The Ministry of Finance & Economic Development (MoFED), last week, reversed its ban on the transfer of two state owned transport companies to private companies. The decision came on the condition that the new owners will give priority to public projects.
The ban came in response to the demand from the Ministry of Transport (MoT) to retain Bekelcha Transport S.C and Weyra Transport S.C under state ownership, in order to use their trucks for the transportation of imported equipment for ongoing government projects, including housing projects, according to Wondafrash Assefa, public relations head of the Privatisation & State Enterprises Supervising Agency (PPESA).
“Following the call from the MoFED to cancel the sale of the companies, the Agency wrote a letter requesting that the Ministry allow the transfer of the companies since the decision is not good for the image of the Agency,” said Wondafrash. “We invested in the auction of the companies; it would be a loss for the Agency.”
It was in response to this request that the MoFED agreed to lift the ban. The Agency’s legal department is now working to include the precondition in the deal. It will require them to give priority to transport cargo for ongoing state projects, Wondafrash said.
Tikur Abay Transport S.C, an affilate TIRET, had a successful offer of 325.9 million Br for the acquisition of Bekelcha, which the PPESA’s board approved on March 29, 2014. The approval for the acquisition of Weyra Transport by Trans Ethiopia Plc, an affilate of EFFORT, for 268 million Br was pending at the board when the process was halted by the MoFED.
“Tikur Abay paid 35pc down payment for the company some days before the MoFED cancelled the ban, while the reminder has just been sent to Trans after the ban was lifted,” said Wondafrash.
Both transfers could take place before the end of the fiscal year on July 7, 2014, according to Wondafrash.
There was no offer for two other state owned transport companies, Comet and Shebelle, both of which were offered for sale in the last round of tender for 2012/13.
In an unsuccessful privatisation year, the PPESA only managed to attract successful offers for five enterprises, including Weyra and Bekelcha, although its intention was to sell 20.
The PPESA is planning to make up for that through the aggressive promotion of the enterprises as a strategy.
A villa in the Bole District, owned by Batu Construction S.C, was also approved by the Agency to be sold to Abate Kone (MD), who offered 11.8 million Br. The Agency has also approved the transfer of Hamaressa Edible Oil S.C and Ethiopian Pharmaceutical Manufacturing S.C to buyers who have already made the down payment, although after a small delay, Wondafrash said.
The Agency has another round of tender now in process, the fifth for the year, involving seven companies, five of which have previously failed to attract any buyers. Bilito Siraro Farm and the warehouse of the Ethiopia Fibre Products Enterprise are up for sale for the first time. The other five – the Ethiopian Mineral Development S.C, Bahir Dar Textile S.C, Kombolcha Textile S.C, Agricultural Mechanization Service Enterprise and Transport Construction Design S.C – are being offered for the fifth time within the same year. Financial opening will take place early in the next fiscal year, on July 23, 2014.
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