The government has secured a 600 million dollar loan from the Indian EXIM bank for the construction of the new Tendaho Sugar Development Project and expansion of the existing Finchaa and Wonji Shoa sugar factories.
 

The loan was negotiated between the Indian Embassy in Ethiopia and the Ministry of Finance and Economic Development (MoFED), following which, Girma Birru, Minster of Trade and Industry and Belay Dechasa, director of the Sugar Development Agency, travelled to India two weeks ago to conclude negotiations and sign the agreement with EXIM.
 

The Tendaho Sugar Development Project will need a total investment of eight billion Birr, out of which 1.66 billion Br will be obtained from the Development Bank of Ethiopia (DBE). EXIM will provide 351 million dollars (about three billion Birr), with the balance supplied by the Sugar Development  fund.
 

The new factory, resting on 64,000ht, is to be constructed in the Afar Regional State and will be the biggest sugar factory in the country. Expected to start operation in 2008, the factory will have an annual production capacity of 600,000qt of sugar.
 

The factory's feasibility study was done by J.P. Mukherjee, an Indian consulting firm, and was partly financed by a loan from EXIM.
 

Following the financial deal, it is agreed that the supply of machineries, installation service and supervision work will come from an Indian company. Tenders were issued in the second and third weeks of October 2006 inviting Indian companies to participate. 
 

The Project involves the building of a dam and the completion of irrigation work by the Water Works Construction Enterprise. The design and supervision of that work will be handled by the Water Works Design and Supervision Enterprise.
 

Residential houses will be constructed at a cost of two billion Birr in five areas for the factory's projected 45,000 workers.
 

Up to now, it was the Sugar Development Fund that had been covering the expenses of the project. The Ethiopian Government had budgeted around 16 billion Br for sugar development projects on the "Sugar Belt", the colloquial term for projects on the banks of the Awash River.
 

The plan is to expand the existing factories in addition to constructing the new factory. Although the construction of another new factory, the Kessem Bulhamo Sugar factory in Afar, was in the same plan, it was dropped due to financing problems.
 

Nevertheless, the construction of the dam and irrigation intended for this factory, is still undergoing with a capital of 1.6 billion Br, with a new intention for the Metehara Sugar Factory expansion and for use by the Afar pastoralist communities. Out of the 30,000ht of sugar cane land which was assigned to Kessem Bulhamo, 20,000ht will be deployed for Metehara and the rest will be given to the region's development work.
 

The new and old factories will produce143 million litres of Ethanol upon completion of the project. Finchaa Sugar Factory, which is 350Km west of Addis Abeba, in Eastern Wellega, Oromia Regional State, produces 85,000tn of sugar and 8.1 million litres of Ethanol annually.
 

The Fincha expansion, which will take place in two phases, will increase its plantation size by 7,000ht and 20,000ht, respectively. The factory's daily crushing capacity will also increase from 4,000tn to 12,000tn.
 

The annual sugar demand of the country is around three million quintals and the current production from the three factories (Metehara, Wonji Shoa and Finchaa) is 2.8 million quintals.

"With the current expansion project and with the new sugar development plan proceeding, the country might even one day export its sugar," an official in the MoTI told Fortune.