NOTE ON INFRASTRUCTURE SECTOR IN ETHIOPIA
I. General:
Ethiopia suffers from poor infrastructure and facilities. This is one of the biggest constraints in its overall economic development, poverty alleviation of the masses - specially in rural and remote areas - and in attracting foreign investment. Having realized this, the government took initiatives in the past 7-8 years and embarked on major projects in the infrastructure sectors like roads, power, telecommunications, railways and water resources development. Development partners like the World Bank, African Development Bank, UNDP, EU and some donor countries have come forward to provide generous funding, while the government is also putting its own money to the extent of 30% to 40%. In addition, revitalizing railway network, track up gradation, increasing cement production to cope with spurt in construction activity including roads, oil and gas exploration and their use for downstream projects are some other areas of interest where new projects are coming. These projects are of high value and in priority areas where India has expertise. Indian companies have already secured several contracts in the infrastructure sector, which have either been completed or are under execution.
II. Roads: After completing the two-phase ten-year of the Road Sector Development programme (RSDP) in June 2007, the Ethiopian Roads Authority (ERA) launched the third phase of the programme, which will last for the next three years with a project cost of 35.2 billion birr (US$4 billion). Within the 10-year period of the programme a total of 78,569km of roads were constructed, rehabilitated and maintained, of which 10,282km are federal roads and 10,523km are newly constructed regional roads while 57,764km are community roads, it was reported at an implementation assessment of the 10-year accomplishment in the Ethiopian road sector and launching conference of RSDP III on September 24-25, 2007. RSDP first formulated in 1996 and officially launched in September 1997, it was designed to facilitate economic recovery through restoration of essential road networks. RSDP includes not only investment in physical infrastructure and maintenance of existing and new infrastructure, but also investment in institutional strengthening and capacity building in order to improve road sector management. Included in RSDP III are the rehabilitation of 483km of trunk roads, upgrading of 3,428km of both trunk and link roads, construction of 2,083km new roads and periodic maintenance on 403km of rural roads and construction of 227,548km of community roads is envisaged at the regional level. As a result of investments under RSDP I and II, the current length of the network has reached 42,429km (excluding community roads), of which 5,452km (12.8%) are paved and the remaining 36,977km (87.2%) are un paved. Over all roads network in Ethiopia has been increasing on average by 3% each year between 1997 and 2007. Ethiopia’s major partners in the road sector development, namely AfDB, China, DFID, EC, IDA, Japan and NDF have expressed their desire to continue support Ethiopia’s road sector development in RSDP III.
(a) Existing roads infrastructure:
Road sub-sector plays a crucial role in ensuring sustainable economic development. Presently, Ethiopia has a classified road network of only 37,000 km, of which 4,600 km. (about 12.4%) is asphalt. With the existing road density of about 33 km/1000 sq. km. and an estimated population of about 77 million (second largest in Africa, after Nigeria), Ethiopia has one of the lowest road network in Sub-Sahara African countries. Roads are country’s dominant mode of transport, carrying over 95% of passenger and freight traffic.
(b) Roads development plans:
Recognizing the importance of the road infrastructure in supporting social and economic development and in meeting poverty reduction objectives, the Government of Ethiopia has placed increased emphasis on improving the quality and quantity of the road infrastructure. To address the constraints in the road sector related to restricted road network coverage and low standards, the Government formulated a ten year Road Sector Development Program (RSDP) in 1997.
