Dubai company offers lowest price in wheat re-bid after failing to live up to promises
They say if you don’t succeed once try and try again. That apparently is the motto of Dubai based Promising International Trading Co, which despite failing to live up to their end of the bargain when they won a bid to deliver wheat this past June, returned and offered the lowest price during the Public Procurement and Property Disposal Service (PPPDS) re-bid early last week.
Last June the company, which is not new to the Ethiopian market, agreed to supply 200,000 metric tons of wheat but because of what they said were technical reasons like a delay in the Letter of Credit or disagreements with ESLSE did not deliver. This contributed to a wheat shortage over the past few months forcing the Service to float another bid this month.
Last Tuesday when the bid documents were opened eight companies participated and seven of them met the requirements to supply wheat.
Promising International offered USD 272.05 per metric ton for lot 1 (a unit of measurement) and USD 284.8 for lot 2 or USD 55.68 million in total. In this bid PPPDS specified that the wheat be transported via ESLSE vessels.
This time their bid increased by USD 20.75 and USD 30 for lot 1 and 2 respectively compared with their previous offer, which in June was USD 258.05 per metric ton for lot 1 and USD 262.05 for lot 2, both lots consist of 100,000 metric tons each, for the shipment via Ethiopian Shipping and Logistics Services Enterprise (ESLSE) vessels or USD 251.3 for lot 1 and USD 254.8 for the shipment on other vessels up to the port of Djibouti.
US based Bunge Limited, had the second lowest offer at USD 298.25 and USD 288.25 per ton for the 1st and second lot respectively, which is 58.65 million for the total. Hakan Agro DMCC, a Dubai company which offered the second lowest price in June, offered USD 296.33 and 290.33 per ton for each lot for USD 58.66 million in total making their bid the third lowest.
The fact that the company was allowed to re-bid after failing the first time has confused professionals Capital spoke with. The sector actors said that the Service reported the previous default to the Public Procurement and Property Administration Agency (PPPAA), but since the Agency did not take action in time the company was able to take part in another round of bidding.
Jonse Gedefa, Deputy Director General of PPPAA, told Capital that these types of conditions will occur until the Agency gives a final decision. “Companies will participate in open bids until the Agency gives feedback or blacklists some of them,” he added.
He said that this decision may be delayed since the claim came recently.
Yigezu Daba, head of PPPDS, told Capital that the Board for Review and Resolution of Complaints at the Agency is responsible for deciding whether a company should be banned. Until the decision is given the company can participate in the bid, he said.
Yigezu added that the company claimed they faced problems preventing them from fulfilling their contract because ESLSE revised their cost for freight after they made the agreement with Promising. Wheat is one of Ethiopia’s most imported agriculture products. The Ministry of Trade has attempted to stabilize the local market by allocating hundreds of millions of USD.