Ethiopian Sugar Corporation Earns Billions in Nine Months

Ethiopian Sugar Corporation Earns Billions in Nine Months

The Ethiopian Sugar Corporation (ESC) earned 4.1 billion Br from the sale of 314,946tn of sugar over the past nine months, exceeding its goal of 3.9 billion Br in revenues. The corporation’s ethanol sales reached 48 million Br, up from 8.5 million Br projected in September 2010.

However, the industry suffers from inefficiency and improper budgeting, according to Abay Tsehaye, director general of the corporation, who unveiled plans to revamp Ethiopia’s fledgling sugar industry to Parliament’s standing committee on industry affairs on May 11, 2011.

“For the past five years, project study designs, budget allocations, recruitment of manpower to open project offices, and the onsite execution of projects have stayed the same, with little or no progress,” Abay told the standing committee.

Wonji Shoa, Metahara, and Finchaa Sugar Factory, the country’s operational state owned sugar factories, have an annual production capacity of 2.8 million quintals.

In a bid to meet sugar shortages in the local market, the government imported 130,000tn of sugar last year and plans to import 80,000tn this fiscal year.

The implementation of reforms and poor budgeting had delayed the corporation’s progress, but with a little time Ethiopia could meet its five-year sugar development goals, Abay claimed.

Ethiopia plans to have 2.5pc of the world’s sugar market in five years.

The strategic plan envisions building eight new sugar factories in the set period. At the start of production, these will have an aggregate annual production of 2.2 million tonnes, according to the GTP.

In July 2007, India and Ethiopia agreed on a 640 million dollar credit line for the construction of Tendaho Sugar Factory.

Tendaho and the expansion of existing factories were singled out by Abay, who was appointed as head of the corporation at its establishment in September 2010, for having shown little progress.

“The projects have shown retarded progress coupled with wastages in the budget,” he said. “Several complex land rights issues between pastoralists and the regional authorities at the Tendaho and Wolenchiti sites have remained unresolved. The delays in the projects have not only created unnecessary expenditures but also losses in potential revenues that could have been earned had they been operational.”

The corporation has finalised assessments on the shortcomings of the sector and proposed modernising measures to raise productivity and efficiency, the director general, who is a minister without a portfolio, told the committee in his two-hour report.

A revamp of the sector’s manpower is essential and appointments must be made on competency, according to Abay. He also proposed the implementation of fast tracked business process reengineering (BPR) supported with constant training to help improve the state of affairs in the sector.

It was for this reason that factory workers were refused the salary increment they requested.

“We sat down with the labour unions and discussed why the time for that is not now, and why it is not necessary,” Abay said. “When we have achieved something and are more competent, we will provide what is required.”

The rise in prices of fuel, spare parts, cement, and fertilisers made a dent in the sector’s budget, while wastages also presented a problem to the sector’s overall performance, according to the report.

The very existence of the factories has been threatened by increasing production costs and the necessity to employ excessive manpower, Abay claimed.

“Consolidation is in progress,” said Dereje Gutema, deputy director of planning at the ESC. “The corporation views potential for growth as evidence of the long-term attractiveness of this sector in Ethiopia. If we are going to become global players, we must lower production costs and boost production capacity.”