A federal agency invitation to procure a large volume of edible oil found itself without a bidder. The lack of interest was attributed to the country’s foreign currency crunch, adding to a slew of challenges marking an ongoing economic struggle.

The Ethiopian Industrial Inputs Development Enterprise (EIIDE) had initially planned to procure 10 million litres of edible oil. However, despite nine companies purchasing the bid documents, none showed interest, leaving a question on the Enterprise executives' strategy to ensure the availability of essential commodities for Ethiopia's burgeoning population.

According to Mesfin Melese, the Enterprise's Procurement Coordinator, the executives are adjusting to the situation, reconsidering the option to lower the deposited payment orders and extending the delivery date. They hope these adjustments will incentivise companies to engage in the bidding process.

The foreign currency crunch has had a weighty impact on the bid response. Although the international market price of edible oil dropped by 35pc from an average of 1,023 dollars, the foreign exchange constraint has put the brakes on their plans to float an international bid, said Mesfin.

A state-owned entity established in 2015 with four billion Birr capital, the Enterprise buys and distributes essential consumer items such as cooking oil and sugar through its 83 outlets. Its operations are based on a revolving fund model, with profit margins kept under a ceiling of five percent on each commodity.

The volume for the latest procurement has been slashed by half from the initial plan after receiving information that the Ministry of Finance is processing a separate procurement for 20 million litres of edible oil. Mesfin disclosed that the oil is in the shipment process, with payment set to be settled after delivery using a deferred letter of credit.

However, this strategy does not seem to placate the concerns of local manufacturers. They express apprehension about the limited foreign currency allocation for crude palm oil import, mainly sourced from Ukraine, Djibouti, and South Africa.

A domestic company, Tena Oil Factory, is exploring an alternative strategy, according to Abraham Mekonnen, the factory’s manager. They plan to erect a plant to process raw inputs into crude oil, with an investment of 17.1 million dollars planned for this project in Qaliti and Dukem towns.