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Ethiopian Sugar Industry Profile

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Ethiopian Sugar Industry Profile- June 2019

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Ethiopian Sugar Industry Profile

  1. 1. June 2019 Ethiopian Sugar Industry Pro�ile 0115527475 info@ethiopiansugar.com www.ethiopiansugar.com
  2. 2. ETHIOPIAN SUGAR INDUSTRY PROFILE 3 Creating modern technology and capable human resource so as to develop the nation’s potential to the sector, produce sugar, sugar bi-products and co-products and take remarkable foreign market share and support the nation’s economy beyond satisfying domestic demand and ensuring the benefits of the public. Vision: Ensuring sustainable growth, becoming one of the ten competitive sugar producing countries of the world in 2023. Mission Core Values • Sustainable change and competitiveness; • Virtuous work ethics; • Productivity is crucial to our existence; • Popularity is our typical feature; • We never stop learning; • We encourage creativity and best performance; • Working in team spirit is our unique feature; • Environment protection is fundamental to our development; • Human resource Development is vital to our success. ETHIOPIAN SUGAR CORPORATION’S MISSION, VISION & VALUES
  3. 3. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 4 5 Purposes of Establishment of Sugar Corporation According to Regulation No192/2010 • To grow sugarcane and other sugar yielding crops; • To process and produce sugar, sugar products, sugar by-products and products of sugar by- products; • To sell its products and by- products in the domestic and export markets; • Undertaking of feasibility studies, design preparation, technology selection and negotiation, erection and commissioning of new sugar development and expansion projects; • In cooperation with the relevant organs undertake studies and research in the field of sugar cane plantation and sugar production technologies and implement useful results there of; • In cooperation with capable domestic enterprises, to cause the designing and fabrication of machineries and spare parts required by public sugar factories; • To possess, in accordance with the law, and develop lands required for its operations; • To encourage and support sugar cane out growers who are supplying their cane products to public Sugar factories; • To cooperate with the concerned educational institutions in producing the required type, number and quality of trained manpower for the sugar industry; • In line with directives and policy guidelines issued by the Ministry of Finance, to sell and pledge bonds and to negotiate and sign loan agreements with local and It was at Wonji in 1951 some 110 km east of the capital Addis Ababa that modern sugar industry started in Ethiopia as a share company established by foreign private investors & Ethiopian government. By then the Netherland’s H.V.A. Company had entered into the sector as a foreign share holder. When the factory started production in 1954 its initial production was 140 tons of sugar a day. At the start, the share company had five thousand hectares of land for its sugarcane cultivation. As its location is one of the most suitable areas of the world to the sector it opened a door to Wonji Candy Factory to come forward. Then, followed Shoa Sugar Factory in 1962 with 170 tons of sugar production capacity a day. The two factories known by the name Wonji Shoa Sugar Factories /which later on administered as one factory/ altogether had the capacity of producing 75,000 tons of sugar per annum till 2012 i.e. prior to the completion of the new Wonji Shoa Sugar Factory. Serving for more than half a century and getting obsolete, these two Wonji and Shoa sugar factories were closed in 2012 and 2013 respectively. Replacing these pioneer factories, the new and modern factory had started production in 2013. Ethiopian Sugar Industry Profile international financial sources; • To engage in any other related activities necessary for the attainment of its purposes.
  4. 4. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 6 7 The second factory, Metehara Sugar Factory is established as a share company between same Netherlands Company and the then Ethiopian government in 1965 and started production in 1969 at a location known as Merti some 200 km from Addis Ababa. Currently, the factory with a total 10,235 hectares of sugarcane cultivation land has a capacity of producing more than 130 thousand tons sugar and 12.5 million liters ethanol a year on average. Fiveyearsaftertheestablishment of Metehara Sugar Factory i.e. in 1974 following the dawn fall of the emperor’s regime all sugar factories were made to be administered under the ownership of the government according to notice number 58/1978 of the then Ministry of Industry and started operating under the then Ethiopian Sugar Corporation. The corporation had also been made to administer the Addis Ketema and Asmara Candy Factories together with the above mentioned three sugar factories. Meanwhile, in relation with sugar development, Fincha valley is found to be suitable and sustainable for sugar development as per studies conducted in 1974. Based on this extensive study was underwent in 1978 by the British Bookers Agricultural International Limited, for the establishment of the country`s third sugar factory - Fincha Sugar Factory. Construction of the factory which was delayed by finance shortage started in 1988 and cane planting in 1991. It was completed eight years later and inaugurated by the former FDRE president H.E Negaso Gidada (Dr.) and began regular production in1998. The gap between the establishment and commencement of production of the factory is mainly occurred due to the political change the nation had undergone. Its finance sources were African Development Bank and Development Fund, Governments of Australia and Spain as well as domestic banks of the nation. Its initial sugar production was 50 thousand tons per annum. More modern than the former factories, the factory’s construction job including its ethanol plant was executed by American company known as F.C. Shefer and Associates and Netherland’s company called Dewetto International while many domestic construction companies had also played their part in the process. Later in 1992 the Corporation which had administered the three sugar factories was dissolved by stature after 14 years of service. All the above factories were reestablished as separate public enterprises. Metehara and Wonji Shoa Sugar Factories by regulation number 88/93, and Fincha Sugar Factory by regulation number 199/1994 have become independent public enterprises. Following this the Ethiopian Sugar Industry Support Center came into existence in 1998 to provide support to the factories. The center was established as a share company of the Development Bank of Ethiopia, Ethiopian Insurance Corporation and the three sugar factories. Years later, Ethiopian Sugar Development Agency was established by proclamation number 504/2006 in its stead. The Agency had given support the factories in project development, research, training and marketing. In 2006 Tendaho Sugar Factory was established by Regulation Number 122/2006 as a fourth project in the country. Construction of the factory with the capacity of crushing 13 thousand tons of sugarcane per day has started production in 2014. The first phase, using sugarcane produced on 25,000 hectares of land.
