Government to Pick International Wheat Supplier

Tayitu 14th

Five companies are bidding to procure 1.2 million quintals of wheat for the government

The Public Procurement Property Disposal Service (PPPDS) made a financial opening for five companies to purchase 1.2 million quintals of milling wheat; the financial opening took place after its first attempt failed during negotiations with the suppliers.

The PPPDS initially announced a tender for the purchase of two million quintals of milling wheat in September 2014 in five lots, each having a quantity of 400,000ql.

A total of 12 companies purchased the bid document and, to date, 10 have submitted offers. The financial opening had taken place on October 29, 2014 for seven companies where three of them failed the technical evaluation.

For the four lots from the five, Promising International Trading, a UK company, offered the least price for a ton. Its offer was 271.8 dollars per ton, including transportation costs. But the government started negotiating with three companies for the supply of the wheat, leaving the result of the bidding process and finally succeeded in buying only 800,000ql from Promising.

The reason why the deal could not go further with the other companies was that the PPPDS demanded the transportation should be undertaken by the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), which charges more than the other transporters, according to sources; officials from the EGTE and the PPPDS declined to comment on the issue.

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Following the termination of the negotiations with the companies, five companies were approached for the selective bid for the remaining 1.2 million quintals.

The five companies include Promising, Hakan Agro Group, Glencore Grain, Phoenix Commodities and Ameropa on December 11, 2014, and the financial opening for the companies took place last Monday December 22, 2014.

The financial opening that took place on Monday for three lots, where each lot has a quantity of 400,000ql, Hakan made the least offer for all three lots.

The least offer of Hakan was 287 dollars per ton for lot one and 288 dollars and 289 dollars for the second and the third lots respectively. The highest offer came from Phoenix with 335.83 dollars per ton. The total cost for the 1.2 million quintal from Hakan is 708.1 million Br.

The PPPDS purchased four million quintals at the beginning of the current fiscal year for 2.4 billion Br from Ukraine from six companies where it is set to buy 6.5 million quintals for the current fiscal year and is distributing to 288 flour factories throughout the country every 15 days.

The factories in turn supply the flour to 5,000 bakeries identified by the Ministry of Trade (MoT) and regional trade and industry bureaus.

The government is selling a quintal of wheat at 550 Br to the milling factories and the milling factories are selling to the bakeries for 796 Br, as they make 73kg of flour from a quintal.

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The government has been importing varying amounts of wheat for years for market stabilization purposes. In 2009/10, it had imported 5.3 million quintals, then nearly half, 2.58 million the following year.

In 2011/12 and 2012/13, the imports were 4.2 million quintals and 5.6 million quintals, which again was slightly down to five million quintals in 2013/14. The price per quintal at which the government bought the wheat has also increased from 353 Br in 2009/10, to 507 Br, 534 Br and 549 Br through consecutive years until 2012/13.

Ethiopia is importing wheat, but has a potential 2.6 million hectares of arable land designated to wheat production, 1.6 million of which is serviced by rain fed agriculture and the remaining one million hectare by irrigation.

According to the Central Statistics Agency’s (CSA) current fiscal year’s projections, the cultivated 1.6 million hectares of land will yield 39.3 million quintals of wheat, up by nearly eight million quintals from the 2013/2014 yield.

The company that will get the contract will be selected over the next few days.

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