5 May 2008

Ethiopia: Tendaho Sugar Factory Construction Behind Schedule

Officials of the federal government are disappointed with the delay in the launch of the new Tendaho Sugar Factory construction project.

Girma Birru, minister of Trade and Industry (MoTI) has, two weeks ago, instructed the project winner, Overseas Infrastructure Alliance (India) Pvt Ltd Co (OIA), to commence construction by May 15, 2008.

The minister issued the instruction following the discussion he had with the management of the Tendaho Sugar factory and the Ethiopian Sugar Development Agency as well as executives of the OIA.

Overseas has delayed by three months. Tendaho Sugar Factory and Overseas signed an Engineering, Procurement and Construction (EPC) Contract on January 20, 2008 and Oveseas should have begun construction within 36 days of the agreement. The company, however, has yet to begin the construction of the factory in the Afar Regional State. The delay following the agreement is also feared to make the sugarcane harvest out of use.

"If the sugar cane is put idle after harvest for an extended period, it will not be used for sugar production,"

There is a 400ht of sugar cane plantation at Tendaho.

The agreement for the project was made to be for engineering procurement and construction only as there are two more winners of the various lots in the tender that had been floated to also include the Finchaa Sugar Factory Construction Project.The idea to sign an EPC agreement came from the Indian EXIM Bank, which financed 640 million dollars for the Ethiopian sugar projects, including Tendaho.

The winners of the four lots were Overseas for juice extraction and power house construction, IJAC for stem generation, and UTTAM for processing house installations.

To kick off construction, the company has to make a deal with the two other companies that won single lots each. The delay is attributed to a failure of Overseas to agree with IJAC and UTTAM, sources disclosed.

The federal government has budgeted 15 billion Br for expansion of three sugar factories - Wonji-shoa, Metehara and Finchaa - and the construction of the new Tendaho Sugar Factory.

Tendaho, which cultivates 64,000ht of land, has been allocated eight billion Birr of this budget. Although Tendaho Sugar Factory was projected to be finalized in 2010, the deficiency of water in the incomplete Tendaho Dam during the dry season and the protraction of the launch of the construction are expected to delay completion by a year, a source disclosed.

The Tendaho Dam, the largest dam constructed by the Water Works Construction Enterprise (WWCE) has a capacity to hold 1.8 billion cubic metres of water.

When completed, Tendaho Factory will have a capacity to crush 26,000tn of sugar cane, the largest capacity in Africa. When the projects in all the sugar factories are finalized, Ethiopia will produce 800,000tns of sugar annually.

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