  5. 5. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 8 9 Sugar The present Sugar Corporation with a vision of executing sugar development activities at a large scale came into existence on October, 2010 by the Council of Ministers Regulation No.192/2010. It is operating under a board of directors. Currently the Corporation is accountable to Public Enterprises' Property and Administration Agency as dictated on proclamation number 1097/2018. Ever since its establishment in October 2010 Sugar Corporation has benefited communities of the areas in which the development is going on. It has made irrigation, potable water, roads, schools, health posts and other social service institutions available for the local community. It is also expanding land covered with sugarcane, increases the number of sugar factories and creates job opportunities. However; it is possible to witness that it has yet to do a lot in increasing housing construction, and sugar co-products supply. To fulfill its major goals and tackle problems faced the Corporation is implementing change management and other series of tasks. Along with this capacity building trainings are going on locally and abroad. Corporation Sugar Industry Sub Sector Sugar development sector is one among other huge projects which enables industry take a leading role in the nation’s economy. Ethiopia has huge human as well as natural resources which enable the nation to broaden this export oriented manufacturing industry sector and its productivity. The nation has suitable climate, 1.4 Million hectares wide and proved irrigable agricultural land as well as abundant resource of water and ample labor resource. The government has given higher attention to the sector and it is working for further development of it. Productivity The country is rich with resources like suitable climate, fertile land and abundant water supply which are favorable for sugarcane development. Hence, it is possible to cultivate 162 tons of sugarcane per hectare on average in 15 months. In relation to the productivity it is possible to produce 10.8 tons of sugarcane in Ethiopia per month and when compared against the global sugarcane production potential it outstrips the global production per hectare in 2.3 tons. Cognizant of this fact, the FDRE government has started broadening the sugar development sector which had been limited to Wonji Shoa and Metehara Sugar Factories for more than half a century to Oromiya, Afar, Amhara, Tigray and Southern Nations, Nationalities and Peoples Regional States since 2010. Based on this at two sugar factories are under construction with crushing capacities 12 thousand tons sugarcane per day using sugarcane to be planted on36thousand 277 hectares of land at Tana Beles Sugar Development Project in Amhara Region. On the other hand, there are four sugar factories which use sugarcane developed on 100 thousand hectares land in South
  6. 6. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 10 11 Omo, Bench Maji and Kaffa zones of Southern Nations, Nationalities and Peoples Region where Omo Kuraz Sugar Development Project is found. The constructions of these factories are at different levels. Among these Omo Kuraz Sugar Factory Number Two and Three have started production, with each having crushing capacity of 12 thousand tons of sugarcane a day. Whereas the other two factories with each having crushing capacity of 12 thousand and 24 thousand tons of sugarcane a day are under construction. In the same way, construction of Welkayit Sugar Development Project in Tigray region, which will use sugarcane developed on 39 thousand 500 hectares of land and has the capacity to crush 24 thousand tons of sugarcane a day is advancing. Commencing 10 huge sugar development projects which require high investment in the lowland areas of the country is challenging. However our motto is "we learn while working." And, hence our sugar development projects in the areas which have no infra-structure before are becoming hopeful. Though the successes so far are not as anticipated, it is possible to say thatthey foresee the bright future of the industry. We had only three sugar factories till 2014. But now we have eight operational factories while making the existing ones expanded. Generally, from the new sugar factories Tendaho, Kessem, Arjo Diddessa, Omo Kuraz Number Two and Omo Kuraz Number Three`s construction is completed and the factories have started production. Moreover, it has been possible to make the land covered with sugarcane to 102 thousand 741 hectares from 30 thousand 397 hectares in 2009. This is made possible by the efforts made in the past eight years. Similarly, the efforts made to increase irrigation infrastructure becomes fruitful. On the other hand, the effort made to benefit the local community from the development in the area is encouraging. Community Services • Hand in hand with the sugar development, Sugar Corporation working with Ministry of Water, Irrigation and Energy has built 255 social service institutions like schools, potable water supply, health institutions, mills and roads. • Members of the local community are given priorities to be hired at the projects after training on tractor operation, building, carpentry and the like. This continues in the future. • The local youth are organized in micro and small enterprises to take part in the development activities and generate income. This also continues now and in the future. • Irrigated land is given for the local pastoralist community. The
  7. 7. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 12 13 Domestic Sugar Supply pastoralists now have begun producing crops like maize. In the future conditions are laid for them to be sugarcane out growers who sell the product to the sugar factory around. In order to make this possible they have got experiences from sugar cane out growers of Wonji Shoa Sugar Factory. • From 2010 to 2017, Sugar Corporation has spent about 1.2 billion birr for the construction of social service institutions, infra-structure, compensation, vocational training and others to benefit the local community. • In conclusion, ever since the development is started in 2010 more than 450 thousand citizens have got jobs on permanent, temporary and contractual basis. Even though the nation`s sugar industry has scored more than half a century, it has failed to satisfy the domestic demand because of the following facts: • Growing demand of sugar of the society in relation to the fast economic development the country is registering; • Growing of population and • Due to Increasing number of industries which use sugar as an input, the sugar demand and supply has been incompatible. TThe current sugar supply is about 650 thousand to 700 thousand tons of sugar per annum. Of this 325 thousand to 400 thousand tons of sugar is produced in the