Saturday, July 13, 2024

Cork factory only PEHAA’s privatization this year


Public Enterprises Holding and Administration Agency (PEHAA) has closed the budget year with the record lowest privatization process by transferring only a single enterprise. They have also been calling investors who are interested in joining value addition development at a tantalum mine in Qenticha.
For the last quarter century, the agency has been transferring public enterprises including huge and potentially public properties to private actors and sometime regional administrations or party and association affiliates.
However, for the current budget year that ends today, the agency has only transferred one government owned enterprise.
Wondafrash Assefa, Public Relations head of PEHAA, told Capital the agency has transferred Ethiopian Crown Cork and Can Manufacturing Industry which was controlled 75 percent by the government for a total of 130 million birr.
The sole bidder CGF-Crown Cork and Aluminum Cap Manufacturing Factory, who had been in the business since 2012 had a higher offer when compared with the floor price of 125.9 million birr that PEHAA estimated.
Recently the agency also floated a bid to develop Qenticha Tantalum mining through value addition instead of exporting a concentrated product. “We want the company that has capability in technical and capital measurements to develop the Qenticha Tantalum jointly,” Wondafrash said.
It is not the first time the government has invited interested parties to jointly develop projects although none have come to fruition.
“We have tried to develop tantalum mining but so far we haven’t been successful so we floated another round last month,” he said.
Qenticha is one of the very few companies floated during the just ended budget year with Ethiopian Crown Cork and Can Manufacturing Industry, National Alcohol and Liquor Factory (NALF) and BM Textile.
Previously the government considered selling out tantalum mining without any preconditions like requirement of value addition, but it has changed its plan.
Years ago experts said that the bid document for Qenticha should focus on making value added products from the mineral as opposed to mining raw tantalum. They say a value addition factory at Qenticha would cost a minimum of USD 120 million and a maximum of a quarter billion USD. However, this would establish an industry that would boost the country’s hard currency from exporting end products as opposed to raw production.
The government has attempted to expand the 25- year-old Qenticha mine, located 550km south of Addis Ababa at Adola, many times. However, the facility is still the property of the state owned Ethiopian Minerals Development Enterprise, which is now under the Ethiopian Minerals, Petroleum and Bio Fuel Corporation.
Experts said that tantalum mining, which is exported as a concentrate, has several related products that can be produced locally and contribute for huge amount of hard currency for the country.
Lithium demand has been growing because the battery is used it in various industries so the global market is huge. For instance, the lithium-ion battery automobile industry and growing in popularity for military and aerospace applications is now on the rise and is searching for lithium, according to experts.
Tantalum is a major input for the production of electronics, aircraft parts and medical equipment.
“A factory that would make value added products would really help the economy,” experts in the industry added. Tantalum is used to make mobile phones and other electronic gadgets, aircraft parts and medical equipment. A pilot tantalum production project began in 1990, during the Derg era.
Wondafrash said that they have been focusing on restructuring the former Ministry of Public Enterprises to PEHAA and including huge public enterprises that were not under the mandate it in related with the recent government move that decides to sell mega enterprises fully or partly.
“Due to the new attention and almost finalized privatizing other public enterprises we sold only one enterprise for the year,” he said.
However, during the budget year the agency invited interested buyers to sell out the over 46 percent on BM Textile but failed. He said that BM has also floated with Qenticha in the bid notice issued last month.
NALF, which is a very successful public factory in terms of profit, was the other enterprise that was expected to be fully transferred for private investors. “In the case NALF we have gone successfully and got a huge offer but the transfer was delayed because the case is changed to a legal issue,” he said. The former owner of one of the four branches of the liquor enterprise has claimed in the case that delayed the privatization process.
Excluding Shebele Transport, PEHAA, is controlling 22 huge public conglomerates under the new restructure.
Ethiopian Development Bank, Ethiopian Mineral, Fuel and Bio-fuel Corporation, Ethiopian Pulp and Paper, Ethiopian Metals and Engineering Corporation, Ethiopian Trading Corporation, Commercial Bank of Ethiopia, Ethio Telecom, and Ethiopian Shipping and Logistics Services Enterprise (ESLSE), Ethiopian Agricultural Business Corporation , Chemical Industries Corporation, Birhan ena Selam Printing Enterprise, National Alcohol and Liquors Factory, Fil Wuha Spa Services Enterprise, Ethiopian Construction Works Corporation, Ethiopian Construction Design and Supervision Works Corporation, Ethiopian Tourist Trade Enterprise, Hotels Development (Hilton Hotel), Ethiopian Insurance Corporation, Ethiopian Airlines, Ghion Hotel Enterprise, Sugar Corporation, and Ethiopian Postal Service.
Shebelle Transport has been floated on different occasions and the agency is also interested in selling out, according to the public relations head.
“Besides that we are now preparing to sale the mega enterprises as per the direction of the government,” he said.
A year ago the government has been announced that it will sale share on Ethiopian Airlines, Telecom, ESLSE and electric sector, and stated that it is looking to fully transfer the sugar and other sector.
The process for telecom and sugar seems to sell shares or be fully transferred, while the valuation work in other enterprises is on the process.

Read more