The national council for the coordination of public participation for the construction of Grand Ethiopian Renaissance Dam has asked Ethio telecom for the prolongation of the third round of fundraising drive to support the construction of the mega hydro dam.
On Thursday April 22, 2021 Ethio telecom handed over 122.5 million birr to the Ethiopian Electric Power which was collected through the 8100 short SMS to support the construction of the great Ethiopian renaissance dam.
Through its third-round fundraising Ethio telecom has collected 122,467,676 birr within one year starting from March 2020 up to March 2021 through short SMS from its customers.
A remarkable aspect of the project is that it is 100 percent funded locally, through the platform that Ethio telecom provided via the 8100 short SMS for three rounds starting from August 2014-March 2015 (first round), from October 2015 to April 2016 (second round) and the last round from March 2020 to March 2021.
In its three rounds Ethio telecom has collected more than 252 million birr of which 80 million was in the first round, 49 million in the second and the rest in the third round.
The Grand Ethiopian Renaissance Dam (GERD), is around 70% complete and is expected to need 5 billion dollars to be completed and promises to provide much-needed electricity for Ethiopia’s 105 million people.
Even critics of the Ethiopian government have the same stand with the government when it comes to Ethiopia’s Grand Renaissance Dam, which is a testifying factor to its importance.
The CEO of the telecom company, Freihiwot Tamiru, gave the cheque to Ashebir Balcha, CEO of the state-run EEP, and head of the Grand Ethiopian Renaissance Dam (GERD) project.
Of course, this initiative was as a lack of international finance for projects on the Blue Nile River due to Egypt’s alleged persistent campaign to maintain presumed hegemony on the Nile water share which then forced Ethiopia to finance the project from within.
“Since the beginning of the construction, Ethiopians have contributed a total of 15 billion birr via various ways including buying Dam bonds and direct support,” said Aregawi Berhe, head of the National Council for the coordination of public participation for the construction of GERD, adding, “Since the construction is fully funded by the locals it is a reflection of our independency and sovereignty.”
Aragawi also said Ethio Telecom has accepted his office’s request for the continuation of the fundraising campaign via SMS-8100 for the next six-month.
GERD fundraising set to continue
ESLSE to unlock shortages by purchasing new containers
The Ethiopian Shipping and Logistics Services Enterprise (ESLSE), which has been facing hindrance of cargo boxes, is on the process of doubling its owned containers number to tackle the shortage. Meanwhile, public enterprises and government offices are alleged for the hoarding of its property.
The logistic giant and sole multimodal operators, ESLSE disclosed that it is on the process of buying new containers to expand its containerized cargo operation.
Roba Megersa, CEO of ESLSE, told Capital that there is a shortage of containers for different reasons including the current global challenge that is related with COVID 19 which has slow down the global economy.
He said that in order to recover from the challenge and boost its capacity, ESLSE is on the process to procure 3,000 twenty feet containers (TEUs). “As we all know, the Ethiopian procurement process and access to foreign currency has its own complication but we are trying our best to added new containers,” he remarked.
The Bid was floated on March, 2020 and 22 companies bought the bid document and in the end seven of them participated.
Wondimu Daba, Deputy CEO for Corporate Service at ESLSE, told Capital that the bidding process has passed three processes, namely; preliminary, technical and financial qualifications.
On the three evaluating steps, five companies had met the preliminary step and two of them passed the technical specification to compete on the financial evaluation.
“SMC, the company from China and coming via Ethiopian agent Tsemex Global Enterprise, has qualified on the financial offer that which we can’t disclose the amount since the processes is yet sealed,” the Deputy CEO said.
Wondimu said that the procurement process has been delayed following the bid winner compromising to deliver the product with the reason mentioned as the price increment on steel products, “we have been under discussion with the company to deliver the product as per the award, while it is unable to meet the commitment.”
He added that the enterprise had given ample time for the company to come up with the required result, “because of the delay the enterprise has possessed the ten percent performance bond that the company gives as a guarantee.”
Wondimu reminded that despite the award being given on August 20, 2020 some delays has occurred in relation to the approval of the letter of credit.
