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Government contemplates rescinding wheat contract awarded to Wifag

Government contemplates rescinding wheat contract awarded to Wifag

Despite the depleting national wheat stock, the Government of Ethiopia (GoE) is contemplating to cancel an earlier wheat supply contractof 400,000 metric tons at USD 108 million (3.04 billion birr), which was awarded to WifagMabrouk General Trading and its local partner Aplas Importer Plc, a little over a month ago, The Reporter has learnt.

This came following the failure of the company to proceed with the supply after the signing of the contract.

“The officials, including those in Ministry of Finance are now considering rescinding the award given to Wifag,” source from Public Procurement and Property Disposal Service (PPPDS) told The Reporter.

The company, upon the signing of the contract, was supposed to come up with a performance guarantee worth USD 10 million, within 15 days. However, the company has so far failed to do so.The purchase of the wheat by PPPDS was made on behalf of the Ethiopian Trading Business Corporation, which signed the contract with Wifag.

Following weeks of delay, the Corporation issued a letter stating,Wifag, after the signing of the contract, has failed to come up with the guarantee.

The guarantee is supposed to be from a well-recognized international bank that has a working relationship with the Commercial Bank of Ethiopia (CBE).

“Overseas banks ready to provide a performance guarantee on our behalf have a relationship with ten Ethiopian banks except CBE,”Aron G. Silassie, partner of Wifag told The Reporter.

This is both unfortunate and unexpected, he said.

According to sources, one of the reasons for not providing the guarantee is the recent government reports regarding a dangerous deterioration of country’s foreign currency reserves, which is pushing foreign banks not to work with Ethiopian banks. Foreign banks fear that the Commercial Bank of Ethiopia representing the Ethiopian government might fail to settle payments in the future, the same source added.

It can be recalled that back in March 2019, the Public Procurement & Property Administration Agency’s (PPPAA) Board decided to award a contract worth USD 108 million (3.04 billion birr) to the company.

During the aforementioned award, the company gave the lowest offer for the supply of400, 000 metric tons of wheat. However, at the time, the company failed to pass the technical evaluation put forth bythe PPPDS following its failure to come-up with a document which proves their joint venture partnership between Wifag and its local partner.

It can be recalled that, the Service at the time decided to award the contract to other bidders. In this regard, it decided to award it to three international companies: Bunge SA, Amropa AG and ADM International for the supply of 400,000 metric tons of wheat, worth 3.47 billion birr.

However, later on, upon complainants from Wifag and a decision from the PPPAA, the Service re-awarded the bid to Wifag.

It is to be recalled that at the time of the bid, the 400,000 metric tons was divided into four lots, each with 100,000 metric ton lots. In this regard, Wifag gave the lowest prices of USD 270, USD 274, USD 278 and USD 284 per ton for each lot.

After the contract signing, Wifag was supposed to submit guarantees within two weeks but failed to do so.

“If the government is going to cancel the bid, it is going to be a disaster for the country given the current wheat shortage,” said industry sources adding,“However, there is also a possibility that they might reward it to the bidder with the second lowest price officer.”