20 May 2017

Ethiopia: The First Engine Factory Opens in Meqelle

The factory lies on a 30ha plot of land and was erected with 350 million Birr

The first engine manufacturing plant in the country is set to be operational in Meqelle, Tigray Regional State, with a 350 million Br investment from the local military base corporation.

Named as Mekelle Engine Production Factory, the company is established by one of the 15 subsidiary companies under the Metal & Engineering Corporation (MetEC), the Ethiopian Power Engineering Industry (EPEI).

Mekelle Engine Production Factory has a production capacity of manufacturing 20,000 engines annually. It produces three types of engines; small, medium and heavy engines used for different purposes including for vehicles, water pumps and power generators. The small engines are for Bajaj, pumps, power generators and walking tractors; medium engines are for buses and trucks, and heavy engines are for construction machinery such as loaders, excavators and graders.

The construction of the company started in 2015 and was completed last year, and currently, it is piloting production.

The company was initiated after various questions were raised during the Ethio-Metal and Engineering International Exhibition that was held in 2012, according to Mossa Yimame (Maj.) deputy general manager and marketing and sales head of EPEI.

"During the exhibition, it was commented that importing engines and spare parts is the biggest challenge of companies that are engaged in the metal and engineering industries," Mossa told Fortune. "This inspired us to establish the factory."

Lying on a 30ha plot of land, the company currently hires 400 permanent workers. It also secured an area in Bikiltu, Wolega, Oromia Regional State, to explore iron ore as an input for the production of engines.

From the total inputs used to manufacture the engines, about 60pc of the inputs are produced locally by sister companies of the EPEI and the enterprises that are operating under it, according to Ashenafi Biru, head of promotion and advertising at EPEI.

The factory targets local operational vehicle assemblers in the country, which are currently 18, out of the total 104 foreign and domestic vehicle assembly investment projects which obtained licenses from the Ethiopian Investment Commission (EIC) up until last year.

Bishoftu Automotive Engineering Industries, Akaki Basic Metal Industry, Debre Berhan Construction Machinery Industry and Adama Agricultural Machinery Industry, all of which are operating under MetEC, are the major companies, the engine factory is targeting as its customers.

The Company is on a final deal with Bishoftu Automotive to supply engines for the vehicles it is assembling, according to Mossa. They are also working on a deal with Adama Agricultural Machinery Industry to provide them engines for the tractors and agricultural vehicles they are manufacturing.

"The product will help us to increase the rate of value addition on the vehicles we are assembling," Metafer Beshahwured (Maj.), Bishoftu Automotive's deputy general manager for marketing and sales told Fortune. Bishoftu Automotive currently adds 30-55pc value on the vehicles it is manufacturing locally.

"We also agreed with the Addis Abeba Transport Bureau to supply engines, with its 251 cars that are out of service due to a problem that has arisen from their engines and could not be fixed because of a Letter of Credit (LC) problem to import the spare parts," said Mossa.

In 2016, the country imported 515.2 million dollars worth of engines, engine spare parts and accessories. And in the past four months of this year, the amount has reached 101 million dollars.

"We do not compromise quality," Mossa told Fortune, rejecting the claim raised by many over the quality of MetEC's products. "And we believe we can reach the best standard through time."

Established five years ago, EPEI registered a turnover of 1.6 billion Br during the last fiscal year. Including the engine factory, EPEI has seven companies under it, engaging in producing transformers, turbines, solar panels and wires and cables. Currently, it has 2,500 employees.

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