No interest in some, government divesting its shares in others, unable to collect 2.8b Br from one debtor.
Demitu Hambissa, Minister of Public Enterprises.
(Addis Fortune) – MIDROC Ethiopia accounts for 60pc of all the money the Ministry of Public Enterprises (MPE) has been unable to collect from the privatization process, the Ministry reported to Parliament on February 8,2016.
The Ministry, which had been an Agency up until the end of the last fiscal year, said in its six-month performance report that it had been totally unable to collect about 2.8 billion Br from advance payments and sale of enterprises. It had also tried to auction four enterprises during the period but only two, Bilito Siraro Agri Development and Ethiopian Can & Cork Manufacturing S.C., had offers from potential buyers.
There was no interest in Kombolcha Textile S.C., Bahir Dar Textile S.C. and Shebelle Transport S.C. An American company, Fairfax Africa Fund, LLC offered to take 75pc share in the Can & Cork company, but it has failed to materialize. Bilito’s case is still on table for decision.
Its collection of advance payments was 20.9 million Br, only 3.2pc of the planned 654.7 million Br. Yet to pay their advances, are Ambo Mineral Water S.C., Sodere Resort Hotel S.C. and Tibila Agriculture Development S.C.
There are now 34 enterprises that have been fully or partially sold or rented, for which the Ministry still awaits payment. It was planning to collect 1.1 billion Br from 17 of these enterprises in the half year. However, it has been able to extract payment of 708.6 million Br from only four of them.
By January 2016, the Ministry was awaiting the payment of 2.15 billion Br in installments, including interest and fines. MIDROC Ethiopia accounts for 60pc or 1.3 billion Br of these unpaid debts in relation to the acquisition of farms it acquired through Horizon Plantation. These acquisitions include Upper Awash Agro Industry Enterprise, Limu Coffee Farm, and Coffee Processing & Warehouse Enterprise.
Its export revenue expectations were also not met, with eight enterprises having exported 14.4 million dollars worth of goods, of the planned 23.2 million Br. This is 31pc of the plan for the whole year, which is 46.58 million dollars. It also planned to make 14.5 million dollars from the export of goods from fully or partially transferred enterprises, but managed to earn only 4.97 million dollars.
One tender that is expected to be announced at any time now, is that for the National Tobacco Enterprise (NTE), in which the government has a 71pc share; the rest is owned by Sheba Investment Group from Yemen. The Ministry wants to sell 20pc of its share in the company, so that it will have only a 51pc share, said Minister of Public Enterprises, Demitu Hambissa. Approval is expected from the Council of Ministers in order for that to happen. It was in June 2015 that the then Public Enterprises Privatization Supervising Agency (PEPSA), snatched Sheba’s chance to increase its share to 60pc, but the latter managed to raise its share to 29pc.
“We believe that we need to have control over the Enterprise,” Wondafrash Assefa, communication head of the Ministry told Fortune.
Interest in buying the tobacco company has also come from one British, two US and two Chinese companies but the Minister declined to identify them. NTE is among the 10 Enterprises listed for auction during the second half of the fiscal year. Among them are those which the government co-owns in joint ventures, including Sodere Resort, B.M Textile & Garment S.C., Ethiopian Crown Cork & Can Manufacturing Industry S.C., Ambo Mineral Water S.C., Abiyata Shala Soda Ash S.C., and Tibilla Agriculture Development S.C. The Ministry wants to fully transfer its shares in these enterprises. Fully owned by the government and to be auctioned now are Silea Agriculture Development S.C., Artistic Printing Press and Bilito Agriculture Development S.C.
Government owns a 55.7pc share in Sodere Resort and a 44.3pc share in DEK Oromia Business Investment Plc.
“We have already informed them if they wish to increase their capital,” said Wondafrash.
Two companies, Feleke Trading Plc and Corporate Computer Center Plc, have offered 328.8 million Br for the full ownership of Artistic Printing Press when the tender opened in November 2015. The auction committee has not yet made its decision on this offer.
The condition for this bid was 35pc advance payment, with the rest to be paid in five years.
The government owns a 14pc to 75pc share in the other five enterprises including Tibilla Agriculture Development S.C. B.M Textile & Garment S.C. ECCCMI. Ambo Mineral Water S.C. and Abiyata Shala Soda Ash S.C. In these joint ventures, the existing private owners are given priority to buy the government’s shares, Wondafrash said.
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