Chemical Corporation established


A new corporation responsible for the development of the chemical industry, called the Chemical Corporation, has been established under the Ministry of Industry (MoI).
The Corporation will manage state-owned chemical manufacturing enterprises that currently exist as well as any that may be established in the future. The government is interested in expanding the chemical industry for several reasons and has emphasized its importance in the Growth and Transformation Plan (GTP). One reason is that the private sector is unable or unwilling to invest in the manufacturing of chemicals because it is capital intensive, according to experts.
The other reason for the government’s involvement concerns the role that chemicals play in the economy. As a major input for other industries, the success of those industries depends on the availability of reasonably priced chemicals. For instance, the GTP expects the textile and leather sectors to boom in the coming years, and both sectors are highly dependent on chemical inputs.
Sources at the Ministry told Capital that the Corporation has already been formed and is in the process of organising its office and appointing a person to lead it.
The legal framework for the formation of the corporation has been carried out in the past fiscal year by the Ministry, but the actual establishment and organisation has started during the current budget year. In addition, one of the two state ministers recently appointed by Prime Minister Hailemariam Desalegn for the Ministry, has been assigned the responsibility for the sector’s development.
Mebratu Melese (PhD) was appointed two months ago as the new state minister for the Chemical and Construction Development division at MoI.
The formation of the corporation is also related to the clarification of the complex fertiliser project, which had previously created some confusion, as it was not clear who was responsible for it.
It is to be recalled that there was some controversy involving 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 Woreda of Illubabor zone, Oromia Regional state, 600km West of Addis Ababa. The study conducted by COMPLANT worth 12 million birr showed that around 100 million tons of coal was to be found in the Yayu area where MetEC has a construction project.
The fertilizer factory that will produce 1.5 million tons of Urea and Dap per year will vastly reduce the amount of fertilizer that the country imports every year. Before MetEC revised the feasibility study, the project aimed to produce 300,000 tons of fertilizer per annum. The new MetEC study revised the production capacity five fold.
The project, to be conducted in different phases, will also produce 20,000 tons of ethanol and 90 MW of electric power annually. This is supposed to cost close to USD 730 million at the time the report came out in 2008, but prices have likely gone up since then.
The government has formed two other corporations since the beginning of the GTP. The Chemical Corporation will be the third state corporation established in the past two years. Currently, the country has a handful of chemical producers, but lacks major chemical industries that are necessary for industrial input and other purposes. Therefore, chemicals are one of the major import items for industries, adding to the cost of manufacturing. The two corporations that were also formed in the past two years are MetEC, which is under the Ministry of Defence, and the Sugar Corporation. Other new corporations, like the Wholesale and Retailing Corporation, are expected to come into being in the coming years.