20 October 2015 News Round-Up


Ethiopian Renaissance Dam Construction is Almost 50% Complete



A high ranking Ethiopian official has confirmed that the construction of the Grand Ethiopian Renaissance Dam is almost 50 percent complete.

Debre-Tsion Gebre-Michael, the finance and economic cluster coordinator as well as the minister of information, communication and technology, told the press on Wednesday that the dam is about 47 percent complete. He revealed that up to 47 billion Birr (over $2 billion) has been spent on the project thus far – over three percent of this funding came from the public.

On Thursday, Simegnew Beleke, the Renaissance Dam project coordinator, also announced that the project is almost halfway done. He noted that engineers are working non-stop on the dam.

The Ethiopian Renaissance Dam is by far the most ambitious hydroelectric power project on the African continent to date. Upon its completion in July 2017, the plant is expected to generate up to 6,000 MW of electricity.

Debre-Tsion, who explained that the increased electrical supply will support Ethiopia’s industrial expansion, said some power from the GERD will be diverted to the existing national grid.

The grand scale of the Renaissance Dam has been a source of concern for nations downstream that depend on the Blue Nile. The dam will have the capacity to hold up to 79 billion cubic meters of water when it is completed. Egyptian authorities have fears that the dam could drastically reduce the country’s supply of fresh water.

Since Ethiopia, Egypt and Sudan signed a Declaration of Principles on the Renaissance Dam in March, tripartite talks to resolve the impasse has almost grinded to a halt.

Two consultancy firms – Deltares from Holland and BRL Group from France – were hired to assess the risks of the dam have failed to submit their reports. Last month, Deltares withdrew its initial report on the dam, explaining that it did not have the opportunity to carry out an independent, in-depth study.

Meanwhile, representatives of Ethiopia, Egypt and Sudan have failed to arrange a date for their next tripartite talks since an Oct. 4 meeting was postponed by Addis Ababa.

Egyptian officials, who have accused Ethiopia of stalling the talks, are reportedly mulling a decision to invite the United Nations (UN) to mediate the dispute.

Earlier in the week, the Egyptian Irrigation Minister Hossam Moghazi revealed that discussion for the next tripartite meeting is ongoing. He noted that the meeting is likely to take place during the last ten days of this month.



Kilitch Drugs to set up a unit in Ethiopia


Kilitch Drugs to set up a unit in EthiopiaAddis Ababa, October 19, 2015  –
Kilitch Drugs (India) Limited has informed the stock exchanges that it has formed a joint venture in Ethiopia with a local party therein to set up a pharmaceutical/nutraceutical manufacturing unit whereby the company shall be a partner to the tune of 97% and the Ethiopian partner shall hold remaining 3% in the said joint venture.

The stock is currently trading at Rs. 36.4, up by 4.6 points or 14.47% from its previous closing of Rs. 31.8 on the BSE. The scrip opened at Rs. 31.05 and has touched a high and low of Rs. 37.7 and Rs. 31.05 respectively. So far 109437(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 42.07 crore.

The BSE group ‘B’ stock of face value Rs. 10 has touched a 52 week high of Rs. 56.45 on 07-Jan-2015 and a 52 week low of Rs. 25.25 on 15-Jun-2015. Last one week high and low of the scrip stood at Rs. 32.95 and Rs. 31.25 respectively.

The promoters holding in the company stood at 64.5 % while Institutions and Non-Institutions held 0 % and 35.5 % respectively.

The stock is currently trading below its 200 DMA.



Russian company embarks on oil exploration project in Afar State


Russian company embarks on oil exploration project in Afar StateAddis Ababa, October 18, 2015  –
GPB Global Resources, a Russian oil and gas company, has embarked on oil exploration project in the Afar Regional State.

On July 17, 2014 the then Ministry of Mines, current Ministry of Mines, Petroleum and Natural Gas, and GPB Global Resources signed petroleum production sharing agreement that enables the company to prospect for oil in the Gewane-El Wiha block, in the Afar Regional State. The exploration area is located in the Afar region in north-eastern part of the country covering 42,000sqkm of land.

Immediately, after securing the exploration license GPB Global Resources hired a US company, Bell Geospace, which undertook airborne Full Tensor Gradiometry (FTG) and magnetic surveys in the Gewane-El Wiha Block early this year.

Recently, GPB Global Resources hired another company, BGP Geo Services, a Chinese company that specialized on seismic surveys. An official at GPB Global resources told The Reporter that BGP Geo Services has started collecting seismic data from the concession. FTG and magnetic surveys enable companies to design seismic surveys and exploration well drilling. Seismic survey enables exploration company to learn the geological formation of the sedimentary basin and select drilling sites.

BGP has a good reputation in Ethiopia undertaking seismic survey for Tullow Oil in the South Omo basin. The Chinese company has also successfully undertaken seismic surveys in Kenya and Uganda.

