Ghion hotel located on Ras Desta Damtew street has attracted more local interest when put on the auction bloc for the second time.
An increasing number of local investors had been buying bid documents for the slew of state enterprises that the Privatisation and Public Enterprises Supervising Agency (PPESA) had put up for auction over the past month.
The Agency had, through three consecutive tenders, auctioned 11 state enterprises, 10 of which are for sale. One state enterprise, Ethiopian Minerals Development SC, which explores mineral deposits and mines tantalum and industrial minerals in Kenticha area, 550km south of Addis Abeba, was offered for a joint venture in the latest tender floated on Monday December 3, 2012.
Prior to that, the Agency had issued a tender on November 23, 2012, for the privatisation of four state owned enterprises including Ghion Hotel, Adola Gold Mining Enterprise, Artistic Printing Enterprise and Agricultural Mechanization Service Enterprise.
Nine companies have bought the bid document for Ghion Hotel, whose indicative price is set at 1.7 billionBr.These include Ghion Gas, which has 85pc of the market share in the supply of LPG gas; Tedhar Excavation & Earth Moving Ltd, a road construction company, and GOH Capital Investment, a company headed by Demissie Assefa, who had previously advised Dashen Beer and Duet, aLondonbased company, in their unsuccessful joint bid to acquireMetabrewery.
Previously when the 60 year old hotel which lies on 12ha of land, was fully auctioned for the first time in early June 2012, it was mostly international companies that had bought the bid document.
These included hoteliers like Southern Sun of South Africa; China Communications Construction, a large state owned company involved in the design and construction of roads, bridges and railways, and Panorama International, an American based company which provides consulting services for real estate developers.
Ghion which lies behind theJubileePalaceonRas Desta Damtew Street, was attractive for its location and space. Despite all the international interest, however, offers failed to materialize during the bid opening date in August, something the Agency believes was because of the steep indicative price set at 2.7 billionBr.
The indicative price was later revised after valuation of the property was reassessed by SAB consultancy, a local consultant hired by the Agency.
SAB consultancy had also done valuation for Adola Gold Mine, located at Oddo Shakisso Wereda, Borena Zone in Oromia regional state. It is the first time that the mine, which mainly involves in the exploitation of placer gold, has been put up for auction. The mine which has a production capacity of 85 kgs annually, was offered for an indicative price of 199 million Br, according to sources.
Like Ghion Hotel, Adola gold mine also attracted interest mostly from local investors. Of the 14 businesses and individuals which had bought bid documents, nine are either fromEthiopiaor have operations based in the country.
Forefront among these is MIDROC Gold, which already has a gold mine near Adola in Legedembi area, Shakisso wereda with an average production of 4,500 kg of gold per annum. MIDROC, which is recognized as the only modern gold mining company with large scale production, will add to its vast resources in the area if it bids on Adola.
Sheba Exploration and Fortune PLC have also bought bid documents. Some local investors have bought bid documents for more than one state enterprise including some of the initial six companies that PPESA had tendered early on November 7. These enterprises include Commercial Printing Enterprise, Awash Winery, which will be tendered for the fifth time with an indicative price of 400 million Br, and Arba Gugu farms.
GET-AS International, a business involved in manufacturing, import and export, had submitted tenders for Ghion, Adola and Commercial Printing Enterprise. The printing enterprise was founded in 1940 by a Armenian investor and later re-established as a public enterprise with a paid up capital of 1.02 millionBr.The indicative price for it is set at 58.9 million Br, much lower than the valuation made for Artistic Enterprise.
Some companies buy bid documents to see if there is anything worth investing in, according to a family member and manager at Get-As, who wanted to remain anonymous.
"We buy the bid documents to see if there is anything feasible to invest in; we may not necessarily submit," the management and family member told Fortune.
The indicative price set for the company is 58.9 millionBr.This is much less than the more larger Artistic printing Enterprise founded in 1931, another printing press auctioned by the government whose floor price is set at 241 million Br.
The bid opening date for the first six enterprises including Commercial is December 20. The bids for Ghion and Adola will open on January 7, and the time to submit proposals for Ethiopian Mineral Development Enterprise will end by January 30, 2013.
Offers submitted will first be evaluated by the Agency's bid committee which assesses both financial and technical proposals. It forwards the minutes of its assessment meeting to the Director General, Beyene Gebremaskel. Beyene forwards the offers to the board of directors, headed by Aster Mammo, government whip, which makes the final decision.