Mining Ministry plans to pick prospective companies directly
Ethiopia’s plans to build Ethiopia’s first natural gas-based fertilizer plant were set back again as the Ministry of Mines (MoM) failed to find a consultant to do a feasibility study. The Ministry is compelled to solicit bids for a second time this week.
In June 2022, an Expression of Interest (EoI) was floated to recruit a company capable of conducting a feasibility study for the establishment of the fertilizer industry.
The international competitive bid specifies that the potential firm, company, or consortium will conduct a bankable techno-economic feasibility study for the establishment of a natural gas-based fertilizer plant.
Companies that submitted EOI documents during the first round of bidding did not meet the Ministry’s conditions.
“Some companies participated in the first round of the EoI bid. But they did not fulfill our criteria,” Hanna Berhanu, fertilizer team leader at the Ministry said. She says they have now launched the second EoI, as per the law.
“If we are unable to find the right company in this second round, we will use the direct procurement law to select potential candidates,” she said, refraining from revealing the number of participants.
Consequently, the Ministry issued a second bid on April 12, 2023, which is valid for 21 days. Following this, the shortlisted consultants submit a proposal document as part of the second phase of the screening procedure.
In accordance with Ethiopian procurement law, an EoI can be issued only twice. If a potential winner is not identified after two rounds, the procuring institution has the authority to select and choose a potential firm directly.
In addition to conducting technical feasibility studies, economic and financial evaluations, environmental impact assessments, and mitigation measures, the selected company will determine the site of the fertilizer plant and conduct a cost analysis.
The plant is going to utilize the natural gas found in the Somali regional state as inputs. After confirming the discovery of natural gas, Ethiopia redoubled its efforts to substitute fertilizer imports. In August 2022, the American company Netherland Sewell & Associates Inc. (NSAI), which conducted a feasibility study on the natural gas, confirmed the presence of seven trillion cubic feet (TCF) in the Ogaden Basin in the Somali regional state.
The project, according to Hanna, is related to natural gas because the factory uses natural gas as an input. “This EoI is only for a feasibility study of the fertilizer industry,” she explained.
Ethiopia spends USD 600 million annually importing fertilizer, primarily from Ukraine. But, as a result of the war in Ukraine, the cost of imports has doubled since last year.
As the Ministry seeks to diversify fertilizer products, leading fertilizer manufacturers that are present in Ethiopia, such as the Moroccan OCP, are reportedly out of the running, according to sources. “OCP produces potassium-based fertilizer products, but the Ministry wanted to diversify into natural gas-based fertilizer products,” the source said.