After completing the two-phase ten-year of the Road Sector Development programme (RSDP) in June 2007, the Ethiopian Roads Authority (ERA) launched the third phase of the programme, which will last for the next three years (2007-2010) with a project cost of 35.2 billion birr (US$4 billion). Within the 10-year period of the programme a total of 78,569km of roads were constructed, rehabilitated and maintained, of which 10,282km are federal roads and 10,523km are newly constructed regional roads while 57,764km are community roads. RSDP first formulated in 1996 and officially launched in September 1997, it was designed to facilitate economic recovery through restoration of essential road networks. RSDP includes not only investment in physical infrastructure and maintenance of existing and new infrastructure, but also investment in institutional strengthening and capacity building in order to improve road sector management. Included in RSDP III are the rehabilitation of 483km of trunk roads, upgrading of 3,428km of both trunk and link roads, construction of 2,083km new roads and periodic maintenance on 403km of rural roads and construction of 227,548km of community roads is envisaged at the regional level. As a result of investments under RSDP I and II, the current length of the network has reached 42,429km (excluding community roads), of which 5,452km (12.8%) are paved and the remaining 36,977km (87.2%) are un paved. Over all roads network in Ethiopia has been increasing on average by 3% each year between 1997 and 2007. Ethiopia’s major partners in the road sector development, namely AfDB, China, DFID, EC, IDA, Japan and NDF have expressed their desire to continue support Ethiopia’s road sector development in RSDP III.
(c) Non-Indian companies in road construction/consultancy projects:
(i) A number of foreign and Indian companies are active in the road sector. China dominates the construction side. Principle non-Indian road construction companies are: China Road and Bridge Corporation (CRBC), Hunan Hunda, (China), CGC Overseas Construction Eth. Ltd., (China), Keangnam Enterprises Ltd. (Rep. of Korea). In addition, there are some Ethiopian companies like M/s Sur Construction, Satcon, and Sunshine Construction which are relatively new entrants in road construction.
(ii) Several foreign companies from India, UK, South Africa, Japan, Canada, Netherlands, Israel etc. are in road consultancy area. Some of these are: BKS Group (South Africa), Pacific Consultants International (Japan), Roughton International (UK), DHV (Netherlands), LEA International (Canada), Comptran Engg. and Planning Associates (Ghana), Stewart Scott International (South Africa), Mouchel Parkman (UK), BCEOM (France), TAHAL Consulting (Israel).
(d) Indian companies in road construction/consultancy projects:
During the last few years, Indian companies have won various government contracts in Ethiopia against tough international competition. Indian companies from public and private sectors have secured several contracts in the road sector, including consultancy works in roads and road construction. IRCON and M/s SMS Infrastructure have secured contracts in road construction. Indian companies are doing consultancy jobs for almost all the important road projects spread being undertaken throughout Ethiopia. Ethiopian Roads Authority is satisfied with their performance. The companies are: Consulting Engineering Services (India) Limited (CES), International Consultants and Technocrats Pvt. Ltd. (ICT), RITES, SPAN Consultants, LEA Associates, etc.
Ethiopia's import of road construction equipment
There is a major market for export of road construction equipment as Ethiopia is engaged in massive road construction project. Some of the Ethiopian companies have already sees strategic significance in entering this business. Major exporters in this sector are Korea, Italy, Japan, USA, China, Germany, etc. According to data from the Ethiopian Customs Authority, up to 150 machines are imported in to the country every year. In the current market, the top price for an excavator is 2.5 million birr (US$291,000), a wheel loader costs 2 million birr (US$232,558) and skid steer loader is sold for 1.4 million birr (US$162,790). It will be very important for any Indian company entering in to the Ethiopian market to maintain quality and standards to gain and sustain confidence. Indian companies should further explore the Ethiopian market through appointing agents in Addis Ababa.
III. Power:
(a) Existing power infrastructure:
Government owned Ethiopian Electric Power Corporation (EEPCO) is the sole authority for generation, transmission and nation-wide sale of electricity. Presently the Corporation maintains two different power supply systems; namely, the Interconnected System (ICS), which is mainly supplied from hydropower plants, and the Self-Contained System (SCS), which consists of mini-hydropower plants and a number of isolated diesel generating units that are widely spread over the country. Numbers of electrified towns under EEPCO are 632 of which 563 are within the Interconnected System (ICS) and the remaining 69 within the Self-Contained System (SCS). The ICS consists of 12 hydro, 25 diesel and one geothermal power plant with total installed capacity of over 1,000 MW, 200 MW and 7.3 MW respectively. Over 98% of the total generation in the country comes from the ICS. The SCS consists of small hydro and several diesel power plants. Generation in this system is mainly by diesel power plants having an aggregate capacity of 31.66 MW. The contribution from the small hydropower plants is only 6.15 MW. The high voltage network consists of both 230kv and 132kv transmission voltages, and 66kv & 45kv sub-transmission voltages.
