Ethiopia – Habesha Cement Factory Plans solidifying

(Capital)-The new cement factory share company; Habesha, is to float an international tender in the coming weeks to invite equipment suppliers with vendor finance from international financial institutions. The invitation will include construction of the cement factory scheduled to commence in September 2009 at Holeta, 35km west of Addis Ababa.

A source from the managing staff of Habesha disclosed to Capital the bid document requires a company that can deliver favourable terms of loan with low interest rate and extensive payment duration.

To realize the project, it plans to sell 40 per cent of total shares until the end of this month. The balance is expected to be covered by loans from international and local financial institutions until the end of August 2009. Mesfin Abi, CEO and main promoter of Habesha Cement, told Capital the project is on schedule. “We have achieved 100 per cent of our plan even before the selling of the shares is concluded,” he said.

According to Mesfin, the discussions with loan providers like the African Development Bank (AfDB) and International Finance Corporation (a World Bank group which opened its office in Ethiopia some months ago) have been positive.

“However, for wider opportunities we are approaching other financial institutions such as EXIM (export and import) Banks of India and China,” the CEO added.

Habesha Cement was created by 30 professionals that were engaged in cement production for many years and other interested investors with capital of 600,000 birr in September 2008. The company’s minimum share price is 5,000 birr (five shares) and the maximum number of shares one investor can buy is 120,000.
The factory is projected to cost 1.2 billion birr and upon completion in April 2011 it will have the capacity to produce 12 million quintals of cement per year.

A few months ago, Habesha acquired 66 and 19 square kilometres of land in Mugher and Holeta areas, respectively, both with enormous limestone potential.

In the last few years, according to experts, the demand for cement, subsequent to the construction boom, has shot up.

The unbalanced demand and supply resulted in scarcity and a doubling of prices. In order to alleviate the shortage and reverse the price hike, the Government allowed companies to import the product using their accounts in foreign countries. Following the permit, last budget year alone the country imported 700,000 tonnes of cement. During this budget year the government plans to import 1.5 million tonnes of cement for its housing project.

Currently the local cement supply is around two million tonnes per annum from three major factories in the country, while the demand is more than double that amount. Experts estimate an ever increasing demand; from 8.4 to 20.5 million tonnes per annum over the coming six years.

The two huge cement factories; Mugher and Mesebo are under expansion. When all expansions are completed, including other new factories, the supply will reach four million tonnes per annum.

Capital Ethiopia

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