The Metals Industry Development Institute of Ethiopia (MIDI) is requesting a dedicated sea port at Djibouti, the major Ethiopian logistics outlet, to import metal products in the country, Capital learned.
Sources told Capital that the management of MIDI paid a visit to the neighboring country at the beginning of the budget year to assess the situation and come up with ways to obtain a port.
Ethiopia, which has registered one of the highest economic growth rates in the world, is undertaking massive public and private projects that are pillars to further advance the economic prosperity in the country.
Workneh Delelegn, Director General of MIDI, declined to comment, but a delegation from the Institute apparently visited Djibouti in August this year, according to sources.
These sources added that the Institute is interested in obtaining an exclusive port for metal commodities and that MIDI, which is under the Ministry of Industry, has communicated with the Ethiopian Maritime Affairs Authority (EMAA), the government regulatory body in the sector, to explore the issue.
Sources said that the Institute is also looking to establish a new facility in Djibouti to import the product.
Meanwhile the Institute was looking to form a new facility. The Authority strongly suggested that the country use ports developed in Djibouti and if the Institute needs an exclusive port it can look the developed Port of Tadjoura, which was inaugurated in the first half of 2017 with the goal of exporting potash from Ethiopia, according to sources.
The visit is related with the growing demand of steel and the metal industry in the country.
Sources said that the delegation which visited Djibouti was observed at the site at Obock town, located on the northern shore of the Gulf of Tadjoura.
Mekonnen Abera, head of EMAA, told Capital that his Authority told the Institute that the current facilities in Djibouti are sufficient for handling the specific cargo. “I have told them the current ports and Port of Tadjoura are plenty enough to import the product,” he added.
“How much the country imports and what kind of facility is needed are major issues,” he said.
“It is not necessary to establish a new one looking at the current potential port facilities, roads and distance and developed infrastructure, I cannot propose the new facility,” he added.
The two countries have already agreed in principle to develop a port jointly in the future, according to Mekonnen. “So far we don’t need additional infrastructure and economically it is not feasible,” he added.
The expert at the authority says they may be open to reconsidering in the future. “When the economy is growing and the ports cannot keep up with the demand we will reconsider,” EMAA’s head explained.
Djibouti has aggressively expanding its port facilities throughout the country.
Ahmed Shide, Minister of Transport, told Capital that the studies will cover the establishment of ports in partnership with the government of Djibouti. “This specific issue will be related with these studies,” he added.
Djibouti has a plan to develop ports for specific purposes as the economy grows, according to Ahmed.
He said that the two countries have several dialogues going on about joint investment and they have good practices about joint development. “The railway project, which is very high in terms of investment is a good example,” he added.
Recently, Djibouti inaugurated Doraleh Multipurpose Port (DMP) that cost USD 590 million and Tadjoura. The DMP is one of the biggest port facilities at the region. It can accommodate many vessels at one time. Tadjoura Port, which consumed about USD 80 million, was mainly established to export potash from Afar but now it is possible Ethiopia will use it for other purposes.
Ethiopia eyes to develop new port in Djibouti
Japanese company now monopolizes Tobacco business in Ethiopia
Within a single privatization and acquisition process Japan is now listed as one of the major foreign direct investment (FDI) countries in Ethiopia. Late this week the Japanese tobacco giant Japan Tobacco International (JTI) made the second largest sale in the country for ownership of the remaining 30 percent share of the National Tobacco Enterprise (NTE) from the government.
The deal sealed on Thursday made Japan one of the six major FDI sources for Ethiopia; an amazing feat considering only two years ago their investment in Ethiopia was negligible, although Mitsubishi invests in the nation’s coffee industry.
A year ago JTI acquired 40 percent of NTE with a record sale of USD 510 million. The current deal is the second largest in the history of the country.
Currently JTI spends close to USD one billion on Ethiopia’s tobacco industry in just one year, through the privatization of NTE. They now own 70.95 percent share.
“This significant increase in our ownership of NTE shares reaffirms our strong belief in the company and Ethiopia as an increasingly important place to do business in Africa,” Eddy Pirard, President and CEO of JTI said. “By combining our international and newly acquired local expertise, we are confident that we can take NTE to a new level of growth,” the CEO added in a statement published on the JTI website.
So far Turkey is the leading FDI in Ethiopia followed by China, India, Saudi Arabia and the European Union countries respectively, according to recent data.
Yet now because of this single investment the FDI share for Japan may equal the European Union’s.