(b) Power development plans:
To meet rapidly rising demand for electricity, Ethiopian Electric Power Corporation (EEPCO) plans a massive boost to power generation capacity in the next five years, from about 790 mw to 3,500 – 4,000 mw, mainly through the construction of new hydroelectric dams, but also from thermal and geothermal sources. EEPCO’s five-year plan is based on nine key projects, which are in varying stages of development. The most advanced are the Gilgel Gibe II dam (430 mw), which is being built by Salini of Italy with funding from the Italian government, and the Tekeze dam (300 mw), which is being built by Sinohydro of China and local partners; both are due to come on-stream by 2009. In other developments, Salini won a contract in 2005 to build the Beles dam (435 mw), costing US$628m, and another contract in 2006 to build the massive Gilgel Gibe III (1,870 mw), costing US$2 billion, which is planned to be the largest plant in the country when it comes on-stream in 2011. Looking further ahead, Ethiopia has the potential to generate up to 45,000 mw in the form of hydroelectricity, which is being described as Ethiopia’s “white oil”. In line with the ongoing rise in power generation capacity, Ethiopia is undertaking a massive expansion in the power distribution network under the banner of the government’s Universal Electrification Access Programme (UEAP). Under this programme, over 6,000 rural towns and villages will get electricity and this will extend electrification access to some 24 million people. Furthermore the Corporation has slated a capital of over US$12.8 billion for construction of transmission lines. The Corporation envisages attaining 100% power service coverage by 2023. Ethiopia has also a plan to export electricity to neighboring countries (Kenya, Djibouti and Sudan) in view of generating income to the country. Electricity interconnections with Djibouti and Sudan are scheduled for completion by early 2009, and plans for a link to Kenya are also advancing. The projects are mostly funded by World Bank and ADB. In addition, EEPCO secured a US$140 million loan in October, 2007 from the China National Machinery and Equipment Import and Export Corporation, to help to expand the national grid and link new generating and transmission facilities
(c) Non-Indian companies in power projects:
Several Indian and foreign companies are active in the power sector. Non-India companies include: Energo Invest (Bosnia), JPCC (China), China Wanbo Engineering Corporation (China), Areva T & D (France).
(d) Indian companies in power projects:
Indian companies like KEC International, BHEL, Jyoti Structures, IRCON, Kalpataru Power Transmissions and Overseas Infrastructure Alliance Pvt. Limited have secured several projects in the past related to electric transmission, distribution and sub-stations. Recently, Indian companies are aggressively coming to Ethiopia with a strong technical and project management competence in order to cater to the need of the power sector in Ethiopia, which will provide access to electricity in rural areas across Ethiopia. On August 7-8, 2008, two Indian companies IRCON International Limited, and National Contracting Company Limited (NCC) have signed contracts with EEPCO amounting to USD 31 million financed by the World Bank. The contract envisages complete design, supply, testing and commissioning of 17 substations. Apart from soft loans from India amounting to USD 700 million in last two years a new trend is emerging from India for financing various projects in Ethiopia. In the last six months various Indian companies received Suppliers Credit amounting to USD 100 million through Indian commercial banks supported by the Export Credit Guarantee Corporation of India (ECGC) to execute various electricity projects in Ethiopia. Good Luck Steel Limited has got USD 8 million for the supply of transformers to EEPCO. A PSU, PEC has also won a contract with EEPCO for supply of power transmission conductors amounting to approx. US$20 million.
EEPCO had sent its General Manager for the CII-EXIM Conclave on India Africa Project Partnership 2008 in New Delhi from 19-21 March, 2008.
Line of Credit: India has approved an EXIM Bank dollar line of credit worth US$ 65 million to Ethiopia for a power transmission and distribution project under the rural electrification programme in 2006. In this regard, EEPCo and Overseas Infrastructure Alliance Pvt. Ltd. (OIA) signed the agreement on September 22, 2006 for the project involves extension of ICS Grid from Hagere-Mariyam to Mega Zone and electrification of towns and villages in Mega, which have no electric supply. The Indian company was chosen without a tender process because it secured a loan of US$65 million that EEPCO needed for the project through EXIM Bank line of credit.
