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The progress at Tendaho Sugar Development Project in the Afar Regional State has suffered a serious drawback, missing the critical month of July 2006, a rainy season that was planned to give the project its highest water catchments.
Delay in the release of financing from both local and international creditors and the ballooning price of cement are major culprits, according to informed sources. Now that the rainy season is in full swing with the project's dam only completed by 81pc, managers of the project were forced to postpone their water catchments plans to February 2007.
Under the joint auspices of ministries of Trade and Industry, and Water Resources, the Tendaho project was launched at the beginning of 2005, after its feasibility study was conducted by an Indian firm, G. J. Mukherjee. It was hired by the Ethiopian Sugar Industry Support Centre (ESISC).
The project is estimated to consume 8.68 billion Br, with a 351 million dollars loan expected from India to develop the project on a 64,000hct plot near the Awash River.
Officials at the Ministry of Finance and Economic Development are still negotiating terms of the loan with their Indian counterparts, although sources say the latter want their companies to be assured of winning contracts in the project. The project will require the remaining 1.66 billion Br from the Development Bank of Ethiopia (DBE), a state company that has been evaluating loan applications from the project office for the past four months.
According to Dereje Birgesa, head of Public Relations Department with DBE, the Bank is expecting to announce its decision in two months.
The tender to select the construction company of the sugar mill and suppliers of machineries to the Tendaho Sugar Factory has not been floated. Tendaho is a newly established state company that has taken the responsibilities of the project from the ESISC, following a decision by Council of Ministers. According to officials at the Centre, prospective bidders to the project are reluctant to participate in a project whose financing they are not sure about.
These reasons have contributed to a delay of six months, thereby prolonging the government's dream of expanding the sugar manufacturing capacity of the country three-fold from what it is today, 2.8 million quintals. The three factories now operational - Wonji, Metehara and Finchaa - produce this amount, unable to satisfy the growing demand that is estimated to be above three million quintals.
There is also a great deal of concern that the planned plantations of seeds of sugarcane for December 2006 could also be compromised. The idea was to follow-up this work with a commercial sugarcane plantation on 11,255ht of land between September 2007 and June 2008. It is an uphill task to be accomplished before the factory is launched in November 2008.
Notwithstanding the slowdown on the major project, basic works are, however, well in advance with constructions that involve irrigation canal and soil testing: the Ministry of Water Resources has already given the job to two state owned companies - Water Works Construction Enterprise and Water Works Design and Supervision Enterprise.
The federal government has allocated 1.98 billion Br for these particular works. Upon completion, the dam, which will be constructed in the Dubti area, will be 53m wide and 112m long, and will keep 1.86 billion metric tons of water. Of the 64,000ht of land the project has, 14ht will be allocated for infrastructure and construction of residential houses for the projected 45,000 workers to be deployed in the factory. The construction of residential houses is projected to cost 2.6 billion Br.
Belete Alemayehu, general manager of Tendaho Sugar Factory, wants to see the planting of the sugarcane and the construction of the factory to go hand in hand, for the sugarcane will get spoiled if it is not processed right away. He told Fortune that more work has to be done in terms of the construction of houses and the water reservoir.