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Parliament approves $50m polish loan for sugar sector

Posted in Sugar & Related

ETHIOPIA - Parliament has approved a Polish loan of 50 million dollars for the sugar sector, although the Sugar Corporation had already announced a tender to start spending the money without waiting for the House’s decision.

Ethiopia and Poland signed the loan agreement on March 20, 2015, which was followed by the House’s approval more than three months later on June 30, 2015.

The loan, which is highly concessional, will be paid in 28 years, with a grace period of five years. In case the loan is not paid by the agreed upon time, the Ethiopian government will be forced to pay a 0.6 default interest in addition to the originally agreed interest rate of 0.15 pc.

Ethiopia will use the money for the purchase of machinery for its sugar cane plantations. The machines include a cane haulage tractor, tandem cane haulage trailers as well as a cane grab loader, which will help harvest the sugar cane and transport it to the factories. The new machines preclude the need for burning in order to chop the canes.

The use of intensive labour and the high temperatures makes harvesting sugar cane very challenging, problems which can be solved by deploying machines, a source, who wished to be unnamed, told Fortune. The leaves that were once burned can now be composted, this source added.

With four existing sugar factories and five ongoing projects, the Sugar Corporation currently cultivates 61,126ha of land, while the ongoing projects are expected to add 330,000ha.

Currently, Finchaa Sugar Factory has the largest sugar cane plantation, consisting of around 21,000ha. From the ongoing sugar projects, Kuraz Sugar Project is expected to have the largest cane plantation field, which is 175,000ha.

Established in 2010 by the Council of Ministers regulation replacing the former Sugar Development Agency, the Sugar Corporation has only four factories in operation, with five still in the making, despite the aspiration of the government to have 10 factories in operation by the end of the GTP I, in a couple of days.

Only Polish companies were eligible to bid for the supply of the machinery. The bid was announced before Parliament’s approval so as to save time and because the approval was thought to be on the cards. Even if the loan was not approved, the bid could have easily been rejected by the Sugar Corporation, according to a source who requested anonymity.

The machinery is to be distributed in a centralised system through the Corporation, based on the factories’ as well as projects’ need to use it, Zemedkun Tekle, communication director at the Sugar Corporation told Fortune, noting that distribution to the projects is yet to be determined.

July 7, 2015;