IV. Telecommunications:
(a) Existing telecom infrastructure:
(i) Ethiopian Telecommunications Corporation (ETC), owned by the government, is the sole operator to provide telecom services in the country. It mainly provides basic services by direct telephone lines, mobile services by GSM network, internet services, and broadband services. Ethiopia suffers from low tele-density, with 1.3 million telephone subscribers, which includes mobile and internet subscribers.
(b) Telecom development plans:
(i) ETC has undertaken extensive measures and drawn ambitious programmes to increase number of subscribers and improve quality of service. In the next few years, it plans to lay optical fibre backbone network of about 11,000 km in the country. It is undertaking a project to provide additional 2.4 million mobile telephone connections, in addition to the existing 6.5 lakh mobile subscribers.
(ii) In August 2005, the government allowed private companies to enter in ISP area. This followed ETC’s decision to itself concentrate on infrastructure development and sub-contract its service providing to private investors. In May 2005, it installed broadband which is expected to attract 100,000 subscribers and strengthen this sector.
(c) Non-Indian companies in telecom sector:
Many foreign MNCs are engaged with ETC in providing latest technology in areas like VPN / IN / VOIP networks, convergent billing, customer care, high capacity switches, etc. These are:
- Ericsson (Sweden): Providing turnkey solutions for GSM mobile services of 2.5 lakh lines; has undertaken some switching projects of various capacities.
- Siemens (Germany). Implementing transmission turnkey project of OFC backbone network; undertaken some switching projects of various capacities, including access networking.
- In addition, Alcatel (France), Nokia (Finland), Huawei (China) are engaged in projects which are similar to that of Siemens.
- ZTE (China): This was the first Chinese company to win the contract for providing turnkey solutions for GSM mobile services. However, its established network of 2 lakh lines did not work properly due to incompatibility. The entire network had to be shifted from Addis Ababa etc. to remote areas. The Ethiopian Telecommunication Corporation has secured massive funding of US$1.5 billion from ZTE which allows the company to monopolize ETC project till 2010. The company is exclusively developing Ethiopia’s nationwide network to cover 14 major cities in the country, including the capital city of Addis Ababa.
(d) Indian companies in telecom projects:
TCIL is the only Indian company active in executing turnkey projects in Ethiopia in this sector. During February 2001-June 2004, it has completed 10 telecom-related contracts for the ETC valued at US$ 18 million. In 2005, it provided short-term training in technical courses to ETC officers at ALTTC, Ghaziabad. In addition, the following projects are ongoing or are being pursued:
(a) Supply of V-SAT Antennas of 3.8 mts. and 2.4 mts. to ETC.
(b) GSM Project with Ericsson: MOU signed with Ericsson to implement GSM project work like tower erection, BTS installation, radio links, solar system installations etc.
(c) Pan-African VSAT Project: TCIL has been designated as the implementing agency from the Indian side for the Pan African e-Network Project for tele-medicine and tele-education for African countries. The total project cost is US$ 63.7 million, to be given as a grant by the Government of India. Ethiopia is the first beneficiary of this project. An agreement has been signed between TCIL and Ethiopian ICT Development Agency (EICTDA) to implement the pilot project in Ethiopia at a cost of US$ 2.1 million, which will be fully met by India.
(d) TCIL is also trying to associate with Nokia and Huawei for erection work for GSM projects for the ETC. In addition, TCIL has submitted a proposal for training programme in ICT to ETC and EICTDA.
(e) Supply of digital satellite receivers, IDR modems, supply and services of optical ibre digital transmission systems to ETC.
V. Water and Water Resources:
(a) Present position:
(i) In 2000, access to safe potable water in urban areas in Ethiopia was 72%, although in Addis Ababa it dropped to 38%. In rural areas, this figure is about 24%. Sanitation facilities are poor except in Addis Ababa and a few other towns. The country utilizes only a small portion of its aggregate annual run-off of about 122 billion cubic metres and its groundwater potential of 2.6 billion cubic metres.
