22 March 2018

Ethiopia: Omo Kuraz II - Sugar Industry's Source of Optimism

It was in 2010 when Ethiopia starts the First Growth and Transformation (GTP I) that it set the ambitious plan of giving a significant boost to the sugar industry, hence placing it among the pillars of the overall economic transformation. Between 2010 and 2016, using the loans it secured and other sources, the government allotted close to 3.6 billion USD to expand the sugar industry, according to the 2016 Bloomberg report. By making the country to rank among the top-10 global producers by 2023, Ethiopian Sugar Corporation (ESC) plans to make the sugar industry a globally competitive one.

Ethiopia has more than 500,000 hectares of irrigable and untapped fertile land, with abundant water resource, suitable for sugarcane development, according to a national survey.

The establishment of sugar factories is among the major plans of GTP I and II to meet the growing local demand, create jobs, boost economic growth and export and expand industries. ESC will also use the by-products of the sugar companies to generate substantial amount of energy.

According to the 2016 study, 'The Kuraz Sugar Development Project (KSDP) in Ethiopia: Between 'sweet visions' and mounting challenges, the ESC adopted a dual-track approach: modernizing and expanding existing estates (i.e. Wonji Shoa, Metehara, Fincha) while also developing new estates and sugarcane processing facilities including KSDP, Kessem, Tendaho Wolkaiyt and Beles sugar development projects.

However, the end result during GTP I had not been encouraging as the construction of some of the newly built sugar factories lagged behind schedule. For instance, the construction of Tana Beles I and II, and Omo Kuraz V, which were supposed to be completed in 2013 and 2015 respectively, lagged behind time.

One of the successful sugar projects in this regard is the Omo Kuraz II Sugar Factory along the Omo Basin in Southern Nations, Nationalities and Peoples State. The factory, whose construction commenced three years ago, is located in the middle of the four sugar factories planned to be constructed under the Omo-Kuraz Sugar Development Project.

According to the revised plan of the sugar development sector, the culturable command area of the project selected for the construction of four sugar factories, one with 24,000 TCD and the rest three with 12,000 TCD (Tone of Cane Crushed Per Day), is 100,000 hectares. The sugarcane cultivation is currently is well underway.

The plain landscape makes the Basin convenient for sugarcane cultivation using canal irrigation. As the project site is very close to the Ethio-Kenyan border, it situates the factory in a strategic location to export its production to neighboring countries easier.

Gashaw Ayichiluhm, ESC corporate communication executive officer told The Ethiopian Herald that ESC secured the 6.67 billion birr needed to construct the project from the Chinese Development Bank in the form of credit. Following an agreement signed between ESC and the Chinese company Complant, construction officially started on July 2014. Unlike the other projects, the construction was also completed within a short period.

The communication officer added that Complant also built the Kessem Sugar Factory that has already commenced production. In addition, the company is also constructing Omo Kuraz III Sugar factory that is nearing completion and ready for production.

Almost three years later on March 2017, the factory commenced production. With full capacity, it could crush 12,000 tons of sugarcane per day. Besides producing 2.5 million quintals of sugar per year, the factory would produce 28 million liters of ethanol and generate 60 Mega Watts of electricity. While the factory consumes 20 MW, it would send the remaining 40 to the national power grid.

The project was set to commence production by early 2017 only to have delayed due to bad weather condition from July 7 up to January 30. "But once it started production, it has become successful and joined Wonji Shoa, Metehara,Fincha, Kessem, Tendaho and Arjo Dediessa sugar factories that are striving to meet the national demand, he added.

Omo Kuraz would have significant impact on the economy because of its size. It would significantly increase the national supply of sugar. It not only reduces import of sugar, as witnessed during the recent sugar shortage, it will also enable the nation to export sugar to the international market in the near future. The factory has also been effective in creating a significant amount of jobs and generating electricity to send to the national grid. With this, it is supporting the industrialization ambition, he said.

According to Gashaw's explanation, in the future, when an ethanol factory is built, additional ethanol will be produced. ESC is looking forward to work with domestic as well as foreign companies in the sector. "We supply molasses and the work will be conducted either in joint venture or else by foreign companies."

He added that, the construction of the third sugar factory i.e. Omo-Kuraz III Sugar Factory is already completed. Same Chinese company- Complant has been constructing the factory and it would enter production phase in the very near future.

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