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Ethiopia saves 2.6 billion birr form fertilizer purchase

  • Moroccan company to supply 70 percent of the fertilizer demand

The Ethiopian Agricultural Business Corporation on Thursday announced that it saved 2.6 billion birr from fertilizer purchase for the 2017 harvest year.

Briefing local reporters in his office CEO of Ethiopian Agricultural Business Corporation, Kefyalew Berhnau, said that the corporation, which was established a year ago amalgamating five state enterprises, has purchased 936,430,000 tons of fertilizer at a cost of 290 million dollars (6.4 billion birr). Compared to last year’s purchase the corporation saved 119 million dollars (2.6 billion birr). Kefyalew said the cost reduction was achieved by making amendments on the procurement procedure, increasing efficiency in procurement, bank procedures (letter of credit process) and bidding process.

Kefyalew said previously the government used to buy different fertilizers through agents. However, the Ethiopian Agricultural Business Corporation amended the bid document and allowed fertilizer manufacturers to directly participate in the bid. “This has enabled us to get better or lower prices. We also floated the tender early. We hired transporters through open bid that haul the fertilizer from ports to different parts of the country. So, by allowing producers to participate in the bid and increasing our efficiency we managed to save 119 million dollars. The fuel price decline has also contributed to the cost reduction,” Kefyalew said.

According to Kefylaew farmers would get the fertilizer with lower prices this year. “Farmers would have 250-300 birr discount per quintal of fertilizer. This is a big amount,” he said.

Kefyalew pointed out the need to cut down the long supply chain in the fertilizer market to secure the products at lower prices.

Eighty five percent of the Ethiopian 100 million population depend on farming. Last year the Ethiopian government purchased 852,400,000 tons of fertilizer valued at 385 million dollars. The price does not include transportation, bank and insurance costs.

This year the Ethiopian Agricultural Business Corporation would buy a total of 1.2 million tons of fertilizer at a cost of 400 million dollars (nine billion birr). The fertilizer demand is on average growing at a rate of 20 percent. Out of the total 1.2 million tons of fertilizer required this year 935,430 tons has been already purchased through an open international tender.

Urea (350,000 tons), NPs (193,000 tons), NPS Boron (338,000 tons) and NPS Zinc and Boron (54,430 tons) were purchased. The remaining amount will also be purchased once the corporation opened letter of credits.

Kefyalew told The Reporter that the Moroccan fertilizer giant, OCP, would supply 70 percent of the country’s fertilizer demand. The remaining 30 percent is bought from various international fertilizer producers.

Global leader in the phosphate industry, OCP Group, has partnered with the Ethiopian government aiming to build a 2.5-billion-dollar fertilizer plant in the eastern part of Ethiopia, near Dire Dawa town. Stretched on 100 acres of land, the plant would have an annual production capacity of 2.6 million tons of fertilizer.   

Kefyalew said that at the moment two vessels are unloading fertilizer at the Port of Djibouti and the third Vessel carrying fertilizer will soon arrive in Djibouti. He said due to the congestion at Djibouti port the government of Ethiopia is looking at alternative ports. “We are looking at Port Berbera of Somaliland and Port Sudan. Particularly Port Sudan is viable to import fertilizer to the northern part of our country,” Kefyalew said.

As part of this effort a vessel carrying 50,000 tons of fertilizer will arrive at Port Sudan in the coming few days.

Kefyalew said that the country would continue importing fertilizer until it builds its own fertilizer plants. “The government is looking at various options. One of the options is attracting foreign fertilizer giants who have interest in investing in partnerships or by themselves. There is also an initiative to build fertilizer factories locally by the government,” Kefyalew said.

 The Ethiopian Chemicals Corporation is tasked with building five fertilizer plants. However, Kefyalew said the main contractor, the Ethiopian Metals and Engineering Corporation, did not advance the project as planned.

Source:Ethiopian Reporter

 

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