country. To fill in this gap about 200 thousand to 300 thousand tons of sugar is imported annually by the government spending high amount of foreign currency. Though only 7 kilo grams is being supplied, the current sugar consumption per individual in Ethiopia is more than 10 kilo grams a year. As stated earlier the government spends higher foreign exchange and distribute sugar to balance the demand and supply. As importing sugar is not a long lasting solution, the sugar industry sub sector is given due attention ever since the inception of the first growth and transformation plan along with other manufacturing industry sectors. Ethiopia is extensively expanding sugar development projects in low land areas carrying out “Sugar Revolution” so as to: • Narrow the gap between demand and supply of sugar; • Improvethelives ofcitizens bycreatingvastjobopportunities; • Ensure the benefits of citizens of the development areas and • Earn foreign currency by exporting the product. InvestmentInvestment Opportunities and Joint Venture The government has decided to transfer public enterprises to the private sector fully or partially. Encouraged by this several domestic and expatriate companies have showed interest to work in joint ventures as well as private investment on sugar and related sectors. It is recalled that in April 2019 the Ministry of Finance and the Ethiopian Sugar Corporation have invited responses to request for information (RFI) to finance the preparation of 13 sugar projects. Favorable conditions for jointly developing or privately investing on sugar and diversified products • Greater interest of the government on investment and its political commitment;
  8. 8. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 14 15 • Conducive investment incentives based on the country`s investment policy; • The Country`s economic development and • Abundant natural wealth and labor. • To widely produce sugar and co products in Ethiopia includes: • 1.4 million hectares irrigable land suitable for cane development; • Favorable climate; • Abundant water for irrigation (rivers); • Higher cane productivity and • Large labor force • In terms of productivity, the country is rich with resources like suitable climate, fertile land and abundant water supply which are favorable for sugarcane development. Hence, it is possible to cultivate 162 tons of sugarcane per hectare on average in 15 months. In relation to the productivity it is possible to produce 10.8 tons of sugarcane in Ethiopia per month and when compared against the global sugarcane production potential it outstrips the global production per hectare in 2.3 tons. • Infrastructure (big dams and irrigation infrastructures, roads, airport, electric power, telecom services etc.); • 102, 741 hectares land covered with sugarcane; • More than fifty years of experience of producing sugar and ethanol locally; • Ten new and three existing huge sugar factories in operation; • Growing of the society`s sugar demand and a vast sugar market • Expansion of industries (like food, beverage… industries) which need sugar as an input • Abundant animal resource that opens wide market to produce animal feed and carry out fattening business. • Major Sugar By-products • Molasses • Ethanol • Bagasse • Sugar Co-products • Electricity • Fruits ; Orange, Banana, Mango • Animal feed • Cattle Fattening • Cotton • Rice • Soya bean • Sesame • Wheat • Haricot bean • Mung bean Categories of Joint Venture and Private Investment • Construction of sugar projects; • Administration of sugar factory and operation; • Ethanol factories construction, administration and operation; • Diversified sugar and related products; • Irrigation infrastructure, land preparation and sugarcane development projects; • Sugar factory spare parts production industry; • Animal feed production and fattening; • Pulp and paper factories; • Chipboard producing factories; • Liquor production; • Sugar packing sack producing industries and • Paint producing factories. Main Accomplishments of the First & Second Growth and Transformation Plan • Fincha and Wonji Shoa sugar factories are expanded and have Fincha and Wonji Shoa sugar factories are expanded and have increased their production capacity, • Though volume of sugar production planned annually is partially not successful, it was made possible to increase the annual sugar production to 400 thousand tons from 290
  9. 9. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 16 17 Comparative Description of Developments in the Sugar Industry Sector No. Title of the Development 1991 2019 1 Number of Sugar Factories Two (Wonji Shoa and Metahara Sugar factories) Eight operational factories (Wonji Shoa, Metahara, Finchaa, Kessem, Tendaho, Arjo- Diddessa, Omo Kuraz 2 and Omo Kuraz 3) 2 Under Construction Fincha Omo Kuraz 1, Omo Kuraz 5, Tana Beles 1 ,Tana Beles 2 and Welkayit 3 Annual Sugar Production 149 thousand 658 tons Planned to produce 520 thousand tons of sugar in 2018/2019. In the past years 325 thousand tons to 400 thousand tons has been produced annually 4 Annual Ethanol Production None 22 million 355 thousand liters is expected to be produced in 2018/2019. In 2014/15 19 million 804 liters is produced. Out of which large amount of ethanol is mixed with benzene. 5 Sugarcane Crushed Per Day 6 thousand 213 tons Currently eight factories have a crushing capacity of 62 thousand 500 tons 6 Land Covered with sugarcane 15 thousand 501 hectares 102,741 hectares thousand 374 tons in 2010; • It was possible to make the new sugar factories of Kessem, Tendaho, Arjo Diddessa, Omo Kuraz Number Two and Omo Kuraz Number Three sugar factories operational ; • The land covered with sugarcane reached 102,741 hectares from 30 thousand 397 hectares in 2010; • Ethanol production booms to 19 million 804 litres from 7 million 117 thousand litres in 2010. Out of these large amount of ethanol is mixed with benzene annually playing a significant role in lowering foreign currency expenditure; • Several research works which increase sugarcane productivity have been conducted; • Several big dams, vast irrigation infra structures, roads, housing, and huge factory constructions works as well as land preparation are widely done; • Due to lack of infra-structures, limitations of implementation capacity, finance, foreign exchange, spare part as well as machinery supply and many others, the sector is not as fruitful as it was thought at the outset. However, because of the chains of activities carried out and other endeavors made, the sector is becoming hopeful now. The country has targeted to become one of the top ten sugar producing countries of the world in 2023. Generally, when the remaining five sugar factories under construction are completed Ethiopia would have 13 sugar factories and its annual sugar production would become 2 million 250 thousand tons.