“Now we are on the process of developing another round bid document to call bidders for the second round due to the failure of first procurement process,” he said updating on the status regarding the procurement of 3,000 containers.
The new bid is expected to be floated in the first week of May.
Container shortage
In relation to the COVID 19 pandemic and lockdown, the global container shortage has become a challenge for the logistics sector, even though Ethiopia is not under lockdown because of the coronavirus the sector is affected by clients, who hoard containers.
The number of ESLSE containers or others that was managed on their behalf was controlled for years by clients like the infamous METEC.
Roba stated that there are very huge amount of containers hoard by public enterprises.
“We don’t know how to retrieve the property and some of them may not provide service. The only thing we shall do is cut the demurrage, but when we do that we have to settle the depreciated value (DV),” Roba said.
Most of the containers that are on the hand of METEC for years are leased and have the DV settlement. Partner shipping lines are expecting the DV from ESLSE, which we are also looking from METEC. “It has become strange since the settlement shall take huge amount of foreign currency,” he added.
Private clients are taking containers on deposit modality, while METEC took the hundreds of containers that are stored in different sites like Yayu Fertilizer project and other areas without similar guarantee that accrued the settlement amount.
According to the CEO, similarly there are still other public institutions and enterprises which are not returning containers on time.
He said that the container management in the country is very complicated. “For instance; meanwhile the dry port facility is owned by ESLSE, Customs Commission act like it owns and controls the containers. The Commission is using the containers as warehouse for staffed cargos and if it sold out the goods on auction it took the major share for itself, while ESLSE is supposed to settle the container demurrage,” he added.
Roba explained if ESLSE delayed to return the containers it may affect its relation with partners.
“With all this problems the movement of project cargos, COVID 19 related goods and basic commodities that included on the containerized cargo are maintained in good hand, while the containers shortage still affects,” he added.
“Meanwhile, currently, we have maintained a direct regular fleet to Chain that is weekly with MSC, and expanding lifting capacity at ports; the container constrain has become incident. Meanwhile, we have surpassed the previous containers cargo handling in terms of volume. The impact is not small and it forced us to meet 85 percent of the target,” he amplified.
Currently, ESLSE has about 2,940 containers with two common sizes of twenty or forty feet; of which 2,398 twenty feet containers (TEUs), 184 forty feet high cube (HCs) and 358 forty feet general purpose (GPs) containers.
Besides owning containers with different size, ESLSE is leasing containers as the business trend in the logistics sector. Based on that, it currently manages 49 TEUs and 500 HCs on lease arrangement.
Assessing the loop and loopholes of the wheat market
The highest price ever has been put on offer in the latest safety net wheat international tender that is facilitated by the Public Procurement and Property Disposal Service (PPPDS), while experts in the sector express that the volume offered on the bid that was opened on Tuesday April 20 morning is lesser than the rate in the global market.
On the 30,000 metric tons of wheat procurement process PPPDS manages on behalf of the Food Security Coordination Directorate of the Ministry of Agriculture, two companies have offered their price in two lots. However, about seven companies had bought the bid document.
Promising International, which is not new for such tenders, has given similar USD 325.75 per ton for the two lots that have 15,000 metric tons each and transported to Adama and Kombolcha warehouses under CIP, which is a scheme supplier which manages the whole process to transporting the grain from the loading port to buyer’s warehouse.
According to the offer of Promising it has added additional USD 697,500 for the consignment to the first lot, which is delivered to Adama and USD 592, 500 to Kombolcha. It means Promising offered additional USD 46.5 per ton for the first lot that makes the total price USD 372.25, and for Kombolcha, the second lot, an additional USD 39.5 per ton that hikes the total cost to USD 365.25 per ton.
The other bidder Falcon Bridge Resources, a UAE company, offered USD 360 per ton for the first lot for the grain to be transported to Adama and USD 353.5 per ton to Kombolcha warehouse.
Totally, Promising offer was USD 11.06 million for the supply of the wheat that would be from the port of origin of countries at Black Sea, UAE or India, while Falcon’s total offer was USD 10.7 million and the port of origin is Black Sea countries and UAE.
