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Australia, Russia to supply 500,000 MT wheat

USD 135 million required to procure 600,000 MT

For the first time, Australia and Russia have agreed to supply a total of 500,000 metric tons of wheat to Ethiopia for USD 150 million, on a state to state level agreement, in which the majority of the purchase order undertaken by Australia.

Tsewaye Muluneh, director general of the Public Procurement and Property Disposal Service told reporters on Wednesday that state to state agreement with Australia translates into them supplying 400,000 metric tons of wheat, for which the government of Ethiopia will pay USD 120 million. The agreement entails an installment payment basis to be made in a year.

Relatively, Australian prices seem to be costly but the quality of wheat they have agreed to supply retains a certain degree of high quality, the director said. Similarly, the agreement with Russia for the supply of 1000 metric tons requires an outlay of USD 30 million. Currently, Export and Import (EX-IM) Bank of Russia and the Commercial Bank of Ethiopia (CBE) are sorting out payment modalities. The director said Ukrainian government as well was requested to enter into the agreement.

 A state to state grain trading agreements is said to have saved the government hard earned disposable cash, since the global procurement process involves multiple middle players. 

The purchases are sought to replenish the stocks of the National Disaster Risk Management Commission (NDRMC) and the Ethiopian Trading Business Corporation, in which the previous receives 400,000 metric tons of wheat.

To that effect, on Wednesday, the procurement   agency has opened an international bid to purchase 600,000 metric tons of milling wheat out of the 800,000 needed for the current fiscal year. In the first round of bids floated a few months ago, the procurement service has been able to award purchase agreements for 200,000 metric tons and is waiting on delivery of shipments.

 However, the 600,000 metric tons was a rebid, which was cancelled back in February after the bid was contested. Some 11 suppliers have qualified for technical evaluation, which mostly focuses on the quality of wheat. The financial requirement focuses on the bidders' interest to provide credit finances on basis of FOB shipment and least cost pricings.

Despite ongoing efforts to purchase food grains, the impact of COVID-19 pandemic has put pressure on logistics as countries continue to ban travel and impose lockdowns. Prime Minister Abiy Ahmed (PhD) has sounded an alarm on how dire the situation has become and purchasing food grain will be a difficult task ahead.