In the recent past Japanese companies have also been considering the manufacturing sector.
Ethiopia is highly keen to see Japanese investment in the country. Hopes are that this will transfer knowledge and improve the work ethic, according to experts.
The enterprise has been given an exclusive right to produce, process, manufacture, distribute, import and export tobacco and tobacco products in Ethiopia. The enterprise also has tobacco farms at Shewa Robit, Hawassa, Bilatie and Wolaita.
Wondafrash Assefa, Public Relations head of the Public Enterprise Ministry, told Capital that the shareholders have been negotiating to transfer the remaining share.
“We give priority to those interested in a direct sale as opposed to an auction,” Wondafrash said.
He said that two bodies have come up with the final deal to transfer 30 percent to the company. “In the history of privatization the deal is the second in terms of value after the USD 510 million dollar deal a year ago,” he added.
After the latest deal the government has left the tobacco sector fully. Currently Sheba Group, a Yemeni company has more than 29 percent share in the sole cigarette producer and importer.
The then Privatization and Public Enterprises Supervising Agency transferred Meta Abo Brewery for the UK top world distiller Diageo, at a price of USD 225 million in 2012. At the time the deal was the biggest in the country.
Ethiopian Reinsurance suffers 60m birr loss
In its first year of operation Ethiopian Reinsurance (Ethiopian Re) lost 60.9 million birr.
The company, which began operating a year and half ago, held its second general assembly at Hilton. During the meeting with shareholders the company leaders declared their losses.
They said that the reinsurance firm has been engaged in establishing and hiring professionals. Even though it lost money they registered 519.8 million birr in gross premiums.
The report stated that from the total premiums, 194 million birr or 37 percent was generated from compulsory treaty cession. The major premium earning or 62 percent came from compulsory policy cession. The premium registered from compulsory policy cession was 322 million birr, while about 4 million birr worth of premiums were written under facultative voluntary cession from local markets, according to the report.
The annual report stated that the general insurance sector made up over 96 percent of their business, while the three percent of premiums were secured from life business.
The motor sector has taken the lion’s share from the total premiums at 228 million birr, followed by fire and marine policies at 67 and 61 million birr respectively.
For the year the company has paid 82 million birr for claims, 122 million birr in ceding commission and 45 million birr in profit commission.
The company also stated that it wants to be rated by international rating firms to be competitive on the international market and to write foreign business, which is considered a means of hard currency earnings for the company.
The company officials stated that until last October it was engaged in organizing offices and assigning staff.
The board of directors and head of the company has explained about the performance of the company for the stated year.
Shareholders that are mainly financial firms claimed that a lot of idle funds were not included as a most profitable time deposit. The report stated that 263 million birr was put as cash and the 238 million birr is owned by the Commercial Bank of Ethiopia (CBE), which is one of the two major shareholders at the Ethiopian Re. Shareholders said that that the company will engage in other investments during the year.
Yewondwossen Etefa, CEO of Ethiopian Re, said that the report reviewed the performance of the fiscal year that ended on June 30, 2017. “Currently the time despots have substantially changed because collections are now growing,” he added. He said that time deposit is considered as investment.
From the total written premiums, insurance companies have allocated 30 percent for the purchase of reinsurance. The National Bank of Ethiopia directive made insurance companies pay five percent of every premium for the Ethiopian Re.
Ethiopian Reinsurance SC was established with a paid up capital of 500 million birr and one billion birr subscribed capital.
Giddy about geothermal
Ethiopian Electric Power (EEP) signed its first power purchase agreement with Corbetti Geothermal on December 19 to buy geothermal power over the next twenty five years.
The Geothermal project which costs USD four billion is located in Corbetti (East Arsi Zone). The Tulu Moye and Abaya projects are excepted to be completed in the next eight years. Each could generate up to 500 megawatts.
According to the deal EEP will pay USD 0.75/kwh for purchasing power from Corbetti and USD 0.695/kwh for Moye and Abaya geothermal power.
Corbetti Geothermal was initially formed by an Ethiopian affiliated company called Rift Valley Geothermal and its Icelandic partner Reykjavik Geothermal. Currently Berkley Energy and Iceland Drilling have joined the company. Berkley is the major shareholder with at 53 percent.
Eng. Azeb Asnake, CEO of EEP and representatives of Corbetti Geothermal; Luca Buljani and Edi Nijorge signed the agreement.
Eng. Azeb said the projects will help Ethiopia meet its power demand.
