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BusinessEBG earmarks ETB 5 billion for new automotive assembly lines

EBG earmarks ETB 5 billion for new automotive assembly lines

The state-owned Ethio-Engineering Group is set to shell out nearly five billion birr on the launch of new domestic assembly lines for heavy, dump, and pickup trucks.

The former Metals and Engineering Corporation (MetEC) is considering Cumens, Chinese Weichai, and others as sources for the engines to be used on the assembly lines, according to Suleiman Dedefo, CEO of the Group.

He told The Reporter that the military corporation is also considering engine manufacturers in Europe.

“We’re currently in the procurement process to import bodies and components for the assembly of trucks and pickups,” said Suleiman.

He says the enterprise is eyeing the complete domestic manufacture of automotives in the next five years.

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“In the long run, we plan to manufacture these vehicles fully in Ethiopia. Engine, axle, and gear will be manufactured here. We are planning to establish factories that can manufacture engines in the near future,” said Suleiman. “It’s a five-year plan. Up to 90 percent of the car components will be manufactured locally.”

The Group has begun design work for the trucks slated to come off its assembly lines. They will be sold in the market under the brand name “BG”, according to Suleiman.

“These heavy trucks and dump trucks are designed by our own engineers, and will be produced in our own existing facilities,” he said.

The Ministry of Industry is particularly interested in seeing the Group modify single pickup trucks into vehicles repurposed for luxury tourism and for military use, according to the CEO.

The Ministry has plans to substitute the import of these vehicles once EBG launches its local assembly.

The nearly five billion birr investment is to repurpose some of the Group’s existing factory lines to fit these new orders, according to Suleiman.

Bishoftu (EBG), Kaki Plc (Isuzu importer), Asnake Engineering, and Frankun have been selected for the production of components for the domestic assembly of pickups, trucks and dump trucks.

EBG also eyes exporting its locally assembled products to neighboring countries, according to Suleiman.

Ethiopia has limited experience in exporting locally-assembled automotives, but it has previously exported trucks to Kenya, where there is good demand, according to Tilahun Abay, an advisor to the minister of Industry.

“Local assembly currently has huge demand in Ethiopia. For instance, ENDF needs a substantial number of vehicles every year. The government plans to substitute the import of vehicles for the military. Once the four companies are successful, the government will stop importing fuel cars. We can also tap into neighboring markets. It is wise to use locally assembled cars. It also reduces Ethiopia’s expenses in fuel import,” said Tilahun.

EBG also has plans for the domestic production of electric vehicles and agricultural equipment, according to its CEO.

“We will launch electric cars very soon. Bulldozers, excavators, tractors and other construction and agriculture machineries will be soon on the market,” said Suleiman.

The government is crafting its maiden automotive policy in a bid to attract international car makers but there has been little interest.

“Foreign car manufacturers have no appetite to come to Ethiopia. They know the forex shortage problem in Ethiopia. That is detrimental for their profit repatriation. We decided to jump into the untapped market,” said Suleiman.

However, Tilahun cautions that some of EBG’s plans are overambitious.

“Locally manufacturing engines will take Ethiopia a long time. Achieving it in five years is questionable. Plus, manufacturing electric heavy construction and agricultural machinery seems unrealistic. Even European countries like Germany tried but failed to shift heavy machinery from fuel-based to renewable energy. It is difficult to run heavy construction and agricultural machinery on electric energy,” he said.

The domestic production of engines was on the drawing board when the former MetEC was awarded a slew of valuable mega-project contracts during the EPRDF era. The corporation was split into a military and commercial wing following the 2018 political upheaval. EBG is the commercial wing of the enterprise. 

Heads of the former MetEC, including former CEO General Kinfe Dagnew, were released from prison a few weeks ago following their arrest in 2018 on allegations of grand corruption.

The government has yet to clarify whether the charges against them have been dropped or not.

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