  10. 10. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 18 19 7 Labor 11 thousand 452 on permanent, contractual and temporary basis More than 40 thousand on permanent, contractual and temporary basis 8 Housing 7 thousand 483 residential houses 21 thousand 147 residential houses and 311 different service providing blocks 9 Number of social service institutions and infra-structures built for the local community around sugar factories and sugar development projects 31 institutions 255 institutions (schools, health institutions, mills, potable water supply centers, roads, animal health posts, water ponds for animals, farmer/pastoralist training centers, association shops, religious institutions, etc.) 10. Total number of sugarcane outgrowing and providing associations 1 thousand 200 members organized in seven associations at Wonji only 15 thousand 316 members organized in 70 associations Of these 9 thousand 319 members organized in 31 associations at Wonji Some associations in Wonji share 50,000 to 240,000 birr for each individual member every 18 months 11 Total land covered with sugarcane out growers in the sugar industry 1 thousand 2o hectares at Wonji only 17 thousand 246.82 hectares (Of these, 7 thousand hectares found at Wonji) Sugar Factories Wonji Shoa Sugar Facory The factory is found in Oromiya region near Adama City at 110 Kilo Meters from Addis Ababa. Wonji Sugar Factory is the oldest and the pioneer in the history of Ethiopia’s sugar industry. Commencing production in 1954. Then, followed Shoa Sugar Factory in 1962; is the second oldest. Both, being obsolete, have stopped production since July, 2012 and July, 2013 respectively. The two factories constructed by the Holland Company known as H.V.A had a capacity of producing 75 thousand tons of sugar a year. The sugarcane plantation land of these two factories was 7,000 hectares out of which 1,000 had been planted by out growers. In a bid to replace these two oldest factories with a new and modern one, an expansion project had been carried out both in the cane cultivation field and the factory since 2005/2006. And, the factory plant expansion project has come into its completion in July, 2013. Accordingly, the newly built and modern Wonji Shoa
  11. 11. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 20 21 Sugar Factory has currently a design capacity of crushing 6,250 tons of cane a day and producing 174,946 tons of sugar per annum which with further expansion work will reach up to 12,500 TCD maximizing its production to 220,700 tons of sugar a year. The new plant, when having an ethanol plant, will initially have a capacity of producing 10,000 meter cube ethanol per annum that with further expansion will also reach 12,800 meter cube. The factory has the capacity to produce 31 megawatt electric power. Out of these The Factory is currently contributing 20 megawatt electric powers to the national grid in addition to satisfying its own demand which is around 11 megawatt. Its agricultural expansion project is currently being carried out around the areas known as Wakie Tiyo, Welenchiti and North Dodota areas. The factory, with the help of this agricultural expansion project, will have 16,000 hectares of sugarcane plantation field in total. From the 12,800 hectares of land covered with sugarcane 7 thousand hectares are developed by 31 sugarcane outgrowing associations which have 9,319 members. The members are benefiting from the higher income they generate. Some association members have collected 50,000 to 240,000 birr each as a dividend. The factory has created favorable conditions giving irrigated land for the out growers, providing special seed as well as vocational and technical support so as to benefit them more from the business. Metehara Sugar Factory The factory is found in Oromiya region at 200 Kilo Meters from Addis Ababa. Same as Wonji Shoa Sugar Factory its construction was carried out by H.V.A. Company of the Netherlands. The factory started sugar production in 1970. Formed as Share Company between the then Ethiopian government and the constructing company, it was the second sugar mill to the nation. Its sugarcane plantation filed is 10,230 hectares and has the potential to produce more than 130,000 tons of sugar per year. Through an expansion project conducted it came up with an ethanol producing plant by the end of 2010. Currently the factory’s ethanol plant has a capacity of producing 50,000 liters of ethanol per day. It also generates 9 megawatts of power from bagasse. This makes it self-sufficient with regard to its power demand. The factory is best known in implementing kaizen philosophy. It is a pioneer factory for registering successful result by applying kaizen. It received awards all in institutional, development team and individual levels at the first Kaizen award nationally held It got trophies and medals for this. Moreover, it received honorary medals and trophies from the former Prime Minister Haile Mariam Desalegn at the Kaizen award held at Hilton in September 2015.
  12. 12. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 22 23 Fincha Sugar Factory It is found in Horo Guduru Welegga Zone of Oromiya Region in Abay Chommen District at Fincha Valley Agamsa area, 350 Kilo Meters from North West of Addis Ababa. It was found that the valley is favorable for sugar industry. Sustainablity, topography and soil content had been studied by the British Booker`s Agricultural International Limited Company since 1977/78. Its project construction started in January 1988 after being financed by Africain Developemnt Bank, Sweden, Australia and Spain Governements as well as local banks. Fincha Sugar Factory`s command area including the West and East area is 67,098 hectare wide. Passing through Fincha Valley it generates hydro electric power. Then it divides the valley into two and travels to North and flows to Blue Nile. The western Bank of Fincha River develops 6,476.72 hectare land. Factory started trial production in 1998 and entered into regular production the following year. Altitude of the place ranges between 1,350 to 1,600 meters. Higher temprature of it is 31 degree centigrade and the lowest is 15 degree centigrade. Its average annual rainfall is 1,300 milimeters. This natural situation makes the area where Fincha Sugar Factory is located a ‘’Green Desert’’. The factory has the capacity to produce105,000 liters of ethanol per day so it is playing a leading role in the country`s economy by providing ethanol to be mixed with benzine and used as fuel. It also provides ethanol for other industries.
