The Sugar Corporation (SC) has continued purchasing sugar because the highly anticipated sugar factories that are being built across the country have been delayed for an unexpected period.
This week there was an international bid to buy 100,000 metric tons of sugar and eight companies came up with their documents out of a total of potential 30 international companies. Two of the eight, Kingbird Commodities and Teros Commodities failed in the first round of the technical evaluation.
ED and F Man, Agro Corp, Sukden, Al Khaleej, Baitak Development and Antei International make it to the second round of the financial evaluation.
According to the bid documents presented by the companies, there were three possible payment methods; one is upon delivery and the others within the next 12 or 18 months.
Agro Corp has offered a lower price but in an 18 month period, while ED and F Man offered a better price on 12 months term of payment.
According to that Agro Crop has offered USD 413.6 and USD 460.6 per metric ton up to the port in Djibouti on LC or 18 months payment conditions respectively.
ED and F Man also offered USD 434 per metric ton for payment within 12 months.
Agro Crop has stated that it will deliver the sugar from India, while ED and F Man will buy the sugar from Brazil, UAE, Saudi Arabia or Pakistan.
The highest offer on the direct payment (LC) is USD 505 that Baitak Development offered, it has also offered USD 530, which is also the highest price, for the payment condition within 12 months.
Sukden has given USD 592.50 as a highest price for the payment condition of 18 months. The stated prices are tagged for the product transported up to the port at Djibouti.
According to Gashaw Ayecheluhem, Public Relations head at the corporation, the sugar will be transported in the months from June to August, which is a season when local factories terminate their production for maintenance.
In December Al Khaleej won the bid for 100,000 metric tons of sugar purchased by the corporation. In the procurement Al Khaleej won the bid by offering 496.91 USD per ton up to the Djibouti port or FOB of 460.91 USD at the port from the initial point.
Late last budget year the government bought 70,000 metric tons. Sukden is the company that supplied the 70,000 metric tons that was procured before the end of the past budget year to fill the gap that occurred when sugar factories shut down for maintenance at the beginning of the current budget year.
According to sources in the sector, in the near future the corporation is expected to announce more bids to buy up to 300,000 metric tons of sugar. It would be the highest procurement period after a few years. The government has been interested in cutting sugar imports and vie for local production to fill the market.
However this has not occurred because some of the factories have not started on time and despite the fact that factories like Kesem, and Omo Kuraz II began their production it has not been at full capacity.
The volume of imported sugar has been reduced in the past few years after some of the old factories expanded.
The current 100,000 metric ton bid is for the second time in the budget year.
Gashaw told Capital that Kuraz III, which is managed by the Chinese COMPLANT, is in the process of commencing test production. “Currently the water supply for the factory is in the process and it is expected to undergo a trail test soon,” he said.
In the first GTP the government announced to construct 10 sugar factories, while two of them only partially produce the sweet. Even though all of the factories were awarded for the Metal and Engineering Corporation (MetEC) in the initial stage the projects didn’t meet timelines. Due to that the government transferred Kesem, Kuraz II and Kuraz III to COMPLANT.
Kesem that commenced production about two years ago has a capacity to crush 6,000 tons of sugarcane per day, while its actual production is now half due to lack of sugarcane supply. Kuraz II that was on trial in March last year and forced to suspend production until November last year has a capacity to crush 12,000 tons of sugarcane per day but it is also is operating under its capacity. The capacity of Kuraz III is similar to Kuraz II.
That factory projects s carried out by MetEC are not finished except Kuraz I which is apparently undergoing a trail test.