Saturday, September 23, 2023
BusinessGov’t reconsiders Yayu Fertilizer JV

Gov’t reconsiders Yayu Fertilizer JV

A year after the government distanced the scandal-hit Metal and Engineering Corporation (MetEC) from the delayed construction of Yayu Fertilizer, three overseas companies have shown interest to resume the construction of the factory and commence with the production of fertilizer on a Joint Venture (JV) scheme.

According to the corporation, as of Monday, three foreign companies are expected to start negotiations with the government and submit their proposals over the possibility of resuming building the factory.

The corporation has further indicated that OCP, the Moroccan giant and supplier of fertilizer, is also part of the discussions.

In addition to the idea of floating the project for a JV, the government is also contemplating a backup alternative which includes developing the energy provided by coal to produce around 90 MW of energy until the required capacity to complete the factory is reached and then divert it to the fertilizer plant.

The third alternative considered is to deliver the coal products to Cement and Sugar factories which currently import coal from South Africa, to be used in the production process as energy.

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It is to be recalled that the Minister of Agriculture, Umer Hussien, told the parliament in April that the Government has decided to strip MetEC of the project and award it to OCP.

Presenting his report before the House of People’s Representatives (HPR), the Minister further said that an agreement has been reached with OCP to jointly carryout the remaining works of the plant. However,

Yayu plant construction was terminated last year after MetEC was unable to complete the construction despite taking seven years. It was also announced that MetEC only managed to accomplish 46 percent of the project which was launched in 2011 with an initial investment cost of 11 billion birr (USD 400 million). After seven years, MetEC has since asked for an additional 20 billion birr to complete the project.

The Minister, however, did not disclose the project cost that would be paid to OCP and how long the Moroccan company would take to complete the construction.

The decision to cancel the contract came from the Office of the Prime Minister following repeated calls made by the then Ministry of Public Enterprise, owner of the project, to terminate the contract. The Yayu Complex is the second largest project in the nation next to the USD four billion Grand Ethiopian Renaissance Dam.

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