GPB Global Resources is an international group of companies engaged in petroleum and mineral resources exploration projects in various parts of the country including Africa, South America and the Middle East. In Africa the company is active in Eritrea, Mali, Ivory Cost, Niger and Mali.

Officials of the Ministry of Mines, Petroleum and Natural Gas, are happy with GPB’s swift move to launch the oil exploration project. “They started the oil exploration project according to schedule,” a senior official at the ministry told The Reporter. “We are optimistic that GPB will fulfill all its commitments,” the official said.

The company committed itself to undertake seismic survey and drill at least two exploration wells in the initial exploration period. According to the agreement, the company may invest up to 60 million dollars on the exploration project. GPB Global Resources is an affiliate of Gazprom, a Russian gas giant.

Russians are not new to Ethiopian oil and gas exploration industry. In the 1980s and early 1990s, former Union of Soviet Socialist Republics (USSR) company, Soviet Petroleum Exploration Expedition (SPEE) was engaged in oil and gas exploration projects in the Ogaden basin. SPEE collected massive seismic data and drilled dozens of exploration wells in the Ogaden.

The declining price of crude oil in the international oil market has an adverse effect on the global oil exploration industry. Global oil companies are slashing exploration budgets and shutting down exploration projects. There are massive layoffs around the globe. However, an official at the Ethiopian Ministry of Mines, Petroleum and Natural Gas told The Reporter that the soaring price of oil did not affect the ongoing exploration projects in Ethiopia. “We are lucky that the companies did not terminate the projects,” the official said.

Currently, Poly-GCL, Tullow Oil, Africa Oil, New Age, South West Energy, Delonex Energy and GPB Global Resources are some of the companies engaged in oil and gas exploration projects in Ethiopia.



Kessem to start regular production next week


Kessem to start regular production next weekAddis Ababa, October 17, 2015  –
Kessem Sugar Factory, which has been under trial run, will commence production on regular basis next week, the Ethiopian Sugar Corporation said.

Located in Afar Regional State, Kessem will produce 260,000 tons of sugar and 30,000 cubic metres of ethanol per year once it begins production with full capacity.

Moreover, the three existing sugar factories, namely Wonji, Metehara and Fincha, which have been under renewal during the summer, will start production next week.

“This will significantly increase the supply of sugar,” Zemedkun Tekle, Communication Director of the Corporation said.

Both Arjo Dedesa and Tendaho Sugar factories will begin production next, he said.

Ethiopia started building 10 new factories in 2011 as part of a plan to become one of the world’s 10 biggest exporters of sugar.



ECX, Malawian Exchange sign agreement


ECX, Malawian Exchange sign agreementAddis Ababa, October 17, 2015  –
Ethiopia Commodity Exchange (ECX) AND Malawi’s AHL Commodity Exchange signed a Memorandum of Understanding (MoU) in Addis Ababa, Ethiopia this week.

During the signing of the MoU, AHL’s Chairman Dr. Evans Matabwa said, “I have always believed that the fastest economic growth for the African continent will only be achieved if we focus on intra-continental trade. Agreements like the one we have signed today will support that common purpose.”

The MoU entails significant and wide-ranging technical, training and consultancy cooperation between the two exchanges.

ECX’s CEO Ermias Eshetu on his part said, “ECX is honored to engage with AHL and pleased to see the ECX model as a benchmark across Africa. We will continue to partnership across Africa as well as with major international exchanges, in order to leverage best practice approaches as a world class Exchange.”

As part of the MoU signing, a delegation of government technocrat team from the Ministry of Trade and Ministry of Agriculture of Malawi took part in a two day visit to the commodity warehouse, witnessed the Open-Out-Cry trading, the ground breaking eTRADE Platform and experienced cupping at the SCAA certified coffee laboratory.

ECX envisions to revolutionize Ethiopia’s tradition bound agriculture through creating a new marketplace that serves all market actors, from farmers to traders to processors to exporters to consumers.

Ethiopian government believes that ECX represents the future of Ethiopia, bringing integrity, security, and efficiency to the market. It is also believed that the exchange creates opportunities for unparalleled growth in the commodity sector and linked industries, such as transport and logistics, banking and financial services.



Six airports to start operation in five year time


Six airports to start operation in five year timeAddis Ababa, October 17, 2015 –
Some six airports that are currently under construction in various parts of the country will go operational within the coming five years, according to the Ethiopian Airports Enterprises (EAE).

Hawassa, Jinka, Semera, Denbidolo, Robe and Shire airports will start operation in five years time, Wondim Teklu, Communication Director of EAE told FBC today.

Moreover, expansion of the Bole International Airport passengers’ terminal, which is now at 15 per cent completion, will be finalized within the coming three years, he stated.

