After winning a significant battle against international competitors, six local cement manufacturers passed the preliminary technical evaluation to supply 7.3 million quintals of cement estimated to worth half a billion Birr.
The procurement will be used to construct 94,072 low-income housing projects undertaking in Koye Feche and Bole Arabsa sites.
Although 13 companies initially expressed an interest to participate in the bid, only six submitted their technical and financial proposals. Their technical documents were opened last Wednesday at the premise of the city’s Public Procurement & Property Disposal Agency (PPPDA).
Dangote Cement Plc, Mesebo Cement Factory Plc, National cement S.C, Habesha cement S.C, East cement S.C and Mugher Cement Factory were the only interested bidders amongst the 15 local cement manufacturers with an annual production capacity of 8.9 million tonnes.
The technical evaluation commenced just three weeks after the Agency cancelled the tender following an instruction from the Addis Abeba Bureau of Finance & Economic Cooperation (BoFEC). The retraction was requested by local cement manufacturers that believe their existing capacity is enough to satisfy the demands of the Agency without the involvement of international suppliers.
About 17 companies had shown interest in the cancelled bid.
The Agency floated the tender on behalf of the city’s Housing Construction Project Office (AAHCPO). It evaluated whether the bidders fulfilled the legal and financial requirements, such as license renewal, value added tax registration, tax clearance documents and half a million Birr bid security to be a part of the bid.
The human resource and production capacity of the six companies that made it to the preliminary technical stage of evaluation will be assessed in the official technical phase. It is expected to be finalised in two weeks, although it depends upon the genuine participation and cooperation of bidders, according to Abdulkadir Redwan, deputy manager of Sales & Contracts at the Agency.
“To ensure fairness, the winning company will supply 60pc of the cement while the forerunners will also be given a chance to provide the rest- if they agree to deliver the cement by the least price offered in the auction,” he said. “This creates an equitable market opportunity for the suppliers and enables us to distribute the goods without being affected by the price fluctuation.”
Despite the worries of the Agency, some companies seem confident even though the arrangement of the Agency does not work.
“We have a capacity of producing 1.4 million tonnes of cement a year. Thus, we can manage it even if we win the right to supply all of the required cement,” said Mesfin Abi, CEO at Habesha Cement Factory.
The winning companies are expected to supply the cement quarterly for a year.
For some companies, the tender is not short of problems. Contrary to other bids, it does not draw attention to big fishes in the industry.
“The conditions of the Agency to participate in the bid are repelling,” said a CEO at one of the giant cement manufacturers. “Also, they are usually late in processing payments and have a management problem.”
This is not the only procurement made by the Agency this year. A month ago, it selected Steely RMI, one of the giant local steel producers, to supply 50,000tns of steel for low-income housing projects with an estimated cost of one billion Birr.
In the past fiscal year, the Agency procured items worth half a billion Birr for various offices under the city administration.