Ten Companies Compete to Supply Bulk of Wheat

Three companies made a total offer of two billion birr

Three international grain suppliers gave a least offer of two billion Br for the supply of 400,000tn of wheat.

Following an international tender, 11 international suppliers have submitted their proposals, including an 80,000Br bid security to supply of wheat to the government. The bid was opened at the premises of the Public Procurement & Property Disposal Service at King George VI St. on February 7, 2017, which conducted the bid on behalf of the Ministry of Trade.

The bid was initially floated last month. At the time, the plan was to purchase 720,000tn of wheat.

“The volume was downsized to 400,000tn because the first assessment of the national demand had to be revised,” said Yigezu Daba, director of the Service. “The earlier amount was much higher than the national demand.”

During the latest bid, all except one out of 11 proposals submitted were opened. A bidder, Al-Kawo Trading was declared a late bidder and its proposal was not opened, in spite of explanations about the traffic congestion on the road from Nazreth that caused the delay. The total bulk of purchase was divided into three lots. Lots 1 and 2 contain 133,334tn of wheat each, and Lot 3 had 133,332tn.

Three different companies listed the least offers for all three lots.

Promising International Trading Co listed 227.28 dollars per tonne for Lot 1; a total offer of 30.3 million dollars, nine dollars a tonne less than the second least offer made by Phoenix International. Promising, a UK based company, is one of the major suppliers of grain to the Ethiopian market. In 2016, the Company won a bid to supply half a million tonnes of wheat and Phoenix is

An American based company, ADM International, which works in crops markets on six continents and operates more than 420 crop procurement facilities, gave a list offer of 227.5 dollars per tonne for Lot 2, a total offer of 30.3 million dollars. Promising and Phoenix followed ADM with offers of 232.52 dollars and 229.10 dollars per tonne for the second lot, respectively.

Prices for Lot 3 were much lower than those for the other lots. Phoenix Commodities listed 225.10 dollars per tonne, almost one million dollars less than total offers made for the other two lots. However, Phoenix failed to provide a security bond that fulfilled the minimum amount, only submitting a security bond of 8,000 dollars under Phoenix’s name, and an 80,000 Br CPO under the agent’s name. However, only the security bond was considered for all three lots, placing Phoenix’s bond below the minimum requirements.

Each bidder had to submit a bid security bond worth at least 10,666 dollars for all three lots, according to a procurement expert close to the process.

All ten companies who listed prices gave two types of offers; if the shipment is transported by the Ethiopian Shipping & Logistic Services Enterprise, and if the transportation is carried out by the sellers’ vessels. The latter offer was optional.

“It is only if ESLSE doesn’t have the capacity that we will look into other options,” says the expert.

Over the years Ethiopia has been importing wheat for the purpose of market stabilization. In 2011/12 and 2012/13, imports stood at 4.2 million quintals and 5.6 million quintals, which slightly decreased to five million quintals in 2013/14. Last year, the government purchased six million quintals of wheat, without including the purchase made for drought relief. After the current procurement is delivered, the wheat will be distributed to more than 300 flour factories and 5,000 bakeries.

The wheat procurement is made in an economy where food inflation rates grew below six percent in January 2016 compared to the same period last year. In addition, global wheat prices declined by 23pc in 2016 from 2015 prices, according to the United Nations Conference on Trade and Development. The price has now reached 204 dollars per tonne.


Published on Feb 16,2017 [ Vol 17 ,No 876]



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