- November 30, 2020
- Posted by: pragma_admin
- Category: Uncategorized
The Ethiopian Public Enterprises Holding and Administration Agency (PEHAA) called for expression of interest from potential firms to advise the government on the transaction for the privatization of eight sugar factories.
Part of the government’s wave of privatization plans, the eight sugar factories that will be placed for sale are Welkayit, Tendaho, Kesem, Omo Kuraz-1, Omo Kuraz- 2, Omo Kuraz-3, Arjo-Dedesa, and Tana-Belese sugar factories.
The announcement made on November 26, 2020 came just a day before the telecom sector liberalization license bid which is also part of the government’s grand plan to incorporate private sector money into the economy.
According to the announcement, potential transaction advisors are expected to “prepare a comprehensive plan and recommendations for a successful privatization transaction for the above sugar estates, undertake the necessary market research and carry out a detailed analysis of alternative transaction approaches.”
The expression of interest requires the transaction advisor firms to have “thorough knowledge of the sugar sector from commercial, legal, technical, economic, environmental, and public-policy perspective; extensive previous transaction advisory experience in the agriculture and manufacturing sectors and capital markets; Expertise in carrying out legal, technical, financial due diligence and accounting expertise necessary to carry out successful transaction; at least two experiences in the past five years in developing, assessing and advising on privatization activities, either as an advisor or as an agent, and broad experience in the sugar sector, including legal, regulatory, operational, industry and technical experience; experience in undertaking business review, expertise in business and fixed assets valuations.”
When Ethiopia launched its investment for 10 sugar factories in 2005 during GTP I, its plan was to avail surplus production for the export market. But, because of huge inefficiency in project execution, many of these projects were not successful. Again, because of failure of the sugar factories to enter into operation, sugarcane plantations intended to feed the mills were frequently cleared.
The plan for the sugar sector is to privatize 13 state-owned sugar factories. Last year, the Ministry of Finance released initial documentation for the purpose of inviting local and international investors to express their interests to invest in the state-owned sugar factories. The Ministry and the Ethiopian Sugar Corporation have conducted asset valuations and due diligence in the same year.
The Ethiopian Sugar Corporation, the investor and industry regulator, has been hugely criticized for failure to effectively manage the investments and it had defaulted on its 77-billion-birr loan.
Source: The Ethiopian Reporter