FORTUNE+ VIDEO SPONSORED CONTENTS ADVERTORIALS FORTUNE AUDIO Fortune Careers New TRADE AFRICA New

Fortune Logo
Close to 20 transformer manufacturing industries operate locally, of them, half a dozen are compact substation transformer manufacturers. MetEC used to be the sole supplier in the industry.

Transformer producers have lodged complaints before federal authorities that they are on the verge of closing plants. Twenty local transformer producers declined to make deals with the Ethiopian Electric Utility (EEU) before their issues over forex shortage, and high import tariffs were resolved.

Mengistu Asres, head of the quality department at the EEU, confirmed that the producers demanded renegotiated prices.

"We've informed them to enter into deals with us before December," Mengistu told Fortune.



Transformer producers sign agreements with the EEU yearly to supply products to the capital and regional states. Last year, the EEU signed 2.1 billion contracts with them, a third round after the board of EEU approved a procurement directive prioritising domestic manufacturers.

The Metals & Engineering Corporation (MetEC), a state-owned industrial enterprise, used to assemble transformer parts and supply the EEU. For a decade, local assemblers supplied transformer parts to the MetEC. Manufacturers began producing finished transformers to deliver directly to the EEU.

EEU's quality department inspects assemblers annually before allowing them to participate in bids.


Eight months ago, assemblers offered prices higher than the tariff EEU set.

For over a decade, government policy had favoured foreign investments and joint ventures providing second-schedule, excise duties, and tax-free imports of raw materials, hoping it would help energise the industry. The second-schedule tax-free privileges were not incorporated in the recently revised tariff book by the Ministry of Finance, according to Tsehaye Yenesu, head of the electronics manufacturing industries unit at the Ministry of Industry.



Approved by the Ministry of Finance authorities, a tariff book comprises a list of materials exempted from duties.

Tsehay and his teams conducted a study and discovered 251 items not included in tariff books.


Last year producers delivered 10,000 transformers to the capital and regional states, meeting 150pc of EEU's demand, disclosed Mengistu. However, the assemblers declined to supply products for the current year, blaming the unavailability of raw materials, the taxation system, and low tariffs. As the import bills of transformer parts soared to 45pc in recent years, the industry appealed to the authorities for tax exemption and adjustments on imported inputs.

"We can't sign the contract where inputs are lacking, and high tariffs are imposed," said Dawit Belay, Advantage Industrials Plc general manager.


Dawit, head of the Transformer Manufacturers' Association, an industry lobby group, blamed the soaring prices for inputs in the international market due to Russia's war in Ukraine and the taxation system. Manufacturers import most of the inputs from Ukraine.

Incorporated a decade ago, Advantage Industrials Plc supplies transformers to Amhara and Oromia regional states. Last year, it supplied 1,000 transformers.

"We're almost closing factories," he told Fortune.

It is a voice in desperate plea but echoed by others in the industry.

Incorporated three years ago with a registered capital of 62 million Br, Qifa Mechanical & Electrical Equipment Manufacturing Plc produces compact transformer products, mainly used by industries and residential complexes. The company imports 95pc inputs such as breakers, sheet metals, conductors and core coils with an annual production capacity of 300.

"We stopped operation," said Kinfe Molla.


Ethio Telecom, a state-owned giant company, is among the companies with high demand for transformer products. It buys these products from domestic assemblers certified by the EEU. However, the company looks elsewhere for supplies come short locally.

"The problem is the low production capacity unable to meet our demands," said Tariku Demissie, chief technology officer of Ethio Telecom. "There are times we could not operate due to shortages."

Ethio telecom buys from domestic assemblers up to 500 transformers a year.

"Manufacturers are not delivering enough," said Tariku.

Many factories halted operations due to power shortages.


PUBLISHED ON Oct 08,2022 [ VOL 23 , NO 1171]

How useful was this post?

Click on a star to rate it!

Average rating 5 / 5. Vote count: 1

No votes so far! Be the first to rate this post.



Related Posts

Editors' Pick

Exclusive Interviews

State Enterprises from Oracles to Apprentices

Dec 22 , 2024 . By TIZITA SHEWAFERAW

Charged with transforming colossal state-owned enterprises into modern and competitiv...

Agenda

Rising Costs, Inflation Threaten Insurance Industry

Aug 18 , 2024 . By AKSAH ITALO

Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...

Agenda

BREWING DISCONTENT

Jul 28 , 2024 . By TIZITA SHEWAFERAW

Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...

Fortune News

Electric Vehicle Push Leaves Investors in the Lurch

Jul 13 , 2024 . By AKSAH ITALO

Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...

Commentaries

Container Ships Keep Global Trade Afloat While the World Looks Away

Shipping is often overlooked as a foundation of global trade. Consumers easily recogn...

Climate Displacement Is Also a Health Crisis

Every year, 21.5 million people are forcibly displaced by floods, droughts, wildfires...

Fineline

Leaders of the National . . .

Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...

When the country’s most. . .

When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...

Editorial

Addis Abeba's Costly Pursuit of Prosperity Bulldozes Dreams on Bargain Prices

Feb 1 , 2025

Urban renewal is seldom gentle to those on the receiving end of redevelopment. Take s...

Birr in Tumble, Reform Rhetoric Meets Bitter Economic Realities

Jan 25 , 2025

Grand ambitions have long driven Ethiopia's successive leaders, but they remain weigh...

Breaking the Chains to Protect the Vulnerable During Painful Reforms

Jan 18 , 2025

Adanech Abebie, the mayor of Addis Abeba, addressed last week a warm-up session for h...

Banks Struggle to Lend as Branches Bloom, Coffers Wither

A severe cash shortage squeezes the economy, and the deposit-to-loan ratio has slumpe...

Gallery

Parliament Approves New Cabinet Members

Oct 6 , 2021

Parliament Approves New Cabinet, Incorporates Opposition Leaders Lawmakers have approved today the nominations of 22 ministers, including three opposition leaders. Two MPs have voted against, while 12 abstained...

2020 in Posterity

Jan 5 , 2021

TIGRAY VOTES DESPITE "NULL & VOID" THREAT

Sep 9 , 2020

IN-PICTURE: LAUREATE'S RECEPTION  

Dec 14 , 2019

PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize

May 6 , 2019

Faces, Voices of Addis Abeba

Apr 26 , 2019

Sunday With Eden

The Vanishing Reverence for Marriage

Marriage is meant to be a lifelong bond, built on love, trust, and commitment. It is...

Wash Hands, Save Lives

In a world scarred by health crises like COVID-19, one might expect handwashing to be a universal habit. Yet, many still neglect this simple...

Life Matters

When Taxi Rides Become Unexpected Fare Collection Hassles

There was a time when taxi rides were moments of peaceful relaxation. I would lean back, sometimes fall a...

Breaking Stereotypes, Redefining Masculinity for a Just Society

A recent altercation in my neighbourhood has made me reflect on the complexities of conflict, especially...