(ii) The current potable water coverage has reached 42.6% as against 30.9% five years back. In the coming seven years, it is proposed to fully meet water demand of Ethiopia’s entire population. Over 152,000 deep, medium and small-sized water wells have so far been dug to increase rural water supply.
(iii) Ethiopia has prepared a 15 year project costing US$ 430 million to provide safe water supply. It plans to secure 100% water supply demand in all the towns and70% in rural areas. Water supply projects for 109 towns and water sewerage services for 110 towns would be undertaken. 746 meteorological and 274 hydrological centres would be established. Master plans of seven rivers would be drafted.
(iv) It is believed that Ethiopia has the potential to produce 30,000 MW power from hydro-power, which is enough to meet its own needs and surplus production could be exported to neighbouring countries.
(v) Hydropower plants at Gilgel Gibe (184MW), Fincha, Koka, Awash II and III, Melka Wakena, Tis Abay I and II provide electric supply to the main regional distribution system of Inter Connected System (ICS). Main industrial towns are connected into this national grid.
(b) Hydro-power development plans:
(i) The government plans to raise hydroelectric power production to 7,000MW through various projects. The current production is less than 700MW.
(ii) The proposed Kara Dobe Dam will be Ethiopia's largest ever multi-purpose dam estimated to cost US$ 800 million. It is expected to generate 1700 MW of electricity. The project is a result of an agreement between Ethiopia, Sudan and Egypt. Sudan and Egypt will bear some of the construction costs. The pre-feasibility study is expected to be completed by mid-2006 when the feasibility study will begin. The project is expected to be completed in 7 years and would help export of power to countries such as Sudan and Egypt.
(iii) The Gojeb hydropower project will produce 150MW electricity after completion. The proposed Halele Worebesa Dam project in the five-year plan is expected to produce 422 MW electric power. The Tekeze hydropower project, with capacity of 300MW, was to be completed in 2007 but there is expected to be delay of about 6 months.
(iii) Various hydro-power generation projects could be of interest to Indian companies engaged in construction, consultancy work, supply of machinery like turbines, setting up switch control room, etc.
(c) Non-Indian companies in hydro-power sector:
EEPCO signed a contract with the Italian company, Salini Construction SPA, in June 2005 for the Belese Project located 650 km. north-west of Addis Ababa in the Amhara region. It is expected to produce 460 MW electric power and to serve irrigation purpose. The Italian government is covering 70% of the cost with long-term interest loans while the remaining 30% is covered by the Ethiopian government. The Chinese National Water Resources and Hydropower Engineering Corporation (CNWRHRC) is completing the Tekeze hydropower project.
(d) Indian companies in water resources and hydro-power projects:
(i) WAPCOS has completed some consultancy services projects in the micro-dams, small irrigation and water resources sector. In 2004, it was awarded four projects for feasibility study and design of some micro-dams and for irrigation, which have been completed.
(ii) International Consultants and Technocrats Pvt. Ltd. (ICT) is presently doing feasibility studies of three irrigation projects for the Ministry of Water Resources. These are: Gumera Irrigation Project, Arjo Dedessa Irrigation Project, and the Humera Irrigation Project.
VI. Oil and Natural Gas:
(a) Existing reserves:
(i) Studies have indicated availability of oil in the regional states of Gambella, Somali, Tigray, and Awash basin of the Afar.
(ii) Natural gas reserves were first discovered in Ethiopia in 1973 by Tenneco, an American oil company. Later, the Soviet Petroleum Exploration Expedition drilled seven wells in Calub and two in Hilala in the Ogaden basin of Somali regional state. Currently, there are eight production wells in Calub. Gas reserves in Calub and Hillala are estimated at 2.7 trillion cubic feet and 1.3 trillion cubic feet respectively. The gas fields have an area of 285 sq. kms.
(iii) Ethiopia imports 100% of its petroleum requirements, but has commercially viable gas reserves at Calub, in the remote south-east. With world oil prices remaining at a high level, the search for other oil and gas reserves in Ethiopia is intensifying.