  13. 13. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 24 25 General Expansion Project of the Factory The expansion project of the factory started in 2005/2006. With this it is planned to expand land covered with sugar cane to 21 thousand hectares including West Bank`s 8,300 hectares as well as 7,000 hectares of East Bank and 4,670 hectares of Neshe area. Parallel to this, by increasing the cane crushing capacity, it is planned to increase the factory`s annual sugar production to 270,000 tons from what it was 110,000 tons. It is also planned to increase annual ethanol production to 20 million litres from what it was 8 million litres. The expansion completed in 2013/14 and the factory intered into production process having 19,000 hectares of land covered with sugarcane by then. With the factory expansion work carried out one additional factory planned Tendaho sugar Factory It is found 670 km from Addis Ababa and at only 300 km distance from port of Djibouti. It is found at Mille, Dubti, Asaita and Afambo districts of Afar region. The location where the factory is located makes it more strategic to exporting sugar. The factory`s construction began in 2005/2006. The constructor of it is The Indian OIA (Overseas Infrastructure Alliance) company. The first phase of the factory began trial production in 2014 and is now in regular production. When it reaches its full production capacity it can crush 13,000 tons of sugarcane per day. It will also generate 40 megawatts of electricity when it starts producing full gear. It uses 20 megawatts for itself and sends the rest to the national power grid. The first phase of the factory uses irrigation water of Awash River from Tendaho dam for its sugar cane development. The dam has the capacity to hold 1.86 billion meter cube water and is expected to nourish 60,000 hectares land. As the factory facilitates irrigable land for the pastoralists, the pastoralists now are becoming semi farmers. to crush 6,600 tons of sugarcane a day and there by produce 160,000 tons of refined white sugar annually is made possible lifting the total annual sugar production capacity of the factory to 270,000 tons. The factory generates 31 megawatts power. From this 17megawatts is spent to residential houses, the factory and other internal works of the factory. And it has a potential to sell 14 megawatts to the national power grid.
  14. 14. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 26 27 Construction of Irrigation Infrastructures • More than 42 km main canal and other various level structure works are completed • 22,835 hectares land is irrigated Sugarcane Development • 17,683 hectares land is covered with sugarcane Housing Construction • 8,997 residential houses and 146 service providing blocks are constructed and they are now giving service. Society`s Benefit Ever since the beginning of the project 77,035 people have got job opportunities at the project on permanent, contractual and temporary basis. 84 micro and small enterprises have been organized. In order to benefit the local community from the development 16 sugarcane outgrowing cooperative associations with 1,667 members have been organized. They are, creating mutual relationship, working with the factory as out grower. Sugar Corporation has spent 1.60 million birr in total to fulfil its social responsibilities. Kessem Sugar Factory Kessem sugar Factory is located in Afar Region, zone three`s Awash Fentale and Dullecha districts. It is found 250 km from Addis Ababa and 50 km from Metahara Sugar Factory. It originally has been started as an expansion project of Metahara Sugar Factory. Later on it was studied that its distance from the factory and its sustainability as an independent sugar factory made it an independent sugar factory. It was constructed by the 123 million dollar loan given by Chinese Development Bank. Constructor of the factory is the Chinese COMPLANT Company. The factory began trial production in 2015 and commence regular production the following year. Working in its full capacity in the first phase the factory has a capacity to crush 6,000 tons of sugarcane per day. With its expansion it is expected to crush 10,000 tons of sugarcane a day. In its first phase the factory is presumed to produce 153,000 tons of sugar and 12 million 500 litersethanol.Itcanalsogenerate 26 megawatts electricity of which it uses 10 megawatts for its own operation and sends the remaining 16 megawatts to the national power grid.
  15. 15. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 28 29 The design capacity of the factory shows that the expansion work will enable the factory produce 260,000 tons of sugar a year and 30 million liters of ethanol in the future. The factory`s cane cultivation area’s 20,000 hectares land is developed by Kessem Dam which has the capacity to hold 500 million cubic liter. The sugarcane development is also found at Bolhamon area. As per an agreement reached with Amibara Agricultural Development Private Company, the company is developing sugarcane on six thousand hectares land and delivering it to the factory. Irrigation Infrastructure Construction • 2,946 hectares land is irrigated. Sugarcane Development • An average 2,823 hectares of sugarcane cultivation land of the factory and 6,000 hectares land of Amibara Agricultural Development Private Company is covered with sugarcane. Housing Construction • 648 houses and 25 service giving blocks are completed and are giving service. Society`s Benefit Ever since its inception Kessem Sugar Factory, which is benefiting the local community both socially and economically, has benefited 42,773localyouthaswellascitizensviatheprojectitself,contractors as well as 29 micro and small enterprises by creating permanent, contractual and temporary job opportunities. Moreover, 399 members organized in five sugarcane outgrowing cooperative unions have reached a business agreement with the sugar factory as out grower modality to deliver sugarcane for the factory. These also have benefited the local community from the development activity going on in the area. Arjo Diddessa Sugar Factory Arjo Diddessa Sugar Factory is located in Western Oromiya region between East Wellega, Buno Beddelle and Jimma zones at Diddessa valley. It is found at a distance of 395 km from Addis Ababa on Nekemte - Beddele route. Average altitude of the place is 1350 meter above sea level. Its climatic condition is known for being hot. Its annual average rainfall is 1400 millimeters. The rainy season lasts from May to October every year. It mostly has black soil and occasionally has red and brown soil which makes it suitable for sugarcane development. Sugar Corporation bought the Sugar Factory from the Pakistani AL- Habasha Sugar Mills PLC in 2012/2013. This factory has a capacity to crush 8,000 tons of sugarcane per day using sugarcane to be developed over 16,000 hectares of land. Overtaking the factory, Sugar Corporation has completed the rest of the construction of the factory in a very short time. It as well began the development activities (public organization, such as dam construction, land preparation, irrigation and sugarcane development, public organization, as well as construction of social
