Amid shortages of wheat supply in the market, the government is spending 1.37 billion Br to procure 155,000tns of wheat.
The wheat was tendered under two schemes by the Public Procurement & Property Disposal Service, and the commodity will be distributed to beneficiaries under the fourth phase of the Productive Safety Net Program launched in 2005. The program was designed to enable the rural poor facing chronic food insecurity to overcome shortages, create assets and become food self-sufficient.
The Program operates in Afar, Amhara, Dire Dawa, Harare, Oromia, SNNP, Somali, Tigray regional states and Dire Dawa city administration zone and reaches up to eight million food-insecure people annually. The programme, which will remain active until 2020, will spend three billion dollars a year, out of which the Government of Ethiopia funds 14pc, and the rest is covered by World Food Programme and eight other donors.
The Service is processing procurement on behalf of the Ministry of Agriculture & Natural Resources with financing from the International Development Association.
Divided into two categories of 80,000tn and 75,000tn, the initial tender was announced in late August. During the financial opening for the first category held last Wednesday, only two companies, Hakan Agro DMCC and Bunge SA, placed offers out of 12 companies that initially expressed interest by buying bid documents.
Hakan, established in 2007 and headquartered in Dubai, submitted the lowest price offer of 25.7 million dollars for the 80,000tn of wheat, while the runner-up, Bunge, came up with a 27.5-million-dollar bid. The wheat will be delivered to Adama, Kombolcha and Dire Dawa central warehouses.
For the second category, 13 companies purchased the bid documents, but only three made financial offers, including Promising International, a company established in 2007.
Promising International, which operates in Ethiopia, Dubai, Ukraine, Syria, Egypt and Tunisia, made the lowest offer of 23.8 million dollars and, Hakan, with networks in 26 countries, offered the lowest bid of 24.3 million dollars for the other bid. The wheat will be divided into two lots and will be delivered to Adama and Kombolcha warehouses.
The winning companies will be confirmed in about a week and will have 30-days to deliver the commodity after the issuance of letters of credit, according to Solomon Betre, director of Procurement Services and chairperson of the tender committee.
Bunge SA was founded in 1976 and is based in Geneva, Switzerland. It had won the previous bid in May to supply 35,000tns of wheat for close to 290 million Br.
Even though Ethiopia is the largest wheat producer in Sub-Saharan Africa, it still can’t meet its demand.
In 2017 Ethiopia produced four million tonnes of wheat, showing a five percent growth in the past fiscal year. Despite the increase in production, imports of wheat grew to 2.5 million tonnes in the past year from 661,386tn in 2015.
The market has recently been hit by a shortage of wheat, which led to a 55pc price increase one quintal of wheat. Food inflation reached 16pc in August this year.