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City rebids billion birr steel procurement

City rebids billion birr steel procurement

The Addis Ababa Public Procurement and Property Disposal Agency has finally decided to rebid the billion birr rebar purchase after months of back and forth with the company that was awarded the supply contract pursuant to the outcome of the previous bid process.  

It is to be recalled that Steely RMI, a notable rebar manufacturer in Ethiopia, was on the verge of winning the supply of 35,513 tons of rebar, which is composed of different sizes, after listing a winning price of a total price of one billion birr.

This bid process, which puts Steely on the winning list, however, got interrupted after the devaluation of the birr and the subsequent continuous rise in the international price of rebar.

The tender process which was undertaken by the Agency was meant to purchase 50,084 tones of reinforcement bars.

During the last round of the tender evaluation, Steely gave a total price of 1.23 billion birr for the total supply.

Steely, the only competing company in the financial evaluation stage, listed 25,916.47 birr, 24,150.97 birr, 23,647.05 birr, 24,097.47 birr, 24,773.1 birr and 24, 773.1 birr for one tone of 10mm, 12mm, 14mm, 16mm, 20mm, and 24mm reinforcement bars, respectively.

In a financial result notification letter issued by the Agency, the offers made by Steely to 10mm, 12mm, 14mm, and 16mm was accepted.

However, the Agency, did not accept the offers made for 20mm, and 24mm bars. According to the Agency’s officials, the price offered for the two sizes had a marked difference with the market price. For this particular bid, four local companies- Guna Trading House (representing Habesha Steel Mills PLC), Steely, Abyssinia Integrated Steel and C&E Brothers entered the competition.

In the middle of the bid award process, the currency devaluation at a magnitude of 15 percent came and the price of reinforcement bars was in a continuous increase both internationally and locally.

Following the financial notification, the winning company issued a letter demanding for an adjustment in the initial price listed on August 4, 2017. The price which was listed by Steely was valid only for one month.

However, this validity date expired before the award was given.

Given all this circumstance, it was difficult for the company to supply the rebar with the initial listed prices.

The unexpected policy measures by the National Bank of Ethiopia which can be conceived as a force majeure will have an effect on supplier cost in the amount of 23 to 28 percent, according to sources close to the bidding process.

The case was then referred to the Board of the Agency, chaired by Abate Sitotaw, deputy mayor of Addis Ababa.

The Board, however, decide that the tender should be repeated saying that adjusting prices following the devaluation is against procurement directives. 

Following this, the Agency floated a restricted bid this week inviting nine local rebar producers, to participate in the bid.

The technical round of the bid will be opened on November 23, 2017.

According to industry sources, this round of the bid will probably see a significant price increment. The price of one kilogram rebar might go up as high as 30 birr.

Over the past one month, the price of steel bar has risen on the global market. According to the London Metal Exchange, on July 31, 2017, the price of steel bar was USD 460 per tons. It has now reaches around USD 523. London Metal Exchange is a global platform for metal exchange and trading.