He further noted that the construction of the new Bole International Airport, an airfield capable of handling up to 120 million passengers a year, will be finalized in 2018, he said.

The new airport allows Ethiopia to position itself as Africa’s number one aviation hub, he added.

Once they go operational, the airports will have a significant role in improving the transport service and facilitating the tourist, business and investment flow to the country, according to Wondim.



 ESLSE makes reduction on container shipping rates


ESLSE makes reduction on container shipping ratesAddis Ababa, October 16, 2015  –
Ethiopian Shipping and Logistics Service Enterprise (ESLSE) has made reduction on container shipping rates.

The enterprise, which transports about 75 per cent of the 200, 000 containers of goods that the country imports annually, has now raised its shipping capacity to 143,000 containers to its 260 destinations.

The reduction in tariffs has been made taking the current global trade, fuel price and other related regional issues into account, Alemu Ambaye, Chief Engineer and Deputy CEO of ESLSE, told FBC today.

A 15 and 14 per cent discount has therefore been made on 20 and 40 feet containers respectively, and it would be effective within the coming three months, he said. A 20 per cent price cut has also been made on other types of containers.

Hence, the price for shipping a container from Jebel, Ali and Dubai ports is reduced to 600 US dollars from the previous 885 US dollars, while the cost from Mumbai port is decreased to 875 US dollars from 1, 300 US dollars, he said.

The enterprise has made close to 40 per cent price cut during the past four years, which according to him has a significant contribution for the economy of the country.

Ethiopia import 200,000 containers of goods annually via the red sea route, while it exports less than 40 containers, according to Chief Engineer Alemu.



Social health insurance scheme implementation set for January

Social health insurance scheme implementation set for JanuaryAddis Ababa, October 16, 2015  –
The social health insurance scheme is going to be implemented across the country as of next January.

The program will allow the society to get health service easily and at a minimum cost, Dr Kebede Worku, Health State Minister told FBC yesterday.

The Ethiopian Health Insurance Agency on its part said preparations have been finalized to commence the program.

Agency Public Relations Director, Assefa Yirgalem, said civil servants and private employees included in the scheme are expected to pay only 5 per cent of the total health care cost.

According to him, the government subsidizes the program as the 3 per cent contribution from employees is not enough to fully cover the health cost.

Some 6 million birr has been allocated for this year’s implementation of the program, he said.

Health State Minister Dr Kebede Worku said negotiations are underway with health institutions to launch the service, which includes supply of medicines.

The Ethiopian Health Insurance Agency plans to make similar negotiations with private health institutions.

All employers are expected to submit list of both their workers and their families to the agency until January.

Employers who have more than 10 workers and the employees will contribute 3 per cent of their monthly salary to the social health insurance scheme as of January 1, 2008 E.C.

Employees included in the scheme can get the service as of February 1, 2008 EC.



Raymond to build 2mln units/year plant in Ethiopia


Raymond to build 2mln units/year plant in EthiopiaAddis Ababa, October 16, 2015  –
Raymond is planning to set up a 2 million units per annum capacity plant in Ethiopia, at a total investment of US$100 million, to manufacture and export woolen-blended and cotton-blended jackets.

Currently, Raymond makes close to 2 million jackets at its Bengaluru facility – primarily woolen-blended and cotton-blended jackets – and exports some of them to the USA, Europe and Japan.

A more favourable duty structure and local incentives prompted Raymond to build a plant in Ethiopia.

Ethiopia has a 10-year duty-free trade agreement with USA, Europe and a preferential trade pact with Japan.

Raymond is also being provided land on long-lease by the Ethiopian government.

It will also get electricity at a price which is a third of the cost of power in India, apart from the labour charges, which are almost half of India.



GERD to generate 750 MW soon

GERD to generate 750 MW soonAddis Ababa, October 14, 2015  – 
The Grand Ethiopian Renaissance Dam (GERD) will begin generating 750 MW power from its two turbines soon, Dr Debretsion Gebremichael, Deputy Prime Minister for Finance and Economic Cluster and Minister of Communication and Information Technology said.

Some 4 million cubic meter concrete has so far been poured as the construction of the dam reached at 47 per cent, Dr Debretsion, who is also member of the Executive Committee for National Popular Mobilization Committee, said at a press conference he gave to journalists here today.

Two of the 16 turbines have already reached at the dam site from abroad and the remaining work is to install the tribunes and decide the amount of water the reservoir holds in consultation with Egypt and Sudan.

After the amount of water is known and once the two turbines go operational, they will begin generating 750 MW power, he said.

According to the Minister, there is a plan to manufacture the remaining 14 turbines here at home.

The dam has so far consumed 46 billion birr, out of which 7 billion has been collected from the public. Ethiopian Diaspora contributed 600 million birr. The remaining 38.4 billion has been covered by the government, he said.

