6 April 2019

Ethiopia: Six Firms Vie to Supply Rebar

Six steel manufacturers and importers are vying to supply 21,761tn of reinforcement bars valued at nearly 305 million Br.

The companies have submitted their financial and technical offers to supply rebar to middle-income housing schemes that are underway by the City Roads Authority and Water & Sewerage Authority. The winning firm will supply eight types of rebar ranging between six millimetres and 32mm in thickness.

Announced by the City Public Procurement & Property Disposal Agency on February 26, 2019, the bids were opened last week after a total of 35 companies expressed interest by purchasing bid documents, and a fourth of them returned bid documents with their technical and financial offers.

Abyssinia Integrated Steel, Tokuma Fite Steel Importer, Habesha Steel, Steely RMI, Mohammed Hassan Adam Import & Export and C&E Brothers Steel are the six companies that passed the preliminary evaluation. Two more companies, Sentinel Steel and Berhe GebreMedhin, could not make the cut as their representatives failed to arrive on time for the bid opening.

"We were late, because it took longer than we expected to secure foreign currency to import metal billets," says Mekebeb Kebede, sales executive of Sentinel Steel Company, adding that the company had to be sure it would be able to produce the rebar before it made an offer.

This round is the second attempt by the Agency as the initial bid failed. It was initially tendered on October 4, 2018, when 36 suppliers participated, but only five offered bids.

"The bid failed as the number of qualified bidders was below the required number," said Bata Edao, chairperson of the tender committee. "Some bidders did not submit mandatory documents, while others tried to set various preconditions that were not included in the bid document."

"When the result of the technical evaluation will be announced depends on the accuracy of the bidders' offers as well as how fast they are willing to resolve minor document errors when the committee requests it of them," said Bata.

Due to the devaluation of the Birr, the procurement of rebar was paused for a year. The last procurement was for 19,513tn of rebar in February 2018 from C & E Brothers Steel Factory, which had offered the lowest price of around half a billion Birr for the Addis Abeba middle-income housing project.

Ethiopia has 190 registered companies that manufacture iron and steel products with an annual production capacity of 5.9 million tonnes of steel. Nonetheless, the national demand for rebar has not been met. The country needs more than 1.3 billion dollars in foreign currency to procure 6.6 million tonnes of billet annually and meet demand.

The challenge of a shortage in the supply of rebar is severely affecting the construction industry and creating vulnerabilities such as hoarding, Habtamu Hailemichael, a civil engineer for more than a decade and a private consultant.

"Price variations of rebar bring about significant contract variations in construction projects," he said. "That escalates the overall price of the project."

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