The Metal and Engineering Corporation (MeTEC) has signed a Memorandum of Understanding (MoU) with Hiber Sugar SC
enabling the latter to carry out the construction of a sugar factory worth USD 250 million.
The corporation signed the MoU with Hiber Sugar SC on Tuesday October 1, 2013 to carry out the company’s sugar factory which is located around the Tana Beles Basin. With this deal Hiber, established in 2009, has become the first private company to sign a deal with MeTEC.
Since its formation three years ago MeTEC, the state owned metal industry complex, has undertaken several large government projects including the Grand Renaissance Dam hydro power project with generating capacity of 6,000 MW.
Brigadier General Kinfe Dagnew, director general of MeTEC, told Capital that Hiber Sugar has become the first private company to reach a deal with the corporation. He said that the corporation’s plan is not only to carry out governmental projects but also desires to handle private companies’ investments as well. “The MoU will attract other private companies to work with MeTEC,” he added.
Some companies are already negotiating with MeTEC for their project to be executed by the corporation, according to Kinfe.
Tuesday’s MoU indicates that MeTEC will undertake Hiber’s sugar project which plans to implement a capacity to crush 12,000 tons of sugar cane per day in two phases.
A technical committee representing the two parties will conduct detailed studies of the project during the first six months and accomplishment period will be identified after an evaluation is conducted.
“We have agreed to construct the factory at a reasonable price compared to the offers made by other foreign companies,” General Kinfe said. According to him, the project will consume 250 million dollars, which is by far lesser than offers from other companies.
Hiber Sugar S.C, established in 2009 with over 6,000 shareholders, was unable to quickly begin the project due to lack of sufficient capital. The company has since been able to collect only 100 million birr from shareholders, a mere part of the total investment, which is capital intensive.
State owned financial institutions have a 70/30 loan scheme for private companies. Menalachew Semachew, acting director general of Hiber, said that the company now has several options to expand its capital.
“We are now negotiating with local and foreign banks to secure a loan,” he said. He added that foreign companies are also approaching them to invest in a joint venture. “We will settle in a JV if we finalize a deal with an appropriate company.”
He said that in the coming month the share company will start a sugarcane seed plantation on 294 hectares, with a view of expanding to 2,940 hectares in the coming few years.
The company has secured 6,183 hectares of land around Tana Beles Basin, in Jawi Wereda, Awi Zone of Amhara National Regional State.
Until the sugar plant is completed, the company plans to supply sugarcane to the Ethiopian Sugar Corporation, a state owned sugar enterprise that has several sugar projects of its own as well as three sugar processing plants.
MeTEC, a state-owned engineering complex and that directly reports to the Prime Minister, was established in June 2010 with 10 billion birr capital amalgamating different governmental metal and engineering enterprises.
The corporation is engaged in the production of machineries, generators and transformers, construction and agriculture machineries, vehicles and other metal engineering equipments.
Currently, the corporation is supplying materials for government mega projects including electric and sugar projects.