Additional costs will not be required to finalize the dam as the analysis made for this purpose rather showed a 5.6 billion birr decrease from the initial budget, he stated.

Dr Debretsion further noted that preparations have been finalized to launch new fund raising program so as to scale up the participation of the public to the dam which Ethiopia declared to build by its own resources.

In addition to the SMS (8100A) and bond sale, tombola lottery and music concerts will be organized in various countries, he said.

The government has no shortage of money and the dam will be finalized as per schedule, he added.



METEC to generate 45 MW from Omo Sugar Factory

METEC to generate 45 MW from Omo Sugar FactoryAddis Ababa October 14, 2015  –
Preparations are underway to generate 45 megawatt electric power from the leftover of sugarcane of the Omo Kuraz Sugar Factory, according to Metals Engineering Corporation (METEC).

Projects Erection and Installation Head with Corporation Power Engineering Industry, Captain Negasi Zerihun told ENA that the project under discussion would enable to generate electricity from discarded sugarcane.

Two turbines are installed and readied to generate 45 megawatt, he disclosed.

According to him, two huge machines that feed to the turbines the discarded sugarcane are also readied.

Upon the commencement of the power generation, some 16 megawatt electricity would be used by the factory and the remaining electric power would be transferred to the main grid so as to contribute to the growing power demand of the country, Captain Negasi indicated.

METEC has moreover built capacity that effectively constructs power generation projects for future sugar factories, it was learned.

Currently, 67 megawatt electricity is generated from the waste of sugarcane in Metehara, Wongi and Fincha sugar factories.

Out of this 34 megawatt is consumed by the factories, while the remaining is transferred to the national grid, he indicated.

The government plans to generate 448 megawatts from sugar factories to be built at the end of the Growth and Transformation Plan (GTP-2) period.



Kefi Minerals appoints mining contractor for Ethiopia project

Kefi Minerals appoints mining contractor for Ethiopia projectAddis Ababa, October 14, 2015  –
KEFI Minerals (AIM: KEFI) has appointed African Mining Services (AMS), a wholly-owned subsidiary of Ausdrill Limited to carry out all premining earthworks and openpit mining at its Tulu Kapi project, in Ethiopia.

Kefi and AMS would now jointly increase the efficiency of the detailed operating plan for the benefit of the project.

The contractual payment rate would be based on each cubic metre delivered, while direct purchases of certain key input costs such as explosives and fuel would be covered by Kefi.

The provisions for cost overruns and finance charges would be checked and allocated between the funding and contracting syndicate as part of finalising intercreditor arrangements.

Kefi on Tuesday said it had selected Australia-based Sedgman as the preferred plant construction engineering, procurement and construction management contractor for the 105 000-oz-a-year gold operation.

Sedgman was expected to start the front-end engineering design stage for the $63-million 1.5-million- to 1.7-million-tonne-a-year plant during the current quarter.



U.S launches procurement assistance program in Ethiopia

U.S launches procurement assistance program in EthiopiaAddis Ababa, October 14, 2015  –
The U.S. Trade and Development Agency kicked off the first phase of its Procurement Assistance Program in Ethiopia under the Agency’s Global Procurement Initiative: Understanding Best Value (GPI).

USTDA is providing 50 Ethiopian government officials with access to world class procurement experts, including leaders from the George Washington University’s Government Procurement Law Program and technical specialists in life-cycle cost analysis, through a three-day workshop on Obtaining Value in Public Procurement.

“We strongly believe that increasing the efficiency, fairness, and transparency of the expenditure of public resources is critical to sustainable development and the reduction of poverty. Efficient public procurement systems are essential to the achievement of the development objectives of the Government of Ethiopia,” Director General Tsegaye Abebe of Ethiopia’s Public Procurement and Property Administration Agency (FPPA) stated at the workshop’s opening ceremony.

“I would like to applaud USTDA for initiating this partnership arrangement with the Government of Ethiopia in the area of public procurement, which has become increasingly important for the country’s development endeavor.”

In July, USTDA Director Leocadia I. Zak signed a Memorandum of Understanding (MOU) with the FPPA to formalize cooperation under the GPI. The partnership, which was announced during President Obama’s visit to Ethiopia, signals the importance the U.S. and Ethiopian governments place on promoting transparent, outcomes-focused public procurement processes.

A second phase of assistance is planned for the spring of 2016, when USTDA will sponsor a group of senior Ethiopian procurement officials for follow-on training in the United States. The visit will provide the officials with the opportunity to learn how U.S. federal, state and municipal officials incorporate best value and life-cycle cost analysis into their procurements.

A according to a statement the US Embassy sent to FBC today, the goal of the GPI is to provide partner countries like Ethiopia with the access, opportunity and support they need to structure sound infrastructure tenders that can foster sustainable economic growth.


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