Delhi firm wins $100 mn Ethiopian sugar factory contract

August 2nd, 2009 - 4:26 pm ICT by IANS  

By Groum Abate
Addis Aaba, Aug 2 (IANS) India continues its sugar quest in Africa, with Delhi-based Uttam Sucrotech winning the $100 million contract for expansion of the Wonji-Shoa sugar factory in central Ethiopia.

The Indian government has given a $640 million loan for three sugar factory projects: two expansion projects at Fincha and Wonji and a giant new factory at Tendaho in Afar Regional State.

The money is to be released phase by phase from India’s state-owned Import Export (EXIM) Bank.

According to the agreement signed between India and Ethiopia, 85 percent of the total project works should be handled by Indian-based companies. Uttam Sucrotech, the sugar plant machinery manufacturing company, is also involved in some projects that are part of the ongoing construction of the Tendaho Sugar factory.

Indian embassy officials told IANS that Uttam Sucrotech has finally been awarded the Wonji project.

The $100 Wonji expansion project is to take place in the same area as the existing facility, which is about 100 km southeast of Addis Ababa, east Oromia region adjacent to the Nazareth-Asela highway, a manageable distance of 850 km from the Port to Djibouti.

The expanded factory is to have a crushing capacity of 6,250 tonnes of sugarcane per day.

According to the bid document, Uttam Sucrotech is to carry out all civil, structural, sanitary and drainage work for plant buildings and site development work, as per the technical specifications laid down in the document. It is also to do the design, manufacture, supply, delivery to the Port of Djibouti, the erection of mechanical and electrical equipment, and employer training.

JP Mukherji and Associates, another Indian-based company, carried out the technical consultation at the cost of 17 million birr ($1.36 million).

According to a Wonji official, other big Indian companies engaged in other projects, Overseas Infrastructure Alliance (OIA) and National Engineering, participated in the expansion bid.

OIA had been arguing with Uttam because it requested a 15 percent administration fee from the subcontract winners, and wanted to receive all the incentives the Indian government provides to its export companies involved in the Tendaho project. This dispute took the case to the Bombay High Court a year ago.

The government of Ethiopia awarded the engineering, procurement and construction (EPC) contract for what will be the country’s biggest sugar factory, Tendaho, to OIA. The contract makes OIA responsible for hiring other Indian companies and managing the procurement, construction and engineering aspects of the project.

In line with its responsibilities, the company awarded contracts to two Indian companies, IJAC for steam generation and Uttam Sucrotech for processing house installations. However, Uttam was not happy with Overseas’ role in the project and queried the evaluation of the EPC tender.

A few months ago, through the intervention of the Indian government, the conflict between the two companies was resolved.

Currently, Ethiopia has only three state-owned sugar factories - Wonji Shoa, Metahara and Fincha - which are producing 2.8 million quintals of sugar per annum, while the demand has reached 4.6 million quintals.

Recently, the government gave priority attention to sugar and ethanol development at a total cost of 15 billion birr. It is managing the expansion projects at these three factories and constructing the new Tendaho sugar factory in the basin of Awash river, which also hosts Wonji and Metahara.

Tendaho, which cultivates on 64,000 hectares of land, has been allocated eight billion birr out of this budget. When completed, it will have the capacity to crush 26,000 tonnes of sugarcane. When the projects in all the sugar factories are finished, Ethiopia will produce 800,000 tonnes of sugar annually.

(Groum Abate can be contacted at groumabate@gmail.com)

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