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Chinese firm wins USD 95 mln contract to complete Tana Beles-I sugar plant

TGIS shows interest in OmoKurazI plant

The Ethiopian Sugar Development Corporation (ESDC) has awarded a USD 95 million contract for China CAMC Engineering Co. Ltd (CAMCE) – a Chinese construction firm - to undertake the construction of the unfinished Tana Beles-I sugar plant project, The Reporter has learnt.

Located in the Amhara Regional State,North-East of Ethiopia, the Tana Beles Sugar plant was one of the ten sugar factories launched by the government, years ago. However, the project exhibited poor progress as its contractor,MetEC, failed to complete the project in accordance with the terms and timetable of the contractual agreement.

According to officials of the Corporation, the government has decided to take away the project from MetEC andawardit to the Chinese company (CAMCE) to complete the remaining tasks.

The company, hence, is expected to complete the project in coming eight months’ time.

CAMCE is currently building the Wolkayit Sugar Plant, in the Tigray Regional State, in Northern Ethiopia.

The decision to award the project comes a week after the Revenue, Budget and Finance Affairs Standing Committee of the House of People’s Representatives (HPR) summoned officials of the Corporation and demanded an explanation regarding the long-overdue sugar projects, mainly focusing on Kuraz-1,Kuraz -2and Kuraz-5.

In a related news, another Chinese company named TGIS, which is currently building OmoKurazV sugar plant,has shown interest inKuraz Iproject and to that effect it has submitted a technical and financial proposal to the Corporation.Officials of the corporation told The Reporter that they are evaluating the Chinese company’s documents intending to carry-out the remaining construction work at the unfinished Kuraz I.

During last week’s parliamentary hearing,WayoRoba,Sugar Corporation acting Chief Executive Officerdisclosed that the Corporation has recently received an additional financial resource worth 13 billion birr from the Ministry of Finance (MoF). However,he underscored the need for the government to allocate an additional budget since the Corporation could not look for external sources due to the high external debt burden it has already accumulated.

According to Wayo, out of the released 13 billion birr, 5.7 billion birr is intended to finance the remaining OmoKuraz-I project, while the remaining 7.3 billion birr will be used for debt repayment to financiers linked to the Corporation.

The Corporation is expected to sign a formal agreement with theChinese company to finish the remaining works on KurazI.

However, it is not clear on how the corporation will consider TGIS, since the company has not yet completed its current project,OmoKuraz V,which has also sparked disputes with the Corporation.

During the standing committee hearing, members of the Committee who had visited the sugar projects in South Omo questioned the Corporation regarding the outstanding challenges observed.

Particularly, MPs grilled the Corporationon why OmoKuraz Vwas halted for a year and a half.

Responding to the questions, Wayo told MPs that Kuraz V’slack of progress has nothing to do with neither the Corporation nor the government.

“There is nothing to blame us for. They [the contractor] faced financial upheavalssince the Chinese Bank has not yet released the finance it was agreed up on earlier on. But, we have delivered all the necessary documents and approvals that enables the contractor to secure financing,” Wayo said adding,“The government has even went further to facilitate the release of the finance by sending delegates to China led by theState Minister of MoF”.

Two years ago, the government awarded KurazV to the Chinese company after MetEC failed to make any progress and complete the sugar plant. The main factor behind the Corporation’sinterest to contract the project to the Chinese firm was that the latter showed its interest with vendor financing; facilitating and securingloans from the Chinese EXIM bank.

KurazV is one of the five plants being built under the multi-billion birr project of the OmoKuraz sugar development project.

Launched in 2010, the OmoKuraz sugar development project has five sugar factories with the capacity to produce 1,946,000 tons of sugar per annum when it is fully operational. According to the Corporation, the five factories also have a total capacity to produce 183, 134 metric cubes of ethanol.

Omo-Kuraz Sugar Factory,Kuraz-2 and Kuraz-3 have been built with an investment of 6.67 Billion Birr and 8 billion birr,respectively, with both loans obtained from China Development Bank.

The project rests on some areas of the South Omo, BenchiMaji and Keffa Zone of the Southern Region.