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06. November 2011

9 foreign firms shown interest in bidding for Tossa Steel in Ethiopia

It is reported that the bidding process for what could be the first and biggest steel factory Tossa with a capacity of producing 1.3 million tonnes a year is under way with 9 international companies having shown interest.

Tossa Steel Factory, established by Mohammed Al Alamoudi, invited offers for the factory which is to be built around 30 kilometers from Kombolcha, 376 kilometers north of the capital in the Amhara Regional State a month ago.

Mr Shimelese Shiferaw head of environmental protection and land administration office of Debub Wollo Zone said that the company has already received the go ahead for 300 hectare of land from the region. However, there are two possible plots the company is looking at.

Representatives of the companies, two from Germany, three from China, two from Italy, one from South Korea and one from France, have shown interest in the factory, even visiting last week to assess the project and financial risks before submitting their bids ahead of the December 16th 2011 deadline.

Company representatives also held discussions on power, customs and environmental issues.

Around 40 people went to the project site on October 25th 2011 to assess the project. The next day they held a meeting with representatives from the Ethiopian Electric Power Corporation, Environmental Protection Agency and the Tax Authority.

Mr Haile Assegid CEO of Tossa Steel Factory said that one of the major issues raised was the availability of power. The factory, which is expected to be completed in three years, will require 300mw of energy when it is completed. He added that "We have been assured that the power would be made available when the factory is completed."

Ethiopia currently generates 1,875 MW of electricity from hydropower. At the current rate, the Tekeze Dam, which generates 300 MW, would need to divert all its power to the factory. However, improving power generation in the country is one of the major infrastructure upgrades targeted in the government’s five year economic plan. The country’s power generation is expected to reach 10,000 MW by 2014-15 as hydropower projects such as the Renascence Dam and Gilgel Gibe III, which have outputs of 5,250 MW and 1870mw respectively, near completion.

Mr Haile said that although the first phase of producing steel products including billets, reinforcement bars and hallow sections is to expected to be completed in three years time, the project has a second phase as well. He added that "In the second phase, we plan to produce steel for railway tracks."

Tossa, which received its investment license from the Ethiopian Investment Agency in July 2011, is not the only company looking to venture in the steel industry.

The Endowment Fund for Rehabilitation of Tigray (EFFORT) has plans to establish an ore mine and a steel factory in the region. It had called for offers of a feasibility study for the factory to be erected in Shire, Mentebtab wereda, in Tigray Regional State, 1080 kilometers North of Addis Abeba. The financial offers of three out of 18 companies who have shown interest have been opened, but the results are yet to be announced.

According to a study conducted by the Japan International Cooperation Agency, the venture by these two companies is the first such endeavor in a highly industrialized steel production. The demand for steel in Ethiopia is currently is 1.2 million tonnes per year, which is estimated to reach 3.1 in 2014-15.



Sourced from addisfortune.com

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