,000 farmers will be the beneficiaries of the programme.