Rorank Business Plc, a local company that makes spirits under the ownership of British giant Vasari Group, has ceased making denatured alcohol because of raw material shortages.

The production facility, resting on 2.2ha of land in Cha-cha Wereda near Debra Berhan town, Amhara Regional State, has been making and supplying denatured alcohol for five years to factories that make milk, cosmetics and medication.

However, the company stopped making denatured alcohol a month ago due to the excise tax and shortages of raw materials, according to a source at the facility.

Last month, the parliament legislated a proclamation that imposed a 60pc excise tax on denatured alcohol. However, the Ministry of Finance has temporarily waived the 60pc excise tax on denatured alcohol due to the spread of the Novel Coronavirus (COVID-19) in order to speed along the production of hand sanitizer.

The company has been both importing and buying the raw materials locally needed to produce pure alcohol.

Finchaa and Metehara are the two sugar factories that are currently producing ethanol from molasses with a combined production capacity of three million litres a year. The two plants sell 300,000lt of ethanol daily to the National Alcohol & Liquor Factory.

"After doing cost analysis, we decided to limit our production to drinking alcohol only," said the source, who adds that the company is planning to downsize its 400 employees by half.

Ethiopia cannot afford to lose such investments in the manufacturing sector, while 70pc of the population is young and largely unemployed, according to Zerayakob Belete, managing partner at Nexus Investment Solution Plc.

"The government must give incentives for foreign investment in the agricultural, industrial and technological sectors, as they play a vital role in creating job opportunities," said Zerayakob.

The liquor factory has the capacity to bottle and package 35,000 bottles an hour. It bottles whiskey, vodka, gin, ouzo and rum with alcoholic contents ranging between 20pc to 40pc and a variety of flavoured liquors such as lemon and super mint.