Wednesday, June 12, 2024
BusinessGovernment Wheat procurement cost surges by USD 100 million

Government Wheat procurement cost surges by USD 100 million

The government paid USD 450 per ton for half a million tons of wheat

International price of wheat averaged USD 286 per ton in February 2021

The Ministry of Finance (MoF) is importing half a million tons of wheat that it procured for USD 225 million (nine billion Birr), USD 100 million higher than the offer it had received for a similar amount of item by the end of last year.

The government has attributed the increase in costs to the surge in international prices of wheat.

“Our expectation was to procure the item for USD 250 per ton, but the least offer that we have received is USD 450 per ton,” said Eshete Asfaw, State Minister of Trade and Industry, who was part of the bidding process.

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Food and Agricultural Organization (FAO), in its latest international food price and monitoring analysis, reported that international prices of wheat averaged USD 286per ton in February, 2021 citing the International Grains Council.

According to the same source, the price of wheat has been almost constant since the beginning of this year and it has increased by 29.1 percent since last year. The governmental claims of price quote surges submitted to the bid, however, stand at 80 percent.   

Previously, such purchases were handled by the Public Procurement and Disposal Service (PPDS), which has the mandate to procure strategic items on behalf of federal government agencies.

The latest procurement, however, was made by the Ministry as a special case due to the urgency in supplying the item to citizens, particularly living in Tigray, where an estimated four million people are in need of critical food assistance.

A decision has also been made to supply portions of the wheat to Sheger Bakery, which is expected to receive 165,000 quintals of wheat in the next two months, to enable it fully utilize its production capacity.

Additionally, this week, the Ministry of Trade & Industry floated a tender to procure 400,000 tons of wheat on behalf of the Ethiopian Trading Business Corporation in order to stabilize the market.

According to Eshete, a committee comprised of officials from the MoTI, MoF and PPDS, has been formed to review the tender process.

“We are purchasing the wheat based on the special direction made by the Office of the Prime Minister, although PPDS has the mandate to do so. This is due to the urgency to buy the item,” Eshete said. 

While bidders are expected to present a bid security of 400,000 Birr, the tender will be opened on April 20, 2021 at the premises of the MoTI, which is located around Arat Kilo near Tourist Hotel.

On the same day, another tender, floated by the Ministry to buy 170,300 tons of rice and 320,000 metric tons of white sugar on behalf of Trading Corporation and Sugar Corporation, will be opened in the presence of bidders.

“Our aim is to buy the item from suppliers who are willing to give us a two year grace period for the payment, which is also a prerequisite to participate in the bid,” said Eshete. 

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