  16. 16. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 30 31 service giving institutions and other related works) and the factory begun sugar production in 2015. Furthermore, the factory has a higher potential to produce ethanol and generate electricity from bagasse. This will make it self- sufficient with energy supply and send the remaining power to the national power grid. The factory which is producing sugar now was inaugurated by the former FDRE Prime Minister Haile Maryam Dessalegn on May 14, 2015. Irrigation Development Infrastructure • The factory receives water for sugarcane development from Diddessa River; • A dam is under construction by Oromiya Water Works Construction Enterprise on Diddessa River for the sugarcane development; • Additionally, irrigation infrastructures which cover 2,300 hectares land is under construction by Oromiya Water Works Construction Enterprise. 1,600 hectares land is irrigated till 2019. Sugarcane Development • 4,450 hectares land is covered with sugarcane Housing Construction • 124 residential houses and 11 service giving blocks are constructed Society’s Benefit More than 20 million birr is spent for social service institutions in East Wellega and Buno Beddelle zones. Ever since the beginning of the project job opportunities have been created for 17,547 citizens. Intermediate skill training sessions were given specially for the youth of the localities so as to benefit them from the development activities of the area. Furthermore, 71 micro and small enterprises are organized in the area and engaged in different fields of work. On the other hand, it has spent 65.66 million birr compensation for its sugarcane field expansion, for compensation of cane cultivation field received from the farmers as well as fulfill its social responsibility. Omo Kuraz Sugar Factory TwoIt is found in Southern Nations, Nationalities and Peoples Region of South Omo Zone Selamago District at a distance of 825 km from Addis Ababa. Its construction began in July 2015 by the 6.67 billion birr loan secured from Chinese Development Bank. After successfully completing its trial production it has entered into regular production on March 23, 2017. This huge factory constructed by the Chinese COMPLANT Company, can produce 800 to 1000 tons of raw, plantation white and refined sugar per day.
  17. 17. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 32 33 Omo Kuraz Sugar Factory Three Located at a distance of 874 km from Addis Ababa, it is found in Kaffa and Bench Maji zones bordering Omo River. The factory is inaugurated by Prime Minister Abiy Ahmed (Ph.D) on October 14, 2018. Construction of the factory officially started on March 11, 2016 with the 8 billion Birr loan obtained from Chinese Development Bank. It is a huge project constructed by the Chinese COMPLANT Company which, while reaching at its full design capacity, is capable to produce from 800 to 1000 tons of sugar a day. As it is up to date in technology it can produce raw, plantation white and refined sugar as per the demand of the domestic as well as the world market. Commencing of production of Omo Kuraz Sugar Factory Three will increase the number of operating sugar factories in Ethiopia to eight (Wonji Shoa, Metehara, Fincha, Kessem, Tendaho, Arjo Diddessa, Omo Kuraz Two and Three sugar factories). Sugar Development Projects Omo Kuraz Sugar Development Project ItisaprojectfoundinSouthOmoZone(SelamagoandGnanegatom Districts); Bench-Maji Zone (Surma and Mieinitshasha Districts) and Keffa Zone (Diecha District) of Southern Nations, Nationalities & Peoples Region. It is about 825-954 km from Addis Ababa via Hosaena – Arbaminch -Jinka or 859-988 km via Shashemenne – ArbaMinch – Jinka route. It is an hour flight from the Capital to Jinka Town plus a vehicle journey that stretches from 80 -220 km. The project has four factories which altogether can crush 60,000 tons of sugarcane. Two of them are under construction. Both use sugar cane developed over 100,000 hectares land. When they all produce in full capacity each of the three can crush 12 thousand tons of sugarcane a day. They also have a capacity to generate 60
  18. 18. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 34 35 megawatts electricity and send 40 of it to the national power grid. Similarly the remaining factory has a capacity to crush 24 thousand tons of sugarcane a day. Furthermore, it generates 120 megawatts of electricity; sends 80 megawatts of it after consuming 40 megawatts for itself. From the four sugar factories those constructed by the Chinese Company COMPLANT i.e Omo Kuraz Sugar Factory Two and Omo Kuraz Sugar Factory Three have entered into production while Omo Kuraz One and Omo Kuraz Five are under construction. Investment Cost Till April 8, 2018, close to 34.8 billion birr has been spent for the four sugar factories in Omo Kuraz Sugar Development Project for capital investment (irrigation infrastructures, land preparation, sugarcane development, housing, factory construction, etc.); project pre operation as well as operational budget. Social Benefit In collaboration with Southern Nations, Nationalities and Peoples Regional State, Sugar Corporation is implementing various life- style-changing activities to benefit the local society around and hence bring about regional transformation within the country. Accordingly, the Corporation in fulfilling its social responsibility has spent about 86 million birr to the benefit of the local community. Hence, more than 50 social service institutions (schools, health posts, community policing offices, local area administration offices, association offices, flower mills and animal health posts, potable water, internal roads, irrigated land supply) are constructed and are now giving service. Compensation Fees 1,141,165 birr compensation fee is given to pastoralists whose beehives and crops had been affected due to coffer dam and main canal construction work. Public Discussion and Mobilization 2,584, 309.30 birr is spent to hold public discussions at different times to raise their awareness about the benefits of the sugar development. Skill Training 2,866,658 birr is spent for a medium level skill training so as to benefit the local society from the job opportunities created at the project. Job Opportunities Ever since the project started in 2011 more than 110,000 local community members have got job opportunities by the project, contractors and micro and small enterprises on provisional, permanent and contractual basis. More than 300 micro and small enterprises are organized in the area and have begun work playing their own share in the creation of the above job opportunities. Sugarcane Outgrowing Associations In order to benefit pastoralists of the area permanently each household is given 0.75 hectares irrigated land since 2013/14 for 2,205 families organized in four associations. The total area of land given for the pastoralists to develop and sell sugarcane for the factory is 1,653.75 hectares. In addition to this the pastoralists for the first time in their history have produced crops like maize. This transformed them to semi farmers.
