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Lame Dairy Plc, a subsidiary company of MIDROC,
which won the second tender floated by the
Privatisation and Public Enterprises Supervisory
Agency (PPESA) as the sole bidder two months ago to
buy the Dairy Products Development Enterprise for 62
million Br failed to take over the Enterprise due to
non-payment.
The Agency’s management had notified Lame of its
victory a day after the Board of Directors decision
to award the ageing milk producing enterprise to
Lame on June 15, 2007.
However, after winning the bid, Lame requested to
pay 65pc of the total amount within five years,
sources at PPESA told Fortune.
“We have an incentive mechanism of granting a grace
period of five years to pay 65pc of the total amount
for local investors that are interested to buy our
enterprises,” Wondafrash Assefa, public relations
service head at PPESA told Fortune. “Lame
requested the consideration of this incentive
mechanism and we are verifying whether this company
is a local company or not.”
Dairy Products Development Enterprise was first
established in 1947 through donations made to it by
the United Nations (UN) under its rehabilitation
programme after World War II. At the time, the
Enterprise owned 300 imported cows and a small milk
processing plant.
With the increase in population of Addis Abeba, and
hence demand for milk, the then Ministry of
Agriculture signed an agreement with the UN Children
Fund (UNICEF) in 1959 to further expand the Shola
Dairy Plant. The expansion was made to primarily
supply hospitals and schools with pasteurised milk.
Until five years ago, it was functioning with
average annual loss of five million Birr. After its
expansion in 2003/04, it came out of the red,
earning half a million Birr net profit from its
operations during the same year. In the subsequent
years, the Enterprise made one million Birr and 3.2
million Br net profits, consecutively. However it is
still producing 22,000lt of milk, using raw milk
from farmers in cities within a 140Km radius, mainly
in Debre Birhan, Selale, Holeta and Addis Alem.
PPESA’s recurrent attempts to sell off the
60-year-old Enterprise, which is known for its brand
milk ‘Shola’ and its other milk products in
Ethiopia, failed until the beginning of this year, a
year in which 28 companies and individuals bought
the bid document for the tender floated in November
2006 to the surprise of the managers.
Kangaroo is one of the 28 companies that showed
initial interest and among the five bidders
short-listed by the tender committee of PPESA. When
the tender was opened on January 18, 2007, Mekia
Enterprise was found to have placed the highest
offer, 47.7 million Br, while Kangaroo had offered
46.5 million Br. Bidders from the third to the fifth
spot are Elfora Agro Industry (45.9 million Br),
Azekas Plc (35.1 million Br) and an individual
bidder, Tesfaye Solomon (35 million Br).
However, the Agency management and tender committee
recommended Kangaroo, the second highest bidder, to
take over the Enterprise on the grounds that Mekia
proposed to service the total amount in two
instalments; 35pc during the signing of the
agreement and the balance in two years, while
Kangaroo would be paying the total at instalment.
Unimpressed with the management’s decision of
granting the Enterprise to the second highest offer,
the Board rejected the decision and ordered the
Agency to re-tendering with the intention that there
would be better offers and the tender was floated
making the previous highest offer of 47.7 million
Br, the threshold.
Displeased with the decision of both the management
and the Board, Mekia had written a letter to the
Agency stating that paying 65pc in two instalments
does not go against the directive of the Agency.
“We knew from the start that the intention of the
Agency was to award the tender to Elfora or to
cancel the tender on groundless reasons,” said one
of the former bidders. “If an opportunity Mekia is
denied is allowed for Lame, what I had suspected is
indeed true.”
Lame Dairy, was established in March 2007 with a
capital of 20 million Br, MIDROC commanding 80pc of
the shares while Sheik Mohammed Ali Al-Amoudi owns
the balance.
Lame’s management members were not available for
comment on this issue.
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