Steely was selected among the four companies that participated in the bid
Steely RMI, one of the largest steel manufacturers in the country, managed to become the only company to pass the technical evaluation of the bid to supply 50,084tn of reinforcement bars for the construction of middle-class public houses.
The total cost of the procurement is estimated to be around a billion Birr, according to the current market price of rebar at London Metal Exchange Market adding to the transportation cost incurred by the supplying company.
The Addis Ababa City Administration Public Procurement & Property Disposal Service (PPPDS) is procuring the steel on behalf of the Addis Ababa City Saving Houses Development Enterprise (AASHDE), which is currently building 20,932 middle-class houses in six sites.
The service selected Steely amongst C & E Brothers PlC, Abyssinia Integrated Steel PlC and Habesha Steel Mills PlC, all of whom made it to the technical evaluation stage.
Founded in 2004, Steely RMI is wholly owned by Ethiopians and has a capacity of producing 360,000tn of steel and wire rods a year in its factory located in Bishoftu, 60.3km from Addis Abeba.
Habesha was the first to be rejected in the bid after failing to fulfil the legal requirement for the bid whereas the rest failed to submit a fully-fledged certificate that ensured the quality assurance of the bars, according to Gemeda Berisa, coordinator of the Procurement Core Process Group at the Service.
The bid, where only local manufacturers were allowed to participate, was conducted a month ago through a restricted bidding system.
“This was to support local producers in raising their market share in the country,” said Abdulkadir Redwan, deputy director of the Service.
Four out of 12 domestic rebar manufacturers expressed an interest in the tender, which was screened by a team of five people who work in the Service.
After the technical evaluation, post-evaluation will be conducted by physical visits. And after the financial opening, the offer of the company will be evaluated against the market price.
The price of steel reached 520 dollars per tonne as of August 31, 2017, according to the London Metal Exchange market, a website that provides information on the metal market in London and European markets.
“Before passing the post-technical stage, five days is given to bidders to present their complaints to the Service,” said Gemeda. “They can also submit their objections to the Bureau of Finance & Economic Cooperation if they are not satisfied with the result.”
C & E, whose production capacity half a billion tons of steel, is amongst bidders unsatisfied with the auction result.
“Although we ordered the raw material for the steel requested by the Service, we could not manage to import it quickly owing to the shortage of foreign currency,” said Wondifraw Belete, CEO of C & E. “Considering the existing situation, the Service should have wait for us at least for two weeks to check whether we have technically fitted product or not.”
Even though the bidding companies are allowed to supply 40pc of the total rebar if they agreed to provide with the winning price, none of them except Steely has managed to pass the technical evaluation stage.
“We can supply the entire 50,000tn for the service,” said Getenet Endazenew, marketing manager of Steely, which is expected to provide the steel for a year.
Hence, the three technically unfit companies do not get to enjoy the incentive given by the Service whereas Steely has the right to supply the entire steel procured by the Service upon passing the financial evaluation stage of the tender, according to Gemeda.
Founded three years ago, the Service has the mandate to purchase various strategic inputs for different offices in the city. It also disposes properties of public offices and agencies upon their demand.
The total local production of steel including core and rebar metals and tube lames stood at 693,467tn yearly, which is almost three times lower than that of the aggregate production capacity of steel manufacturers.