(b) Oil and natural gas development plans:
The Ethiopian authorities are encouraging oil and gas exploration studies/projects and various downstream projects. In March 2006, the Ministry of Mines and Energy invited letters for expression of interest from international companies to develop Calub and Hilala gas fields.
(c) Non-Indian companies in oil and natural gas sector:
(i) The Malaysian company, M/s Petronas, has started to explore oil in Gambella region in western Ethiopia near the Sudan border. In 2004, it signed a petroleum development and production sharing agreement with the Ministry of Mines to prospect crude oil in a 15,000 sq. km. area in Gambella. It has sub-contracted a Chinese company for geophysical seismic surveys and field work in 300 sq. km. area. The Ethiopian government has granted Petronas a one year exclusive right over an area of 350,000 sq. kms. in the Ogaden basin in southeast part of the country for preliminary joint study. According to the data compiled, it shows good prospects. In July 2005, Petronas signed another agreement with Ministry of Mines for exploration and production of petroleum around Kelafo, Welwel-Warder and Genale localities in Somali State.
The Malaysian oil firm Petronas has also won Ethiopia’s ambitious Calub and Hilala gas field development contract in August 2006. The gas fields were identified in the 1970’s and basic infrastructure was installed in the 1990s, but none of a string of development proposals has come to fruition, largely because of logistical difficulties in what is an isolated location with little connecting infrastructure. The final failure of the last development proposal, by SI-Tech international (SIL) in January 2006, led to the tendering and award of the new contract. Petronas plans to invest US$1.9 billion over six years to develop the two fields, which together are classified as “giant”. This will involve the construction of a gas-to-liquids plant and an export pipeline to the coast, at Djibouti. Petronas, Gail India Ltd. and Dinder of Sudan participated in the tender put up by the Ministry.
(ii) The National Oil Corporation (NMC) owned by the Saudi billionaire of Ethiopian origin Mr. Mohammed Al-Amoudi, and his conglomerate MIDROC, has been awarded an exploration license in 2004 in the Awash basin of the Afar State in the eastern part. NMC has appointed Sintom Consultants, a Russian firm, to undertake seismic surveys. It is understood that some American companies are also negotiating for oil prospecting in Tigray region in the northern part of Ethiopian.
(iii) White Nile (a UK-Sudanese group) signed an exploration agreement for a block in the South West in July 2005. As part of the exploration programme, ground geophysical surveys, including magneto-tellurics and gravity, have now been completed in the omo river area. Early results of the interpretation are encouraging and have revealed deep basins, potentially containing sedimentary section similar to that of the petroliferous Muglad and Melut Basins of Southern Sudan. The next stage in the development of the company’s Ethiopian project is to finalise the interpretation of the data collected, which will identifying the areas that White Nile wishes to translate into a PSA. Pexco (a private Malaysian firm) won an exploration in the south-east Ogaden basin (where Calub is situated) in October 2005, for an initial payment of US$1 million; and two other small firms – Afar Exploration and South West Energy – also won concessions in 2005.
(iv) It is understood from the Ministry of Mines that more blocs are available for oil and gas exploration in Ethiopia.
(d) Indian companies in oil and natural gas projects:
In the past, Indian companies like Gas Authority India Ltd. (GAIL), Petroleum India International (PIL) and Assam Company Limited had also shown interest in this sector.
VII. Railways:
(a) Existing infrastructure:
The Ethio-Djibouti Railway Company (CDE) was established about 106 years back. The railway service between the two countries started in December 1902 under an agreement between the French government and the Ethiopian government with the arrival of the first train to Dire Dawa. Ethio-Djibouti Railway was completed in 1917 and is one of the oldest rail-lines in Africa. It is a meter-gauged single track line of 781 kms. Of which 681 km. is in Ethiopia and 100 km. in Djibouti. Dire Dawa is the central station for the operation, hosts the maintenance workshops and employs most of the labour force. The two governments own the Ethio-Djibouti Railway Company with equal amounts of shares. Its operation is governed by a Treaty signed in 1981. The company has over 2700 temporary and permanent employees.
