The first shipment of 150,000tns of Ordinary Portland Cement (OPC), out of 400,000tns bought for 34.6 million dollars by the Public Procurement and Disposal Agency (PPDA), is to arrive in two weeks time.
Two companies, D.G Khan Company Limited (DGKCC) of Pakistan and Global Africa of Israel, offered the lowest priced purchase bid floated on June 25, 2011. A total of twenty companie submitted their offers, of which five were found to have fulfilled the technical and operational evaluation. They scored above 85pc on the evaluation, the cut-off point, and this allowed them to continue on to the financial evaluation.
D.G Khan Company Limited (DGKCC) of Pakistan offered the lowest price of 86.65 dollars per tonne. However, since its offer was only for to supply 250,000tns, the PPDA approached Global Africa, which had submitted the second lowest offer of 86.90 dollars per tonne to supply the rest.
The cement is to be used for Addis Abeba housing projects, construction of new sugar factories and road construction, according to Yigezu Daba, Director General of the Public Procurement & Property Disposal Service at the agency.
“We chose to purchase the cement from abroad because the local supply can’t meet the demand,” he told Fortune.
While the national demand is estimated to be around 11 million tonnes, the combined total capacity of the 11 companies producing Ethiopia’s cement can only supply 2.3 million tonnes to the market annually, according to research conducted by the Ministry of Industry (MoI) last year.
The state owned Mugher Cement and Messebo, owned by the Endowment Fund for the Rehabilitation of Tigray (EFFORT), which are in the final stages of expansion, are the largest producers in the nation. Their combined production constitutes 57.5pc of the 2.3 million tonnes currently produced.
There is a gap of 7.8 million tonnes between the estimated demands for cement this year and the actual supply of 2.3 million tonnes.
The government’s GTP has planned major infrastructure projects which all require cement, but whose demand cannot be met by local supply alone. Just three months ago, it purchased the same amount of cement as now from Pakistan for housing, road, and sugar plant projects.
The Ethiopian Sugar Corporation (ESC) is undertaking expansion projects on the Wenji, Fincha and Metehara sugar factories and plans to construct nine new factories over the next five years. Close to 150,000 houses are also planned for construction in Addis Abeba within the same time frame, by the Government Housing Agency (GHA), established in 2004.
“The cement is to be distributed based on the respective demand of the sector,” Yigezu told Fortune. “Although the expansion of Mugher and Messebo is not completed, we will continue to import cement if they can’t meet the demand.”
The PPDA has also procured 150,000tns of slag cement mixed with fly ash for the foundation work of the Gibe III dam, at the cost of the 12.3million dollars, from Cementir Holdings Company based in Italy, which will arrive at the end of this month.
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