Meet the national demand for sugar

Since recent years, Ethiopia has been constructing various mega projects in a bid to boost its economy and aspiring to join middle-income countries by 2025. The sugar projects, which are taken the lion’s share of all megaprojects were commenced and have been carried out throughout the country targeting to come out of the vicious cycle of poverty.

As part of its Growth and Transformation Plan I, the construction of ten new mega sugar projects has launched or commenced in different parts of the country intending to create more job opportunities, substituting imports and transferring knowledge and technology.

Years ago, the government was planned to construct ten mega sugar plants and anonymously awarded to a state-owned company named Ethiopian Metal and Engineering Corporation (MetEC) to see their completion within 18 months’ time.

It signed a construction contract agreement of these projects intending to finalize within allotted schedule. However, after some trial, MetEC failed to finalize all the projects as the projects are commenced deprived of an adequate feasibility study, in-depth preparation, experience, infrastructure development, allocating sufficient budget, good project management system, the supply of inputs, etc.

Since its inception, MetEC simply received projects to do tasks by ‘learning from experience’ belief which later on caused for the delay of construction. The delay of sugar projects, apart from requiring a sizable amount of extra finance to finalize the project, enforced the country to pay billions of birr in debt. If it has been carried out as per the schedule, the projects should have got their completion in the mid 2013/14.

According to Ethiopian Sugar Corporation, if we take the delayed projects such as TanaBeles I, Omo Kuraz I and Tana Beles II, for instance, the country has lost 9.4 billion Birr for the cost of employees and other expenditures within three years. What is more, the delayed projects defied the country’s effort to meet the demand f sugar by local capacity and forced to spend an extra amount of foreign currency to import sugar for local consumption.

To solve construction barriers, various measures have taken to minimize construction costs and see the completion of projects with less time. Off late, considering MetEC’s incompetence to complete projects up on the schedule and with the allotted budget, the government took away the ongoing sugar projects and transferred to other contractors.

In some extent, the transfer of projects for other capable and well-experienced contractors has speeded up the construction progress, saved unnecessary expenditure and enabled some sugar factories to commence production especially after sugar sector reform introduced recently.

Since 2015 to 2019, five mega sugar projects such as Arjo Dededisa, Tendaho, Kessem, Omo Kuraz II and Omo Kuraz III sugar factories are operational while the remaining five projects are under construction. Some of them have shown spectacular progress while others registered extreme delay due to various reasons.

 After the recent sugar sector reform, the production capacity of sugar factories has increased, according to Gashaw Ayichluhim, Corporate Communication Executive Officer at Ethiopian Sugar Corporation.

In its history, the sugar sector has achieved high production performance right after undertaking reform measures. Over the last just ended fiscals year (till June), seven operating sugar factories have yielded about 310,000 tons of sugar and over 14.2 million litres of ethanol which exceeds last two years’ performance, Gashaw said.

As to Executive Officer, two sugar factories such as Fincha and Metehara have produced the above-mentioned number of ethanol (technical alcohol) during the mentioned period. “The production performance in both sugar and ethanol products exceeded by 600,000 quintals and six million liters respectively when compare the result gained with last year’s performance.”

Considering the rising demand for sugar at the national level, realizing the construction of mega sugar projects is imperative to boost the national economy, create additional job opportunities, transfer knowledge and technology and meet the demand and supply gap.

According to documents, the country has an annual demand of over 7.5 million quintals of sugar. To meet the national demand and supply of sugar that is 400,000 tons of sugar, no other option better than realizing the construction of the remaining projects.

Indicating that the country has been importing sugar product from various countries to meet local demand especially when factories so our production for maintenance purpose, he revealed that about 200,000 tons of sugar have purchased and imported from India, Gashaw noted.

“If the privatization process is successfully implemented, and factories produce upon their capacity in the future, our factories will cover the national demand of sugar.”

Concerning the result gained so far especially after the introduction of sugar sector reform, Gashaw said that we will never be proud of by this year’s performance, but it will encourage us to do the better. We will be proud of it when we cover the local demand for sugar by our capacity and instigate export of sugar, he added.

As part of the reform, various activities have been ongoing to privatize highly debated sugar factories which required additional investment in the sector. The six identified sugar factories are on the privatization process though the occurrence of COVID- 19 outbreak has been affected it, he pointed out.

Asked about the progress of the remaining sugar projects, Gashaw said the government and Ministry of Finance has been playing a pivotal role through allocating additional debt to finalize up on the schedule.

The construction of Tana Beles I Sugar Factory, for instance, was planned to commence its testing and commissioning (T&C) task in May 2020, due to COVID-19 outbreak it postponed T&C to December 2020. But, till the end of June 2020, the project reached to 80.05 percent while TanaBeles II Sugar Factory which is extremely delayed among ten sugar projects has achieved only 23 percent of its plan, he said.

The Ethiopian Herald August 20/2020

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