In 1998, Ethiopia and Djibouti announced plans to revitalize the century-old railway that links their capitals. Railways, its infrastructure and maintenance require major attention to put these in good shape.
(b) Railways development plans:
(i) There is a project to rehabilitate and upgrade the Ethio-Djibouti railway tracks, which is being funded by EU (euro 40 million) and part of which is supported by World Bank.
(ii) The Ethio-Djibouti Railway Company has given concession of operation and management of the Ethio-Djibouti railway to a private company for a period of 25 years.
RITES made serious bid for concessioning of Ethio-Djibouti railways for operation and management for 25 years to a private concessionaire, but lost to the South African company COMAZAR but further COMAZAR not showed their interest to implement the project and now discussions are going on with other parties.
(c) Ethiopian railway Corporation (ERC)
The newly formed Ethiopian Railway Corporation (ERC), which is tasked with the job of building a railway network reaching 5,000Km to connect different parts of the country, was established in November 2007, after the Council of Ministers decided to form it under the supervision of the Ministry of Transport and Communications. The ERC was established with a paid up capital of US$750 million. It envisions installing a 5,000 km railway network in Ethiopia. The project will comprise in its initial phase of building a railway network in Addis Abeba: From Entoto to Kaliti, and from Keranio to Ayat residential estate. H.E. Mr Junedin sado, Minister of Transport & Communications is also chairman of the Board of Directors for the Corporation. Other directors are including Arkebe Oqubay, Mekonnen Manyazewal, and Tadesse Haile, state ministers for Works and Urban Development, Finance and Economic Development, and Trade and Industry, respectively. Mehiret Debebe, general manager of EEPCo, is also a director of the Board. The directors have already appointed chief executive officer for the Corporation: Getachew Betru, a U.K. trained engineer.
VIII. Cement:
(a) Existing production capacity:
There is shortage of cement in the country. The existing three plants at Mugher, Dire Dawa and Messebo have a total production capacity of about 4500 TPD. This is inadequate to meet the ever growing demand due to ongoing road construction projects and increased construction activity in housing, office complexes, etc. The Ethiopian Government has, therefore, put in place a franco valuta import scheme for investors interested in importing cement. A total of 24 companies including Derba-MIDROC, have subsequently penetrated the cement import business.
(b) Plans for additional production:
(i) Mugher Cement Enterprise, the main government-owned cement plant producing 2000 TPD, is planning to expand its capacity to additional 3000 TPD by erecting a new production line. The clinker manufacturing unit will be located at its current premises, while the cement grinding plant will be located at a different location. The estimated cost of project is US$ 115 million.
(ii) Derba-MIDROC Cement PLC signed a US$200 million agreement with three International and local financers i.e. African Development Bank (AfDB), International Finance Corporation (IFC), European Investment Bank (EIB) and the Development bank of Ethiopia on June 23, 2008 for its cement development project. It is the first time the three international financers have advanced loans to privately owned investment in Ethiopia. The AfDB and IFC each invested US$55 million in the cement factory, while US$45 million was released by both EIB and DBE. The installation of the plant is projected to cost US$351 million, of which the company contributed the remaining US$151 million in equity. Derba-MIDROC signed a turnkey contractual agreement with China national Building Materials Co. Ltd. on January 9, 2007, which involves the design, supply, erection, commissioning and handing over of the plant. It is expected to have a production capacity of 80,000 quintals a day, or 25 million quintals a year. Holtec Consulting Pvt. Ltd. from India is consultant to the turnkey project of the Derba MIDROC Cement plant. The three active cement factories currently produce 1.82 million tones of cement a year. A booming construction industry has pushed the demand to more than double then what is currently produced.
(c) Non-Indian companies in cement production:
Four local companies have been given land in Oromia region for construction of cement factories. These are: Derba Midroc, Ethio Cement, Jema PLC, and East Africa group.
(d) Indian companies in cement production:
M/s ACC and Holtec Consulting Pvt. Ltd from India are consultants to the turnkey project for expansion of the Mugher cement plant and newly established Derba MIDROC Cement plant respectively.
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