Ethiopia Sugar Corporation (ESC) invites shortlisted companies to offer their price following the latest international sugar bid bearing no fruit.
It is to be recalled that few weeks ago the corporation opened an international bid to procure 200,000 metric tons of plantation white cane sugar which attracted three bidders; Sucden, ED & F Man and SY General Trading Fzco – East African Djibouti Holding.
The first two companies; Sucden, ED & F Man, which are by no means fresh faces to similar commodity bids in Ethiopia were able to comfortably pass the technical evaluation of the bid. However, experts who closely follow the case explained that hurdles were met on the financial opening which forced the duo to retreat.
Sources said that initially, the bid documents gave the bidders eight working days price validity, while the corporation requested them to give additional five days for the validity. To this end, Sucden refused and ED & F Man gave the price validity extension until the financial opening, which technically expired on the date that was March 8.
Based on the national sugar producer and supplier changes, the procurement thus resorted to short listed invitation.
Sources said that about six prominent global companies in commodity supply like Al Khaleej Sugar, Wilmar Sugar, Agrocorp International, and the two companies that were involved on the failed bid were invited mid last week to provide their offer until Monday, March 21 afternoon.
Agrocorp International, which won last year’s 200,000 metric ton sugar bid and successfully delivered the first 100,000 metric ton, neglected to participate in the latest open bid to which sources point out that it was disappointed by the corporation’s failure not to receive the remaining 100,000 metric tons of sugar that it won for the bid.
Recently, Weyo Roba, CEO of ESC, told Capital that it was the government’s direction to annul the procurement of the remaining 100,000 metric ton sugar from last year’s bid.
Experts argued that last year, the measure taken by the ESC affected this year’s bid which has resulted in international prominent bidders to lose trust on the country’s procurement system.
“I suspect that the low number of bidders for the last bid was an outcome of last year’s failure to buy the sweet as per the expectation,” one of the sector experts said.
He said that such kind of poor decision affects the country’s image on the eyes of global suppliers. “For instance the issue has been raised for discussion between stakeholders on the latest global sectoral event, Dubai Sugar Conference, which was held early this week. The concerns were raised on the country’s default on the bid,” the expert said, adding, “I advise government officials and the bidding committee members to be meticulous in such kinds of global bidding system including other commodity imports.”
Other expert on the sector also added that extending the biding and procurement process also affects the country. “Currently, commodity price is frequently hiking, which directly affects the country and the society,” one expert opined.
The expert argued that if the government procure last year’s 100,000 metric tons of sugar, it would restore an added advantage and trust in the process.
Experts explained that in last year’s bid, Agrocorp had agreed to offer the commodity by USD 549 C and F Djibouti. Currently, they estimate that the C and F price of sugar at Djibouti would run from USD 660 to USD 680.
The global commodity price is skyrocketing due to the after effect of the global pandemic which also spikes the freight price.
However, experts said that so far the Russia-Ukraine crisis is not visible on the sweet sector, while it has contribution for logistics cost increment.
The country annually imports up to 350,000 metric tons of sugar to address the gap. ESC has targeted to produce 413, 000 metric tons in the current budget year.
The sugar demand has been growing from time to time and it is estimated that the country’s annual sugar demand caps at about 1.2 million metric tons. Thus the remaining gap is covered by other importers who have special permit from the government and those who have Franco-Valuta privileges.