The Addis Ababa City Finance and Economic Development Bureau over the week instructed the city’s procurement agency to exclusively purchase cement from local producers, forcing the agency to amend its 1.7 billion birr international competitive bid.
The order from the finance bureau came following complaints from local producers. The producers argued that there was sufficient supply from local producers and purchase should exclusively be made from them.
However, the argument from local producers contradicts the city’s procurement directive, which stipulates that purchases worth above 50 million birr have to be conducted through an international tender.
So far, different agencies under the city, particularly offices involved in government housing projects, have been sourcing their cement locally. This practice has been going on for a while even though it contradicts procurement proclamations and directives, according to sources.
The finance bureau was supposed to give the green light for those purchases.
The 2016 audit report of the city showed that a number of offices under the Addis Ababa City Administration had made 154.8 million birr worth of purchases which violated due procurement procedures.
“The very reason that we float the tender as an international one was because it does not go in line with procurement directives as well as proclamations of the city,” said Allene Gebru, general manager of the agency.
A couple of months ago, an international tender was floated to procure OPC and PPC cement. The purchase was made on behalf of the Addis Ababa Housing Construction project office with the framework agreement contract for Ethiopian fiscal years 2010 to 2012.
Following the invitation, close to 17 suppliers, including foreign cement producers, purchased the tender document.
For 2010 E.C. alone, the procurement agency was preparing to purchase eight million quintals of cement as per request from the Addis Ababa Housing Construction project office.
Currently, the price of one quintal of cement in Addis Ababa ranges from 212 birr to 215 birr. For the 2010 purchase alone, the city will spent close to 1.7 billion birr.
Moreover, the volume of the purchase is expected to increase, as housing agencies such as the Addis Ababa Saving House Enterprise are yet to declare their need for cement.
Following the cancellation of the international bid for framework agreement contract for 2010 to 2012, the agency will decide to change the format of the procurement.
The agency will also decide whether to conduct a case by case purchase or a framework, said Abdukadir Rediwan, deputy general manager of the agency.
If the agency decides not to conduct a framework purchase, the local purchase will only be for one year, instead of from 2010 to 2012.
Currently, the number of cement factories stands at 20, and annual cement production of the country has reached 15 million tons.