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The federal government is preparing to import an
unprecedented one million tonnes of cement at a
projected cost of 53 million dollars, in order to
supply the capital’s massive housing projects,
reliable sources disclosed .
The Ministry of Works and Urban Development (MoWUD)
requested last week the Commercial Bank of Ethiopia
(CBE) open a Letter of Credit (LC) to facilitate the
procurement sources say may come from a port in
Ukraine. It is, however, an Italian company,
Consnorzro Laperi Nazionali Internationail, that
will supply the cement; its director, Daneile Palla,
has signed two weeks ago an agreement with Tsedalle
Mamo, head of the city housing agency, concluding
the deal.
CBE managers have passed the request on to the
National Bank of Ethiopia (NBE) for approval and it
is now under consideration by the central bank,
according to sources.
Constrained by the limited output of cement by the
three plants in the country, the Ministry decided to
import from abroad in order to continue the
construction of condominiums in 33 towns during the
current Ethiopian fiscal year.
The construction of condos across the country is a
flagship project of the federal government. It
believes that the projects not only provide housing
but also creates job opportunities for hundreds of
thousands of people and offer business to small and
medium scale companies.
The federal government plans to see the
constructions of 400,000 houses in 70 towns in the
coming five years, with a project cost of 24 billion
Br. However, the first round of the construction
being undertaken in 33 towns in the 2006/07 budget
year is ailing with the shortage of cement.
For instance, in the past budget year, 33,000 houses
were planned to be constructed in Addis Abeba with a
project budget of 834.4 million Br. The project
needed 70,000tns of cement per week, although only
half of this amount was supplied by the state-owned
Mugher and Messebo cement factories.
“Sometimes we did not even get half of what we
required as the cement factories fail to meet our
demand,” an official at the Addis Abeba Housing
Development Project Office told Fortune.
The Project Office will soon launch the construction
of 38,500 houses planned for the 2007/08 budget
year, further increasing cement demand.
The Amhara Regional State also has planned to
construct over 49,000 houses in four years. An
official at the Region’s Works and Urban Development
Bureau told Fortune that 50,000tns of cement
is needed annually should this project be completed
successfully. But the supply is much lower than the
demand, which, according to the official, made the
project progress “at snail’s pace”.
Mugher Cement Enterprise, which is the largest of
the three active cement factories in Ethiopia,
produces 900,000tns of cement, while Messebo, a
subsidiary company of EFFORT, produces 700,000tns,
and the former Dire Dawa (National Cement Factory)
produces 25,000tns.
The annual cement production in the country is a
little over 1.6 million tonnes while the demand has
reached three million tonnes. In order to fill the
gap, the federal government has given a permit for
local companies to import cement through franco
valuta, beginning November 2006. Jaze Trading,
HM Shebele Business, A&G Global Trading and MIDROC
Derba, among others, have imported over 703,000tns
as of last month.
However, the federal government felt compelled, for
the first time since crises in the supply chain
began, to procure and import because importers
failed to come up with sufficient quantities and
found it to be expensive, an official at MoWUD
claims.
A quintal of cement from Mugher is sold for 135 Br
in Addis Abeba, while imported cement ranges from
170 to 180 Br per quintal.
An importer argues that they cannot remain
competitive if they reduce prices as low as local
producers, considering transport costs and
international prices. Nonetheless, a senior official
at the MoWUD contested this assertion.
“If we buy the cement at such a high price, the
houses we construct will no longer be low-cost
houses,” he told Fortune. “We will end up
constructing expensive houses, only affordable by
the haves.”
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