One international supplier, Promising International Trading Co., won the bid to supply a half million tonnes of wheat, and agreed to deliver the bulk shipment by the end of July.
Of the 13 international companies initially invited through a restricted bid, the Chinese company Louis Dreyfus, and Swiss Solaris Commodities SA showed no interest while 11 responded positively.
“Urgency of responding to the escalating negative impact of the drought pushed us to drop the option of a competitive bid,” said Yigezu Daba, director of Public Procurement & Property Disposal Service.
In the opening of the bid which took place at the Service’s premises on King George VI St., each company submitted its respective offer based on lots – three lots for a total of 499,536tn.
The prices offered ranged from 195 dollars to 225 dollars per tonne.
Promising International Trading Co. Dubai Multi Commodities Centre (DMCC), with comparative exposure to similar bids in the country, offered 195.10 dollars, 204.4 dollars, and 208.05 dollars per tonne for each lot. The same company won the contract to supply 176,000tn of wheat at a unit price of 241.86 dollars in November last year, as part of a one million tonne wheat purchase for the drought response.
The announcement of the award was made on March 31, and a period of seven days was allowed for any complaints to be lodged before signing of the contract.
Next to the offers made by Promising, a company from U.K, Intrade Co. UK Ltd. made an offer of 209.5 dollars a tonne, for the entire half million tonne purchase.
A bizarre offer for four lots was submitted by Hakan Agro, while the bid document stipulated only three lots. Hakan, on its own redefined the lots into 41,628tn each and offered 211.13 dollars, 212.13 dollars, 213 dollars and 214.13 dollars per tonne.
“This is out of what is required,” Solomon Betre, procurment business owner at the Service noted “it might have consequences in the bid process.”
Later in the evaluation the mismatch led to Hakan’s disqualification from the process.
The same company was the winner for the November bid with the lowest offer of 234.23 dollars per tonne, 48.13 dollars more than the lowest offer for this round.
Compared to lowest price offers made in 2015, this year has seen a clear decline of 41.7pc in price. Last year in the same month of March the same company that gave the lowest offer in the current bid offered a price of 81.3 dollars more. Two months later in June 2015, price went down to 220 dollars per tonne. Last year in March, the lowest offer made by Promising was 276.4 dollars. During a bid in June it went down to 220 dollars and in November, the lowest offer was 233.26 dollars.
While price of wheat is dropping, the number of people affected by drought and in need of food aid is on the rise. In November last year, the number of people in need of assistance was estimated to be 8.2 million. That number is now 10.2 million. Projections in the wheat market indicate a further fall in price well into 2016, as larger than anticipated harvests continue in the northern hemisphere.
Under normal circumstances, to stabilise the market, the Country used to import wheat solely via the Ethiopia Grain Trade Enterprise (EGTE) , as mandated.
Now with drought situation at hand, a total of 6.5 million quintals have been purchase through the special route. This year only, Ethiopian government has purchased 13 million quintals of wheat, which is 100pc increase.
The country has been importing wheat over the past years in order to meet the growing local demand. In 2009/10 and 2010/11, 5.3 million quintals and 2.58 million quintals, respectively, were imported. In 2011/12 and 2012/13, the imports grew to 4.2 million quintals and 5.6 million quintals. The quantity jumped to five million quintals in 2013/14.
Since the 2014/15 fiscal year, a special route of purchase has been introduced, to increase the supply of wheat for the drought response.
Wheat is being purchased by the Service on behalf of the EGTE, Disaster Risk Management & Preparedness Commission and Strategic Grain Reserve.
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