10 February 2018

Ethiopia: Rebar Procurement Saga Concludes With C&E Brothers' Victory in Sight

Only two local manufacturers, Abyssinia and C & E Brothers offered to supply the rebar

C & E Brothers Steel Factory offered the least price to supply reinforcement bars worth more than half a billion Birr for use in Addis Abeba's middle-income public housing projects.

The bid for the 19,513tns of re-bars was floated by the city's Public Procurement & Property Disposal Agency (PPPDA) on behalf of Addis Abeba City Saving Houses Development Enterprise (AASHDE) last month. Abyssinia Integrated Steel Plc and C & E Brothers showed interest to supply what is the Agency's fourth attempt to close the saga on the procurement of 50,084tn of re-bars.

C & E Brothers, that has a production capacity of an annual half a million tones, offered the least price of 33,340 Br and 32,500 Br for a tonne of the 10mm and 14mm re-bars, respectively. And with a total of 644.7 million Br, Abyssinia offered a total of 757.5 million Br.

Since the procurement is valued at over a 100 million Br, C & E Brothers have not officially been declared the winner, according to Gezahegn Wodajo, a senior procurement officer at the Agency.

"It has to wait until the board of directors, chaired by Abate Sitotaw, the deputy mayor of Addis Abeba, signs off on it," added Gezahegn.

Just two weeks back, Abyssinia signed the agreement for the supply of 14,571tn of re-bar for a cost of 172 million Br. But the company is still processing the performance bond, which is worth 10pc of the cost of the procurement, to start delivering the re-bars, according to Gezahegn.

The Agency's initial bid to purchase the 50,084tn of re-bars was floated seven months ago for the construction of the close to 21,000 units under the public middle-income housing scheme. Then, Steely RMI, C & E Brothers, Abyssinia and Habesha Steel Mills responded. And Steely RMI won the bid with an offer of over a billion Birr.

But due to the devaluation of the Birr, the company could not supply the product, at which point the Agency decided to cancel the tender, and procure in two lots.

On the first lot, where a bid for the procurement of 14,571tn of rebar was floated in October 2017, Guna Trading, Steely RMI, Abyssinia and C & E Brothers vied. Abyssinia was then awarded the bid to supply 20mm and 24mm re-bars at the cost of 172 million Br. C & E, which was established back in 1960, and is a joint venture company with a capital of more than a billion Birr, failed for not presenting a quality certificate.

The remaining 35,513tn of re-bar were further split into two lots. For the bid to supply the 16,000tn of re-bar with 12mm and 16mm sizes, Steely RMI won, while East Steel, Abyssinia and C & E Brothers failed due to the preconditions they set on their bid documents.

Before this bid, Guna, Biftu and Ambassel tradings were given a chance to supply the rebars in a proforma purchase, while Steely RMI, East Steel, Abyssinia Integrated and C & E Brothers were given a restrictive bid arrangement but could not succeed due to either stock depletion or setting preconditions and lack of providing quality certificate.

The Enterprise is not the only government body having trouble making re-bar procurements. Recently, Army Foundation suspended a bid to buy 600 million Br worth of re-bar citing an inability to access foreign currency. This is in a country where close to 700,000tns of rebars, tubes and core metals are produced annually, accounting for a third of the production capacity of steel manufacturers.


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