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The African Development Bank (AfDB) and the
International Finance Corporation (IFC), the private
sector arm of the World Bank that reopened its
office here a few months ago, have approved loans
worth a total of 110 million dollars for
Derba-Midroc Cement Plc, on Thursday, April 17,
2008.
This is the first loan ever made to a private
company in Ethiopia by either of these international
finance organizations, disclosed Lucy Mamgaga
Marimfye, resident representative of AfDB.
“We understand that there are and will be many
construction activities in Ethiopia and this has
caused a shortage of cement,” Marimfye said.
“Within this context, Derba-Midroc came up with a
project that we couldn’t fail to finance.”
The loan is part of the 60pc financing required to
complete a cement factory the company is undertaking
in Derba, 70Km north-east of Addis Abeba, in the
Oromia Regional State.
Derbe-Midroc, owned by Sheikh Mohammed Ali Al-Amoudi
(80pc) and Midroc Ethiopia, has an initial capital
of 2.4 billion Br. Both organizations have split the
advance equally.
The company has been granted, through lease, an area
covering 134hcts of land. It plans to invest 351
million dollars to develop a green-field cement
plant and limestone quarry found adjacent to it.
The China National Building Materials (CNBM) is
undertaking construction of the plant, which will
also incorporate 450 residential houses, schools and
clinics. A little over 200 million Br will also be
expended for the construction of a 47Km road between
Ginchi and Derba.
When completed, the plant will have a capacity to
manufacture 2.5 million tonnes of cement per year;
30pc of Ordinary Portland Cement (OPC) and 70pc of
Pozzolan Portland Cement (PPC) will be sold on the
domestic market.
Although the project owners are prepared to
contribute 40pc of the cost, the company’s
management, led by Haile Assegedie, former state
minister for Infrastructure, has been looking for
financing from both from local and international
sources. The European Investment Bank (EIB) and the
Development Bank of Ethiopia (DBE) have promised a
total of 45 million dollars for the project. While
the former is expected to approve the loan request
in about a month, DBE’s sluggish pace has become a
source of frustration to Derba’s managers.
“We made our request a year ago, but we have yet to
received any response from them,” Haile told
Fortune, reiterating that EIB responded
positively within six months.
The early operation of Derba-Midroc is crucial to
Ethiopia’s construction industry, which suffers from
a shortage in cement supply, hence the extremely
high price of the commodity. Derba-Midroc is one of
the 24 companies that have been licensed to erect
cement manufacturing plants, 13 of which are
currently erecting their plants.
Only three manufacturers are operating to satisfy
the high demand: the state owned Mughar, Mesebo (in
Mekelle) and National in Dire Dawa. They have a
combined manufacturing capacity of 1.6 million
tonnes, a far cry when compared to the 4.7 million
tonnes the country is projected to consume in 2010.
In the meantime the government is compelled to
import a little over one million tonnes from abroad
and provide a duty free import advantage to
importers in its bid to address the shortage in the
market.
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