Harar and Bedele breweries for Sale

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Addis Fortune (Addis Ababa):

  • Privatization agency puts eight state owned companies on market

The board of directors of the Privatisation and Public Enterprises Supervising Agency (PPESA), chaired by Hailemariam Desalegn, deputy prime minister and minster of Foreign Affairs (MoFA), decided to put Harar and Bedele breweries up for auction for the first time, during their meeting on Wednesday, January 26, 2011.

Bedele Brewery, located 500km west of Addis Abeba, in Oromia Regional State, was first opened in 1993, and has an annual production capacity of 75 million bottles. Bedele exports the beer with a 4.2pc alcohol content to the US. Although most of the raw materials used to make it are produced locally, the company imports yeast, which can be reused three to four times, from Europe and malt from Germany when there is a local shortage.

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Harar Brewery, located 526km east of Addis Abeba, was established in 1983. It has an annual production capacity of 67 million bottles, making it the second largest producer after Bedele.

The agency, which has received 1.5 billion Br from transferring 287 companies and 16 companies through lease and joint venture (JV) agreements, respectively, to the private sector during its 15-year existence, initially planned to sell the breweries, including Meta Abo Brewery, in the next three years.

However, due to the high demand from the private sector, it pushed the auction forward, Brehane Gebremedhin, director of Privatisation under the agency, told Fortune back in July 2010.

Along with the two breweries, tenders for the acquisition of six other state owned companies were also floated last week. Awash Winery, Awasa and Tigray Flour, Kokobe Flour & Pasta Factory, as well as Gibe I Agricultural Development Enterprise were all put up for auction for the first time by the agency, which facilitated the privatisation of 73 companies and branches over the past five years alone.

The sixth company, Tabor Ceramic Products, is being auctioned for the third time. It did not receive an offer when the tender for its acquisition was first floated, and while it was awarded to Amaga Plc for 60.2 million Br, during its second time, the bid winner failed to pay the required down payment to the agency.

The auction for the breweries requires the simultaneous submission of technical proposals and financial offers and closes on March 19, 2011. Bid winners are required to pay 35pc of the total offer as a down payment while the outstanding amount is payable over a five-year period.

The bid winners are also required to retain the employees; to date, a total of 32,500 employees have been transferred along with the former state owned enterprises, according to Wondafrash Assefa, head of Public Relations for the PPESA.

The agency is evaluating the technical proposals and financial offers made by Heineken, BGI, Diegeo, SABMiller, Meta Abo JV, and the consortium spearheaded by Habesha Brewery that comprises GetAs International and GH Geda. The Belgian company that was thought to be part of the consortium is not involved in the bid any longer, Fortune learned.

Most of the shares of Meta, which was established in 1967 and has an annual production capacity of 60 million bottles, will be transferred to the bid winner that will form a JV company with the government, perhaps retaining 51pc of the shares. The government will retain the remaining shares with the strong possibility of leaving the brewery industry altogether.

The agency values its share of Meta Brewery at 1.6 billion Br, according to reliable sources.

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