NBE allocates foreign currency for PPPDS
National Bank of Ethiopia (NBE) has approved the request of Public Procurement and Property Disposal Service (PPPDS) to allocate foreign currency for companies which are contracted by PPPDS to supply goods.
The Service has also approved the scheme that will allow local suppliers to entertain international bid to access foreign currency and harmonize the bid process that is mostly undertaken on FOB indicators.
Tsewaye Muluneh, Director General of PPPDS, told Capital that the leadership of PPPDS has decided to facilitate a way out for local bidders on the international tender to benefit the locals.
“We have now local companies that participate on international bid for wheat. These companies are in need of foreign currency to procure the grain if they win the bid, but currently we are paying them in birr therefore we have to bridge this gap,” she said.
On the other hand the procurement of vehicles is mostly included under the international tender because of the threshold.
In this regard, local companies are importing inputs on DDP (Delivered Duty Paid (DDP): Seller bears cost, risk and responsibility for cleared goods at named place of destination at buyers disposal) scheme unlike international bid process that is FOB (Free On Board: Risk passes to buyer, including payment of all transportation and insurance costs, once delivered on board the ship by the seller).
“To harmonize the scheme and allow local firms to be part of the bid we have considered the DDP with FOB on the aim to fill the gap on procurement process,” she explained.
According to the 2010 procurement directive, the procurement value of goods that is 10 million birr and overshall be conducted under international tender.
The Director General of PPPDSsaid that for companies who have an agreement with the Service to supply goods, the service has secured foreign currency from the central bank.
“To allocate the foreign currency fairly we have developed a working plan that was discussed with suppliers and has now been applied,” she added.
PPPDS has also decided to change the disposal process of old vehicles. Previously the disposal process was just sold out to anyone who was interested in buying the vehicles either to re-operate the vehicles or use their parts or as scrap.
On the new scheme, all vehicles would be sold for scrap purposes. “Allowing the old vehicles to be driven has contributed to pollution and accidents as a resultthe vehicles shall no longer receive permit from the Transport Authority to operate rather they will be an input for the steel industry,” she said.
She said that the Service is working with the Transport Authority and other stakeholders to implement the new process.
The Service by itself evaluated the economic advantage of the framework contract procurement as per its set target.
Wheat is one of the strategic products that PPPDS procures and in the first quarter of the year it has floated a tender to buy 680,000 metric tons of wheat for different organizations. Of the stated volume the process for 80,000 metric tons have been concluded and transferred to the World Bank, which is the buyer of the grain for Safety Net Program of Ministry of Agriculture.
Since the last budget year PPPDS has hired S&P Global Platts, an international global wheat market analyzer, to offer the international daily rate that shall help the public procurement body to evaluate the financial offer on the bid process.
The subscriber, PPPDS, agreed to pay about USD one million per annum.
The country is importing wheat that is worth close to USD one billion every year, while the federal government is working to cut this in short period by replacing it by local production.
PPPDS is responsible for the undertaking framework contract procurement for different public organizations as per their request. On this scheme it shall buy similar products for different organizations on bulk that shall also contribute for lower rate and transparency.