Steel companies still unsatisfied



Even though the government decided to provide additional finance for the capital city housing project, steel factories who claim that they are a major victim, are unable to supply the order of the City Government of Addis Ababa Saving Houses Development Enterprise and have expressed their anxiety  since there is not new change on their side.

In the bid held early this fiscal year the city’s Saving Houses Development Enterprise (SHDE) agreed with three local manufacturers to supply 212,000 metric tons of different sized steel for housing projects that will be carried out in the year.

Recently three local steel manufacturers, C & E Brothers, East Steel and Steely RMI received billions of birr worth of steel orders for the 40/60 housing scheme. However, they complained that the enterprise was slow to receive their product even though they already had produced a major volume of the reinforcement bar and had invested a lot of money  and followed the purchase agreement.

They tried to get help from their union, the Ethiopian Association of Basic Metals and Engineering Industries (EABMEI) and from  Prime Minister Hailemariam Desalegn and other relevant government offices.

The companies claimed that they are experiencing a financial crunch because the enterprise did not collect the product on time. On November 21 SHDE wrote a letter to the three companies saying it would not be able to collect the product by the agreed upon date of December 4.

The letter added that there is a new direction in terms of budgetary issues since the enterprise started a new arrangement with Commercial Bank of Ethiopia that is working jointly on financing the housing projects.  However with the new arrangement the state owned bank is expected to release additional finance for the housing scheme, but the enterprise said it did not get more money from the bank.

Sources at the steel manufacturers told Capital that they did not yet receive a green light from the enterprise to deliver their stocks.

Teklu Beyamo, deputy head of the Enterprise, told Capital that he does not have any information about the additional finance. “Our budget was approved in the beginning of the year and  is 6.5 billion birr,” he said.

Sources at the enterprise told Capital that up to now the enterprise used only 40 percent of the budget.

The local steel industry has been suffering but their capacity has been growing surprisingly. Imported steel has been a major challenge for them, while the government has passed a decision that the housing scheme that used to use imported reinforcement would instead use local products.

Recently Ahmed Abitew, Minister of Industry, told the parliament that the government found that steel traders have been pressuring  local steel manufacturers in an organized manner to be uncompetitive in the industry.