As part of its plan to solve housing shortages Addis Abeba City Administration (AACA) is building 120,000 condominium houses. Building materials are vital, especially gravel. In fact, the material was the subject of discussion in a meeting, chaired by Abate Sitotaw, deputy mayor of AACA, which took place at the Ghion Hotel on October 21, 2014. Gravel producers and suppliers for the city’s housing projects also attended.
The city needs 1.3 million cubic metres of gravel this fiscal year for its housing projects, excluding necessary supplies for the 40/60 housing scheme. Total demand for the next five years amounts to between five and six million cubic metres, the meeting was told. Currently this supply comes from only a few of the 260 gravel suppliers in Addis Abeba, and adjacent Oromia towns. The meeting was attempting to find a solution for the lack of gravel supply for its projects.
The AACA held suppliers responsible for not providing its housing projects with enough of the right quality of gravel, despite their agreement to do so. Meanwhile, suppliers blamed the administration for not paying them in time, as well as raising issues with the accessibility of gravel production sites.
Adugna Kebede, general manager of gravel supplier Nana Trading Plc, has been working with the Addis Abeba Housing & Construction Agency (AAHCA) for the past three years. The company’s production site is located in Akaki-Kaliti District, Debre Zeit Road, seven kilometres west of Tirunesh Beijing Hospital.
It owns two excavators, one loader, four freight track vehicles and a crasher machine, and has a production capacity of 650 cubic meters to 700 cubic meters per day. However, as a result of problems, ranging from the lack of finance to limited production area, the company is not producing as much as it potentially could, Adugna claims. Nana now produces 320 cubic metres of type 02 gravel per day, which it supplies to the Agency. It also produces other kinds of gravel, used for building construction and cobblestone roads.
Currently the company has a deal with the AAHCA to deliver 20,000 cubic metres to 25,000 cubic metres of gravel over two months for three projects, which Adugna says they may not be able to deliver. One contractor at the site of Project 16, near where Nana operates, says he is unable to meet the delivery deadline because of input shortages.
The project, which has approximately 240 blocks of G+4 and G+7 buildings, is planned to reach 70pc by the end of the fiscal year.
“We are now receiving 80 cubic metres of gravel a day, which is 48 cubic metres less than we need,” said the contractor.
The project site has quarries surrounding it, but Nana uses another quarry three kilometres away from where It transports the rocks to the crushing site. Four to five truck loads of rocks make one truck load (16 cubic metres) of gravel. So crushing machines should be installed near quarries. However, it takes six months to a year to move the machines and install them at a new site, Adugna says.
Adugna also wants the city to pay him in advance or give him a loan. However, he says “they are not even making timely payments for gravel already delivered; sometimes we even have to wait longer than a week.”
The imbalance between demand and supply of gravel production is a problem acknowledged by the AAHCA, as well as by producers. However, the Agency believes there are enough producers around the city, but that they are not providing enough.
“Most of the suppliers who get incentives from the Agency, in terms of access to land and machinery, are not helping to overcome our problem,” said Negus Tekelaye, AAHCA’s construction input project office head.
This happens for various reasons, he says. Primarily, those producers who get direct support prefer to sell their gravel to the private sector. Others simply pass the land they get from the administration, as an incentive, to third parties, without ever going into gravel production. The private sector preference instead of working with the government could be due to the fact that private companies pay promptly and cut a better bargain, says Adugna.
The AAHCA pays 250 Br to 300 Br for 16 cubic metres of gravel. The fact that the Agency transports the gravel itself the price ranges according to the distance between the gravel production site and the construction area: the farther the distance, the cheaper the price.
Private company prices range from 300 Br to 350 Br for 16 cubic metres, based on the distance between the construction area and the production site; the farther the distance, the higher the price.
A businessman, requested anonymity, who has 10 years experience in the sector, and co-owner of a gravel producer company in Addis Abeba, Gulelle District and Sululta town, 40Km north of Addis Abeba, complained that his company has the capacity to crush 250 cubic metres an hour, but now does that in a day because of problems such as electricity shortages, delays in payment and lack of credit facilities. He cites these as major challenges for the sector.
“Previously, I used to supply the Agency as they use larger quantities than private customers; however, due to the lower price they offer, compared to private developers, I now supply only private customers,” he said.
The price currently offered by the Agency was set five years ago. He believes it no longer suits current production costs.
Despite the complaints of suppliers, Negus says they receive all necessary direct assistance from the Agency, yet still fail to deliver. The Agency says it will solve the problem by identifying those actors and penalising them.
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