On such kind of wheat bid, the offer from Promising is the highest ever for the country, according to experts on the sector, while they argued that it is not big compared with the latest global market.
“The offer is lower compared with the international price that is skyrocketing since the global pandemic, COVID 19 occurred. I feel that the bidders may think to compromise on the quality, which would not be acceptable if it is against the bid quality specification,” one of the sector experts who closely follow the case told Capital.
The other sector actor who did not participated on the current bid said that the price at the global market is reaching up to USD 400 and in comparison, the current offer is lower, “I fear the bidders may retreat like the experience we see in the past almost two years.”
Both of them, who declined to be identified, blamed the government for involving on such huge unnecessary expenditure. The current bid that is conducted through international competitive bidding under the procedures specified in the World Bank’s Guidelines and financed by the World Bank and its partners will be distributed under safety net program via Ministry of Agriculture. It is recalled that about 319 woredas in the country are regularly included on the wheat safety net package.
By reminding the annulled bids in the past, experts argued on the ability of government or partners to cover the cost with regards to the country buying products before such price hikes occur globally.
Recently, it has been reported that to fill the gap of the grain demand and supply, the government has been engaged on direct procurement that costs about USD 450 per ton for the import of half a million metric tons of wheat.
Regarding, the food security following the pandemic occurrence, countries have shown high demand to procure food items like wheat, boosting the demand of the grain.
Black Sea countries that are major producers and exporters of the grain and other producers have put in-place a quota revising prices every time, which contributed to the hike of the price.
“The delay to buy the product last year is making us pay the price now that there is a spike in cost of wheat and its products. The country will continue paying the cost since the trend shows that the price will continue hiking rather than reducing,” experts argued.
They added that the default of companies on the 600,000 metric tons procurement late last year is also the other constrain for such challenge. “I believe such kind of defaults is sabotages to pressure the country rendering us to pay unnecessary prices,” one of the sector actors who were involved in similar bids explained.
Experts also explained that the reason that there was a narrowing to only two bidders (the third bidder Grain Export (late bidder)) from seven bid document buyers is because of the bid scheme that the country follows.
“The interest of well-known global players to participate on the country wheat bid has shrunk since the bid system demands the bid validity to stay for a month until the award is given,” experts said.
They said the government may not understand the global commodity trade trend, which is highly volatile and fluctuating not for a month but in hours, “on this circumstance bidders would not have interest to validate the price for a month.”
The global experience on such procurement is finalized within 48 hours in maximum but mostly the process is finalized within 24 hours and given the award, while when it comes to Ethiopia the process takes weeks to evaluate the bid and to likewise give the award.
“We had recommended the government to improve its process,” one of the sector expert says, adding, “The government had stated that it has revised the procurement directive, while the latest bid for wheat has not shown that.”
“Besides discouraging prominent bidders, such kind of lengthy process forced other to hold additional buffer or additional amount for possible price increment in the validation, which costs the country additional foreign currency,” they added.
They recommended that at least the government should finalize the evaluation and award within 72 hours by settling over time paying for the bid committee than paying millions of dollars for protection imposed by bidders on the bid price.
They also advised the government to be alert on the sector sabotage that may come from international players or countries.
Meanwhile, Rosentreter Global Food Trading and Marthina Mertens Sampl Lebensmittel Handel (Food Trading), that were awarded the procurement of 400,000 metric tons and 200,000 metric tons respectively had disappeared and failed to come up with the product. The procurement of similar amounts of wheat that was conducted mid last year has also failed because of the same reason and experts have said it was purposely done to affect the country which then makes it unable to deliver the basic commodity for the public.
On the bid that was opened in October the two companies FOB offer was less than USD 200 per ton. The lowest bid security has also been stated since everybody wants to be involved on the wheat procurement that the country allocates USD one billion per annum.
Recently Eyob Tekalign, State Minister of Finance, who is also the board of director of PPPDS, accepted the gap on the bidding process to which he said, the procurement directive is in revision.
