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Corporation decides on fertilizer acquisition

After months of difficulty in deciding over the fate of a fertilizer purchase worth USD 400 million, the government is now renegotiating prices with the suppliers, The Reporter has learnt.

It is to be recalled that back in September, 2018, the Ethiopian Agricultural Business Corporation opened a fertilizer bid worth USD 400 million (11 billion birr). The bid was meant for the purchase of 1.125 million tons of fertilizer.

However, following the opening of the bids, as the result of the current foreign currency shortage, the Ministry Agriculture could not decide in order to proceed to the next level of the bid.

As the result of the aforementioned concern, the Corporation referred the case to the Ministry asking for the approval of the offers from the suppliers. The Ministry on the other hand sent the case to the Office of the Prime Minister.

However, no decision was made on the fate of the purchase, and worrying many as time goes by and the farming season fast approaching.

Having such concerns, the government after almost four months, has decided to let the suppliers who participated in the bid and gave the least price to supply some portion of the total fertilizer.

At the time, the Corporation’s fertilizer bid was composed of 500,000 tons of Urea (divided in 10 lots), 450,000 tons of NPSB (divided in nine lots), 75,000 tons of NPS (in one lot) and 100,000 tons of NPSZnB (also in one lot).

At the time of the opening of the bid on September 19, 2018, six international suppliers expressed their interests and submitted their respective financial and technical proposals.

In this regard, Agri Commodities and Finance ZTE gave the least offers of USD 359.35, USD 360.70 and USD 363.60 per ton for the Urea supply. This will make the total offer of the company worth around USD 179.67 million.

Moreover, for the rest of the 625,000 metric tons of NPS, NPSB and NPSZnB fertilizers, the Moroccan fertilizer giant – OCP – gave the winning prices. In this respect, for NPSB, OCP gave a least price of USD 394.06, USD 394.79 and USD 394.25 per ton making an offer of USD 177.32 million.

At the time, OCP also gave the lowest offer on the rest of the bid to supply NPSZnB, which amounted to USD 34.64 million. On the other hand, the second bidder, Nitron Group Corporation gave an offer of USD 594 per ton or a total offer of USD 44.5 million. On the last round to supply 100,000 tons of NPS, OCP was the only competitor. In total, the sum least offer by the aforementioned companies will be around USD 417 million with OCP listing the lowest price for most of the supply.

According to an official from the Corporation, “the government asked OCP to supply 200,000 metric tons of fertilizer composed of different kind of NPS fertilizers. The latest decision came following concerns that the supply of fertilizer will be delayed,” said the same official.

The fertilizer, particularly NPSs have to be delivered in February, 2019 and distributed to the farmers.

When it comes to the rest of the supplies such as Urea, the government is in negotiation for a price cut with the winning company, Agri Commodities and Finance ZTE.

The company has already agreed to reduce its initial total offer to supply Urea by USD 17 million, the same official told The Reporter. But the agreement is not yet finalized.