Wednesday, February 21, 2024
BusinessWheat supplier fails to guarantee performance

Wheat supplier fails to guarantee performance

Months after it was awarded to supply 400,000 metric tons of wheat with USD 108 million (3.04 billion birr), WifagMabrouk General Trading and its local partner Aplas Importer Plc,have failed to proceed with the supply after the signing of the contract, The Reporter has learnt. 

It can be recalled that back in March 2019, the Public Procurement & Property Administration Agency’s (PPPAA) Board decided to award a contract worth USD 108 million (3.04 billion birr) to the company.

During the aforementioned award, the company gave the lowest offer for the supply of400,000 metric tons of wheat. However, at the time, the company failed to pass the technical evaluation put forth bythe Public Procurement and Property Disposal Service (PPPDS) following its failure to come-up with a document which proves their joint venture partnership between Wifag and its local partner.

Afterwards, the Service decided to award the contract to other bidders. In this regard, it decided to award it to three international companies: Bunge SA, Amropa AG and ADM International for the supply of 400,000 metric tons of wheat, worth 3.47 billion birr.

The price offered by Wifag is almost 300 million birr (USD 11 million) lower than the total offer of the now awarded three companies.

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Following this, Wifag submitted its complaint to the Service as well as the Agency in which the company argued that it gave the lowest price and it disserved to win the bid. After this, the board reversed the earlier decision of PPPDS and decided to award Wifag.

Wifag, upon the signing of the contract,was supposed to come up with a performance guarantee, which is worth USD 10 million, within 15 days. However, the company has so far failed to do so.

The purchase of the wheat by PPPDS was made on behalf of Ethiopian Trading Business Corporation which has signed the contract with Wifag.

“We have informed PPPDS that Wifag, after the signing of the contract, has failed to come up with the guarantee,” an official from the Corporation told The Reporter.

The delay from the company to proceed with the supply is feared to create more shortages of wheat in the country.

According to sources, one of the reasons for not providing the guarantee is the recent government reports regarding a dangerous deterioration of country’s foreign currency reserves, which is pushing foreign banks not to work with Ethiopian banks.

Those foreign banks fear that the Commercial Bank of Ethiopia representing the Ethiopian government might fail to settle payments in the future, the same source added.

It is to be recalled that at the time of the bid, the 400,000 metric tons was divided into four lots each with 100,000 metric ton lots. In this regard, Wifaggave the lowest prices of USD 270, USD 274, USD 278 and USD 284 per ton for each lot.

“We are working on finalizing the process and we also ask for an extension inorder to provide the performance guarantees,” company source told The Reporter.

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Video from Enat Bank Youtube Channel.


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