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The belated transfer of Dairy Products Development
Enterprise to Lame Dairy Plc, a subsidiary company
of MIDROC, was concluded last week Thursday with a
sale agreement contract signed between the
Privatisation and Public Enterprises Supervising
Agency (PPESA) and Lame.
Having won the re-tender floated by the Agency three
months ago to buy the Enterprise for 62 million Br,
Lame paid 50pc of the total sum with a pledge to
service the balance in equal instalments over the
following two years.
“We have an incentive mechanism of granting a
five-year grace period for payment of 65pc of the
total amount for local investors that are interested
to buy our enterprises,” Wondafrash Assefa, public
relations service head at the PPESA, told Fortune.
“Lame requested and was granted this privilege.”
The agreement was signed by Beyene Gebremeskel,
general director of PPESA and Said Hussein Ali,
representative of Lame in the Agency’s office
located in front of National Stadium. Wario Galgalo,
preparation and implementation directorate head at
the Agency, and Teklu Hailu, finance department head
at MIDROC Ethiopia, also signed the agreement on
behalf of the involved parties.
Lame Dairy Plc, was established in March 2007, with
a capital of 20 million Br, MIDROC commanding 80pc
of the shares while Sheik Mohammed Hussein Al-Amoudi
owns the balance.
Though the enterprise is privatised, the post
privatisation directorate under the Agency will
monitor the implementation of the business plan
proposed at least for five years, Wondafrash told
Fortune.
According to the Enterprise’s business plan, the
annual production capacity would be upgraded from
the current 6,000tn to 22,000tn of milk in four to
five years, in an attempt to boost annual sales from
38 million Br to 72 million Br.
The Dairy Enterprise was first established in 1947
through United Nations (UN) donations 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, hence demand for milk,
the Ministry of Agriculture signed an agreement with
the United Nations 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 at an annual loss of five million Birr
on average.
After its expansion in 2003/04, the Enterprise came
out of its bleeding trend once again 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.
PPESA’s recurrent attempts to sell off the
60-year-old enterprise, which is known for its brand
‘Shola’ milk 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.
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 Plast
Plc had offered 46.5 million Br to acquire the
enterprise, the second highest of the 28 bidders and
one of the five short-listed companies. Bidders from
the third to the fifth spot were Elfora Agro
Industry (45.9 million Br), Azekas Plc (35.1 million
Br) and an individual bidder, Tesfaye Solomon (35
million Br).
The Agency management and auction committee had
recommended Kangaroo to take over the Dairy
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
over a two-year instalment plan, while Kangaroo
would be paying the total in one instalment.
Unimpressed with the management’s decision, the
Agency’s Board rejected the decision and called for
the 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.
“We cancelled the first tender hoping that better
offers will be offered and we succeeded,” Beyene
told Fortune.
The losing participants of the re-tendering were
Kangaro and Mekia were ELFORA, a subsidiary of
MIDROC that oversees Lame, Azekas Plc and Tesfaye. |
