Radar | Dec 26,2020
The construction of power substations and transmission lines in three integrated agro-industrial parks will begin following years of delay.
Two years ago, the Chinese Sinohydro Construction Ltd was awarded the contract for constructing the power infrastructure in the Yirgalem and Bure agro-industrial parks. Shortly after, the Indian-based C.I. Electric Co. was selected to install a power distribution centre at Bulbula Integrated Agro-Industrial Park. The federal government allocated three billion Birr to finance these projects, expected to wrap up in two years.
However, the contractors are yet to begin construction, delayed due to a lack of foreign currency, disclosed Ashebir Balcha, chief executive officer (CEO) of the Ethiopian Electric Power (EEP).
His company has facilitated opening letters of credit (LCs) for the contractors.
The past two years have seen three agro-industrial parks open for business.
Bure Integrated Agro-Industrial Park, in the Amhara Regional State, was the first to begin leasing space to prospective investors. It was followed by Yirgalem and Bulbula agro-industrial parks in the Sidama and Oromia regional states.
Construction of a fourth park, Baeker Integrated Agro-Industrial Park in the Tigray Regional State, began in 2018. However, it has been stalled due to the civil war that broke out two years ago. The war resurged this month after a six-month lull.
Officials aspire to see agro-processors leasing space in the parks to help substitute imports, which cost 14.5 billion Br last year. The federal government spent billions (five billion Birr on Bure alone) to finance construction in hopes of attracting 1.5 billion dollars in investment and nearly half a million in job opportunities. Two dozen agro-processors have leased space in Bure, relying on a power substation installed in Debre Markos town – over 100Km to the southeast.
“Factories receive insufficient power supply,” said Dagnachew Asres, general manager.
Agro-processing machines inside the Park require 24mw of power to operate optimally. They receive less than 12pc of demand.
Among the Park’s lessees is Richland Biochemical Production Plc, a joint venture established with over 1.7 billion Br capital between Ethiopian and Chinese investors four years ago. The plant processes corn and soybean to produce protein powder, cooking oil and animal feed.
According to Dawit Awudew, assistant manager, the corn processor, which needs 13mw of energy, has been idle for two years due to insufficient power.
“The machines are operating under their installed capacity,” he told Fortune.
Two companies in processing nuts and tomatoes are waiting until a sustainable power supply is installed to start operations. The unavailability of electric power is pushing investors away, argues Berhanu Taemalew, general manager of the Amhara Industrial Parks Development Corporation.
Experts observe the insufficient power supply is a headache for investors that could potentially put the viability of the parks at risk.
“Such negligence puts the entire endeavour in jeopardy,” said Abinet Belay, an investment consultant with MPE Advisory Firm.
The situation in Yirgalem is relatively better.
Laying on 294hct of land 40Km from Hawassa town, along the highway to Moyale, a border town with Kenya, Yirgalem Integrated Agro-Industrial Park was inaugurated two years ago. The Park was built, consuming 1.4 billion Br public investment. It houses six agro-processing companies – four of which have started operations, including YBM Trading Plc and Sunvado Manufacturing Plc. Combined, both industries can process 14,000tns of avocado annually.
Biruh Coffee, a company incorporated four years ago with a registered capital of 150 million Br, also entered Yirgalem recently after leasing a 2,500sqm shed. Its managers plan to export roasted and ground coffee.
The processors get 10mw of power from a nearby substation seven kilometres from the Park.
“We’ve not fallen short of power,” said Petros Markos, communications director for the Park.
However, he concedes that more power is needed to supply new arrivals. The federal government plans to expand the Park, incorporating an additional 700hct of land to house 152 industries.
PUBLISHED ON Sep 18,2022 [ VOL 23 , NO 1168]
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