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The Ethiopian Grain Trade Enterprise (EGTE) has
signed a 94 million dollar contract with Agrimpex
Company Limited for the supply of 300,000tn of
milling wheat two weeks ago, sources disclosed to
Fortune.
Agrimpex, a private company registered in London and
owned by a Mr. Phillipas, and company has entered
into at least three contracts with the Ethiopian
government since 2008 for the supply of 300,000tn of
wheat. These procurements were done as part of the
federal government's bid to fend off escalating food
prices by dumping excess wheat into the market.
The agreement comes at the second week of wheat
shortages in the capital, prompting shortages of
bread supplies in bakeries and restaurants for the
past two weeks.
Accordingly, the Ethiopian Miller’s Association (EMA)
has submitted a letter to the Ministry of Trade (MoT)
calling for a solution alleging that the EGTE has
failed to supply it with wheat for the past two
weeks.
“There is no response from the ministry but we have
called for a general assembly to discuss the matter
and look for solutions,” Biruk Temke, from the EMA,
told Fortune.
Despite the government’s hope of taming inflation,
the year on year inflation has increased to 39.2pc
in July 2011, compared to last year. The total price
index of cereals in July 2011, has also increased by
42.1pc compared to the same month in the previous
year.
The delivery of the wheat consignment is expected to
ease the growing demand of wheat and stabilise
prices with food inflation peaking to 47.7pc in
July, as well as afford the government some respite
from the nation’s dwindling emergency food security
reserves, which is at its lowest.
However, the respite might be short lived as the
government would have to divert some of the wheat it
imported aimed at stabilising food prices to
replenish the nation’s Emergency Food Security
Reserve (EFSR) needed to provide emergency relief
for the 4.5 million Ethiopians affected by the
drought which had hit East Africa.
The EFSR is currently heavily depleted and the
reserve is close to zero as indicated by Abdou Dieng,
according to a statement made by the country
director of the World Food Programme (WFP) in
Ethiopia on July 29, 2011.
The government has been trying to stabilise prices
through the provision of excess wheat, however,
during the ongoing food crisis, emergency reserves
are almost nonexistent, said Dieng, talking about
the dual challenge that the nation is facing.
Dieng’s comments confirmed reports that the EFSR’s
stock have dramatically gone down since the June 10,
2011; reports which stated that 81,535.60tn of wheat
and sorghum remained in stock out of a full capacity
of 410, 584tn.
As a way of stabilising food prices the government,
ETGE has been releasing food stocks from the
emergency food reserve to provide subsidised wheat
to the public to offset high food prices since 2008.
Since wheat is an essential food item, unless the
government imports a sufficient amount of wheat into
the market, the inflation rate will increase in the
following month, an economist, who wishes to stay
anonymous, told Fortune.
The Government Procurement and Property Disposal
Service (GPPDS), which was established in October
2010 to conduct high level procurements for
government offices, invited prospective
international bidders to provide the nation with
300,000tn of wheat in an open bid floated on July,
2011.
“Since the tender was issued through the internet,
we did not know how many companies have downloaded
the large document,” Yigzaw Daba, director general
of the GPPDS, told Fortune.
However, a total of five companies who responded to
the tender submitted their proposals including Comi
Trade, Agrimpex Limited, Mid Gulf Services Limited
and Louise Deryfus Commodities, who were assessed
based on their technical assessments, which
constitute 70pc of the total evaluation.
The technical evaluation assessment included the
harvest year of wheat, moisture content, and protein
content, according to the bid document.
Since the financial evaluation was determined by who
offered the cheapest price, Agrimpex, who offered
313.65 dollars for one ton of wheat, was awarded the
contract.
This is not the first time that Agrimpex has
supplied wheat to the Ethiopian government. It has
already imported wheat into the country on at least
three occasions, without participating in a
competitive bid since 2008, sources claimed.
The import is now being processed through a
settlement agreement to be undertaken between the
state owned Commercial Bank of Ethiopia (CBE) and
UBS, a Swiss bank based in Geneva, upon the request
of the company, according to sources who are close
to the bank.
Failing to supply milling wheat to EGTE, another
London based company, Mid Gulf, had secured a 13.8
million dollar contract to supply 33,000tn of grain
wheat for EFSR.
A ton of wheat, on the international market, stood
at 322.60 dollars in August 2011, showing a six per
cent increase from the previous month, when the
price was 303.80 dollars. In the local market, a
quintal of wheat stood at 1,100 Br, exhibiting a
57pc rise from the previous month of 780 Br per
quintal, based on prices set at Ehil Berenda on
Fitawrari Habtegiorgis Street, since Thursday,
August 11, 2011.
Ethiopia imported a total of 887,045tn of wheat from
different countries largely from Bulgaria in 2010,
according to data from Ethiopia Revenues and Customs
Authority (ERCA).
China, India and Russia are the top three producers
of wheat producing 115 million tonnes, 81 million
tonnes and 62 million tonnes on a yearly basis,
respectively, in 2009/10.
The wheat will be delivered to the country in
September, according to the bid document.
Berhane Haile, director general of the EGTE who is
identified as the “Procuring Entity” in the bid,
declined to comment on the issue. |
