Thursday, July 25, 2024
BusinessTycoon’s 5bln cooking oil plant embroiled in conflict

Tycoon’s 5bln cooking oil plant embroiled in conflict

Worku Aytenew’s five billion birr edible oil complex is caught up in the violence gripping the Amhara Regional State as federal defense forces reportedly seize arms and munitions stored in the plant.

The plant was inaugurated in East Gojam Zone in 2021 but has since halted production due to hard currency shortages. The latest allegations of aiding and abetting armed groups operating in the Amhara region come as the country struggles to meet demand for edible oil.

A recently surfaced video appears to show senior Ethiopian National Defense Force (ENDF) officers describing the various kinds of weaponry allegedly seized in the WA Edible Oil Complex. The issue was also brought up during a quarterly evaluation of the Food, Beverage, and Pharmaceutical Industry Development Research Center at the Hailed Grand Hotel on December 7.

Tarekegn Bululta, a state minister of Industry, spoke to The Reporter about Worku Aytenew’s political affiliations.

“An industrialist must always be an industrialist. An industrialist’s job is to produce, but this person [Worku] got involved in politics. Then he fled the country and allowed the industry to become storage for arms. He became a political agent,” said Tarekegn.

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The edible oil plant has taken a substantial volume of loans and foreign currency from commercial banks, which worries officials. Tarekegn, however, says the debts can be recouped.

“If the assets at the WA factory are evaluated, they would be valued less than the loans it took,” he said. “It is government resources that have been wasted on this industry.”

Following the tycoon’s exile, Bank of Abyssinia (BoA) has put Worku Aytenew’s residential property in Kirkos sub-city, Addis Ababa onto auction this week. The bank slated floor price of the auction at 40.3 million birr. The tycoon owes BoA 37 million birr, from the residential property.

The State Minister acknowledged that several manufacturing industries have been shuttered due to the ongoing conflict in the Amhara region. 

“The manufacturing sector is suffering because of conflict,” he said.

The sector’s average capacity utilization rate stands at 57 percent.

“We must escape this vicious cycle of conflict,” said Tarekegn.

The sector’s demand for forex needed for inputs is also more than the forex it generates. The federal government allocated 187 million dollars for the import of manufacturing inputs over the first quarter. The sector generated 120 million dollars in forex over the same period.

WA Edible Oil was hoped to address Ethiopia’s huge cooking oil supply gap when it was inaugurated with a processing capacity of 1.3 million liters a day. It was second only to Phibela’s edible oil plant, which can process 1.6 million liters a day in West Gojjam Zone. Phibela’s plant was also opened in 2021.

Despite the resources poured into such large-scale plants, local processors cover less than a fifth of national demand for cooking oil, according to a report from the Research Center.

Domestic processors produced 169,000 tons of edible oil in 2022/23, saving an estimated 382 million dollars via import substitution, according to the report.

 However, the federal government has been allocating larger amounts of forex to the import of finished edible oil products.

Worku is assumed to be abroad. Last year, the tycoon had announced plans to open a large-scale cement factory. It remains unclear how the federal government intends to proceed with WA Edible Oil.

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