Due to its exceptional performance, the logistics giant Ethiopian Shipping and Logistics (ESL) is compelled to purchase four medium-sized vessels as soon as possible under a lease finance agreement.
The company, which achieved incredible success in the recently concluded fiscal year, stated that it has proposed buying six vessels, including two brand-new ones, to its board, chaired by Minister of Finance Ahmed Shide.
The CEO of ESL, Berisso Amallo, stated that the company’s success expectations for the current year depend on the arrival of more vessels.
“In order to meet the target set for the current budget year, we urgently need more used vessels,” he told Capital.
According to the strategy, ESL, which is the sole deep-sea vessel operator on the continent, aims to acquire four pre-owned vessels within the budgetary year to enhance the lucrative cross-trade market segment for the generation of hard currency in the region.
The ambition to increase the size of ESL’s commercial fleet by adding midsize vessels is not new.
The government has given the state-owned logistics giant the go-ahead to purchase two brand-new altramax ships, bringing its total number of ships to twelve by the midterm.
About two years ago, the effort to start building two vessels was initiated.
However, the project has been delayed by the state-owned Commercial Bank of Ethiopia’s delay in allocating foreign currency, despite the fact that the company hired Xiangyu, a Chinese company that currently leads the global shipbuilding market, through an international bid for the construction of the ships.
The project is expected to take at least two years; therefore, in order to meet the increasing demand for the cross-trade service in the near future, the firm has set a goal to purchase secondhand midsize vessels.
The CEO said, “We have presented the proposal to purchase six vessels, including the two brand-new ships, but the four are needed urgently.”
The CEO said that the company will purchase two brand-new ultramax bulk carriers with a capacity of over 63,000 DWT, two used multipurpose vessels with a capacity of 61,000 DWT, and two used container carriers with a carrying capacity of up to 4,000 twenty-foot equivalent units (TEUs) containers.
He expressed his optimism that the government will make a decision shortly.
Wondimu Denbu, ESL’s deputy CEO for corporate services, informed Capital that a lease finance scheme will be implemented to purchase the four secondhand midsize ships.
Wondimu clarified, “We don’t need the government guarantee to purchase the four vessels because we will be leasing the money ourselves.”
“The two brand-new bulk carriers will be funded from local sources,” he added.
Five installment arrangements will be used to pay for the construction of the two brand-new ultramax bulk carriers.
The first payment will be made at contract signature, and the remaining sum will be paid during the steel cutting, keel laying, launching, and delivery phases.
ESL currently operates one ultramax bulk carrier and nine handy-size multifunctional carriers.
