Representatives from five steel manufacturing factories complained to Kassu Ilala, Minister of Works and Urban Development (MoWUD), that the privilege given them to manufacture reinforcement bars for the Ministry’s housing project has not been upheld by the Ministry of Finance and Economic Development (MoFED).
 

The five companies appealed to MoWUD two weeks ago, objecting to the fact that they had to participate in auctions at the Ethio-Djibouti Railway Enterprise, the Central Statistical Agency and three other government offices to purchase scrap metal.
 

All five factories deal in smelting metal and manufacturing bars used in construction. They include Zuquala Steel Rolling Factory; Ethiopia Steel Smelting Company; Abyssinia Steel Integrated Factory; Sheba Steel Mills Industry and Wallia Steel Factory.
 

According to the letter written by MoFED and signed by its State Minister, Mamo Gito, in September 2006, 134 government offices and 20 ministries, including MoFED, were directed to sell their scrap metals at 1.35 Br per kilo to the five steel producing factories in the country.
 

In addition, the Ministry of Trade and Industry (MoTI) banned scrap metals from being exported from Ethiopia on October 5, 2006 based on the great need for reinforcement bars to be used in a nationwide implementation of housing projects led by MoWUD.
 

Because steel companies, which manufacture these bars, need unlimited access to these scrap metal resources to provide the reinforcement bars necessary for the housing project, the ban was implemented.
 

All five companies agreed with MoWUD, in September 2006, to supply 62,065tn of reinforcement bars within a year.
 

MoWUD intends to build 400,000 houses in 70 towns in the span of the next four years with a budget of 15.1 billion Br. The Ministry will oversee construction projects in 33 towns countrywide.

For these projects to be actualized, they need around 80,500tn of reinforcement bars, with a need to grow production by 30pc every year during the span of the project. A study done by the Ministry calculates that the project will need 505,000tn of metal over four years.
 

A manufacturing head at one of the steel factories in Bishoftu (DebreZeit) told Fortune that it did not make sense that they compete in auctions as it defeats the purpose of the ban.
 

The Head of MoFED’s Public Relations and Information Department, Getachew Admas, told Fortune that the original letter did not state that auctions would not take place, but only that exclusive auctions for these five factories will take place in parallel.

The steel factories are hoping to receive a positive response by next week.