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Eastern and Southern Africa Trade and Development (PTA) Bank approved a USD 50 million loan for Habesha Cement S.C.
Habesha initially was due to obtain a loan covering 70 percent of the total cost of its cement plant at Holleta from the Development Bank of Ethiopia (DBE).
However, Habesha faced a setback when DBE withdrew its pledge to finance the 70 percent and was finally granted only 30 percent of the total investment, according to sources.
After persistent efforts, Habesha Cement finally managed to acquire a loan of USD 50 million from PTA bank on August 22.
The loan approval was revealed at the bank’s annual meeting held from 9th-13th here in Addis.
Admasu Tadesse, President and CEO of PTA, who said the bank is looking into financing several projects in the country, announced the approval of the loan for Habesha at a signing ceremony of another loan agreement with Ethiopian Airlines. Upon the latest agreement, Ethiopian Airlines will acquire a loan worth USD 22 million from PTA bank for its housing project initiated back in 2009 and started in 2011.
The loan approval is said to put Habesha back on track to begin construction of its project. “The loan approval by the PTA enables Habesha to come back to track, if not saving the two years wasted with the DBE,” Mesfin Abi (Eng.) CEO of Habesha, told Capital.
Habesha filed a loan request worth USD 60 million with PTA bank in January, which PTA approved in February. However, Habesha made a loan request adjustment reducing the amount of money it was seeking from the bank by USD 10 million, as it had other local banks that pledged to loan it money, according to Mesfin.
PTA approved Habesha’s request for the second time and an agreement was signed between the two on August 22, according to the CEO. “They are very fast in responding and committed to serve their clients,” Mesfin stated in appreciation.
“That, among others, is the reason which forced us to choose them over other banks,” he told Capital.
The approved loan has yet to be registered by the National Bank of Ethiopia (NBE).
“We will start the implementation immediately after the registration at the NBE and it will take us two years to complete the plant and commence operation,” said Mesfin. But he isn’t sure when the NBE will complete the registration of the loan.
Habesha’s USD 130 million cement plant, located in Holleta, will have a production capacity of 1.4 million tons a year.
The company has more than 16,500 shareholders. Its subscribed capital has reached 176 million birr, which is totally paid up, with its major shareholders being Industrial Development Corporation (IDC) and the South African firm Pretoria Portland Cement (PPC) Company Ltd.
PTA is a COMMESA bank but its membership is open for any non COMMESA state. Ethiopia owns 10 percent of the bank’s shares, making it one of the biggest shareholders. China has six percent of the shares but wants to increase its stake in the bank, according to the president.
The president said his bank has been working with Green Coffee Agro Industry, the Leather sector, Ethiopian Airlines etc.. However, the amount of money it has extended in loans hasn’t been very large, he said. “It was maybe a total of USD 20 or 30 million in the past five to ten years,” he explained. So, concluding a hundred million dollars worth of transactions in the country over the past year represents a significant departure from the past. The bank, which has USD 2 billion on its balance sheet, also reveals its growing appetite to finance projects in the country. “There’s room for several hundreds of million dollars financing to come in the months and years to come ahead.”
Member countries of the bank include Ethiopia, Eritrea, Djibouti, Kenya, Sudan, Burundi, Comoros, China, Democratic Republic of Congo, Egypt, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Tanzania, Uganda, Zambia, and Zimbabwe.