Three companies show interest in the latest restricted bid for sugar procurement.
Despite the Ethiopian Sugar Industry Group highly anticipating the recently awarded bidder to deliver the sweet, the company has failed to come up with a performance bond, Capital has learnt.
About a week ago, the Ethiopian Sugar Industry Group re-floated yet another round of restricted international competitive bid to procure the strategic commodity after the recent bid winning company failed to deliver.
As per the information that Capital obtained, the highly anticipated sugar shipment failed to push through as a result of Millhouse International not being able to come up with a performance bond.
A week ago Weyo Roba, CEO of Ethiopian Sugar Industry Group, told Capital that he is optimistic that this time around the awarded company shall come up with its performance bond sooner rather than later. He said that if the company was to appear with the required procedure earlier, the bid would be pushed for another period.
In the recent bidding process that did not push through, Osirius Group, Millhouse International, and ED and F MAN had met the technical evaluation. The first two companies however did not have experience on similar biddings in Ethiopia.
While on the latest restricted bid that was opened on November 8 Osirius Group, Agrocorp International and ED and F MAN have come up with their technical and financial document, while as per the information Capital obtained, the group is evaluating the technical document prior to evaluating the financial papers. Similar to ED and F MAN, which is a UK based, commodity company, Agrocorp International of Singapore is not new to the Ethiopian market as it has participated on such kind of huge public procurements.
In this bid, the public enterprise has targeted to buy 200, 000 metric tons of sugar.
In the past bid that was opened a couple of weeks ago; as per its financial offer, with three letters of credit (LC) modality, Millhouse, a company from South Africa, offered LC at sight FOB USD 450 per ton and CFR USD 480, LC for 12 months USD 522 and USD 552 on FOB and CFR shipment modalities respectively. While for 18 months payment modality, it offered USD 561 and USD 591 of FOB and CFR respectively. Due to its lower bid in contrast to the rest, the company was awarded the bid.
Millhouse rates had wide gaps compared to the other bidders. For instance, Osirius and ED and F Man offer was FOB USD 545 and UDS 715 for LC at sight respectively.
For the new bid, the Industry Group invited interested bidders to come up with three alternative payment modality; LC at sight, and 12 and 24 months differed payments.
Experts suggested that the relevant body should be cautious with regards to new companies that do not have any track record in Ethiopia.
“Detailed understanding of companies before the award should be a norm. We have to learn from the previous unsuccessful procurement processes that have been seen in the wheat bid process about three years ago,” experts said.
The industry experts expressed their view citing that Millhouse failed not because of its inability to come up with the performance bond, “Nonetheless, it is actually difficult for the company to deliver the commodity with the rate that it offered.”
However, the CEO said that there were difficulties in connection to bank to bank relations for the company to come up with the performance guarantee.
For the past budget year, the Industrial Group did not buy the sweet from abroad, despite about three bids being floated.
Compared with early 2022, the sugar price globally has registered increments but experts said that the latest price would not be higher compared to the last bidding period.
Because of the failure of finalizing the international procurement, the enterprise, which also operates millers, is facing difficulties in meeting the local demand.
However, there are hopes that some of the huge sugar millers who halted operations owing to annual maintenance, which usually takes place in the rainy season, are now getting back to production which may ease the shortage.
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