  19. 19. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 36 37 Omo Kuraz Sugar Factory One is found in South region of South Omo Zone in Selamago District at a distance of 863 km from Addis Ababa. By an agreement signed in June 2012 with Metal and Engineering Corporation (METEC), factory construction had been supposed to be completed and begin production in 18 months. However, due to the delay for long period to complete the construction, contract with METEC is terminated by the decision of government in 2018. At the termination point construction of the factory reached 80%. The remaining part of the construction of the factory is expected to be completed by well experienced foreign contractor that will overtake the responsibility. When the factory operates in full capacity it is expected to crush 12 thousand tons of sugarcane per day. Omo Kuraz Sugar Factory Five Omo Kuraz Sugar Factory Five shares boundaries with South Omo Zone`s Nyangatom District. It is found at the distance of 954 km from Addis Ababa. Factory construction begun in November 2016 by the Chinese JJIEC and is being constructed in two phases. When it operates with full capacity it can crush 24 tons of sugarcane a day. Omo Kuraz Sugar Development Project Irrigation infrastructures • Extensive irrigation infrastructures are being constructed on Omo River which enables 100 thousand hectares of land to be covered with sugarcane. Coffer Dam • A coffer dam is built on Omo River to supply water for the project. Main Canal Construction • On the left bank of the river 55 km long main canal infrastructure is constructed and is giving service. 43 km out of the total 134 km main canal to be constructed on the right bank of the river is constructed and giving service in the same way. Digging of the remaining 91 km main canal is complete and left only with structural works. Generally 22.3 billion birr is needed to complete the main canal construction work at Omo Kuraz Sugar Developemnt Project and other related works. Sugarcane Development • So far over 25,000 hectares land at the project is irrigated out of it 16,000 hectares land is covered with sugarcane. Housing Construction • 1,140 residential houses and 52 service giving blocks are constructed and now giving service at the project. Omo Kuraz Sugar Factory One
  20. 20. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 38 39 Tana Beles Sugar Development Project The Project is located at Awi Zone`s Jawi District of Amhara region. Its head quarter is at Fendika Town 650 km from Addis Ababa and 225 km from Bahir Dar town. Construction of two sugar factories, each with crushing capacity of 12 thousand tons of sugarcane per day each, begun by Metal and Engineering Corporation (METEC) in 2010. However, due to long delay observed from the contractor to construct Tana Beles Sugar Factory One and Two`s the contract signed with METEC was terminated by the Government in 2018 and 2017 respectively. When the remaining construction of the two factories is completed they are expected to use sugarcane developed on 36,277 hectares of land. The irrigation water supply for sugarcane development is made available because of the weir constructed on Beles River. They are designed to produce refined sugar. Furthermore, they altogether will have a design capacity of generating 45 megawatts electric power out of which using 16 megawatts for their own factory operation could send the remaining 29 megawatts to the national power grid and generate income. Tana Beles Sugar Factory One An agreement was signed between Sugar Corporation and Metal and Engineering Corporation (METEC) in June 2010. Later on the agreement had been improved in June 2012. According to the later agreement the project was supposed to be completed and begun production in 18 months. However, due to the delay of construction the government terminated the agreement in 2018. Factory construction had reached 65.79% by then. In the way forward construction of the factory will be completed by chinees company CAMC Engineering Co.LTD.When complete and operate in full capacity, the factory will crush 12,000 tons sugarcane a day.
  21. 21. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 40 41 Tana Beles Sugar Factory Two As per the agreement signed between Sugar Corporation and Metal and Engineering Corporation (METEC) in June 2012, factory construction would have been completed and begun production in 18 months. However, due to overstretched delay by the side of METEC the government had terminated the contract with METEC in 2017. As Sugar Corporation`s external consultant confirmed factory construction had only reached 25% by then Irrigation Infrastructures Construction at Tana Beles Sugar Development Project Irrigation water is already made available from Beles River for sugarcane development of the project. The project has a 30 km length weir which can pass 60 cubic meter water per second. Additionally, in-flow water controller, silt remover and main canal construction is completed and is giving service. With the exception of few fields the area is irrigated using overhead irrigation (sprinkler). • 16,000 hectares land is irrigated Sugarcane Development • 13 thousand 600 hectares land is covered with sugarcane Housing Construction • 1,689 residential and 24 service giving institutions are constructed and giving service Community`s Benefit Successive discussions were held with members of the community at the venue of the project at different times so as to make the development is a benefit for all. Schools, health institutions, potable water supply, roads and other infrastructure and social service institutions are constructed to those relocated from the area. These public service institutions are now giving services. In addition to this payment of 152.6 million birr is effected for asset valuation, perennial plants developed on their lands as well as for religious institutions as compensation. 91,493 jobs were created for the area`s youth and other citizens by the project, contractors as well as micro and small enterprises on permanent, contractual and temporary basis. Furthermore, 1,253 micro and small enterprises are organized and job ties are created to them. With regard to fulfilling its social responsibility and development works, a total of 178.68 million birr is spent by Sugar Corporation.
  22. 22. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 42 43 Welkayit Sugar Development Project The project office is located at Tigray Regional State`s Western Zone, Welkayit District 1,030 km distance from Addis Ababa. It uses sugarcane which will be developed at 39,500 hectares of land when the construction work of the factory is completed it is expected to crush 24,000 tons of sugarcane a day. The factory is being constructed in two companies by The Chinese CAMC Company. The project gets its irrigation water from Tekeze, Kalema and Zarema Rivers. Irrigation Infrastructure Building • May-Day Dam, which has the capacity to hold 3.5 billion cubic meter water, is being constructed on Zarema River. When the Dam is completed it will have 840 meter width and 135.5 meter height. • In line with dam construction, to develop 7 thousand hectares land with drip irrigation. An agreement is signed with Israeli NETAFIM Company and the job is being carried out. • 10 km long main canal construction is completed. • Construction is going on to develop 3 thousand hectares land with sprinkler pumping from Kalema River • 260 hectares land is irrigated for sugarcane seed Housing Construction • 1,066 residential houses and 53 service giving blocks are constructed and are now giving service. Community`s Benefit Intermediary skill trainings have been given so as to benefit the local community from the development activities being carried out at the project. 84, 659 local community`s youth and other citizens have got permanent, contractual and temporary jobs. 161 organized micro and small enterprises are getting every support including creation of business links. Asset and production compensation has been given for those who are relocated as a result of the development. 2,621 locals resettled at the newly built town Korarit from the factory`s command area. Social Service institutions (schools, human and animal health posts, farmer training centers etc. ), 14 potable water supply facilities and 62 km roads are built and now giving services. A total of 407.68 million birr is spent by Sugar Corporation for public participation and social development works.
  23. 23. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 44 45 Sugar Producing Factories /Projects Factory Sugarcane crushing Capacity per day per tons Region Land for sugarcane in hectares Omo Kuraz Number 1 12,000 South N.N.P 20,000 Omo Kuraz Number 5 24,000 South N.N.P 40,000 Tana Beles 1 12,000 Amhara 18,138.5 Tana Beles2 12,000 Amhara 18,138.5 Welkayit 24,000 Tigray 39,500 Factories /Projects under construction Research and Development Center Research works on sugar begun in our country in 1951 by the Dutch HVA Company. The Headquarter of the then Research Center was in Amsterdam. The center by then had been giving a strong support for sugar factories in Ethiopia. Since the factory started planting sugarcane and start sugar production, evidences show that trainings on sugar industry were used to be given from 1958 onwards. Later, due to the factories transfer to public ownership, the research works had been carried out by different organizational structures at different times. It was with the establishment of Sugar Corporation by Council of Ministers proclamation number 192/2010 that research and training is given higher attention. Since then it performs the following: • Increase production and productivity by advancing applied research which reduces production cost based on problem solving approach. So far it is possible to generate technologies for commercial service; Factory Sugarcane crushing Capacity per day per tons Region Total Land for sugarcane in hectares Wonji Shoa 6,250 Oromia 12,800 Metahara 5,372 Oromia 10,230 Fincha 12,000 Oromia 21,000 Tendaho (phase I) 13,000 Afar 25,000 Kessem 6,000 Afar 20,000 Arjo Diddessa 8,000 Oromia 16,000 Omo Kuraz Number Two 12,000 South N.N.P 20,000 Omo Kuraz Number Three 12,000 South N.N.P 20,000
  24. 24. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 46 47 • Apply research findings to boost production at each sugar factory and field; • Identifying problems faced in production process, it has given technical and advisory services to optimize productivity; • By evaluating the application of researches on work and their environmental impact new research directives and strategies are prepared ; • Introduced sugarcane seeds with higher productivity, disease resistant with high sugar content ; • Introduced improved sugarcane production means and new technologies; • Enabled application of operational technologies with their appropriate standards and there by share best experiences ; • By issuing different sugar technology researches it has been possible to avoid sugar loss and increase overall recovery; • It has made possible to generate and adapt technologies on sugar by-products and those related with ethanol • It has conducted various trainings involving professionals so as to lead the industry with skilled and fruitful human resource. The sugar research center which is located at 110 km distance from Addis Ababa is restructured in 2016 to successfully achieve the above tasks. Accordingly, the Center has set up research posts in Wonji Shoa, Metahara, Fincha, Tendaho, Arjo Diddessa and Kessem sugar factories as well as Tana Beles, Omo Kuraz and Welkayit sugar development projects. The Sugar Research Center is conducting sugar technology researches to improve sugarcane and seed development. Currently, it has prepared three roadmaps and these are bio refinery,sugartechnologyandmicroorganismsandhencetosupply modern technologies and ensure the industries competitiveness sustainably. It has currently entered the implementation stage. Sugar Academy The Sugar Academy was Set up in 2016 at Wonji taking into account the gap in knowledge, skill and point of view in the sugar development sector and hence bring about technology and ensure knowledge transfer, Sugar Academy is giving various trainings since 2017. Prior the establishment of the Academyexperienceshavebeen taken both from abroad and local institutions. Professional standards as well as curriculums of 12 fields of studies including modules which were considered to help the teaching have also been prepared by professionals with rich experience. To create the platform whereby it would be possible to start a certified regular training program, the trainings to be given are made to directly link with competencies of professional standards. Currently, the Academy is giving training courses on the sugar industry and related fields such as sugarcane plantation as well as factory operation and maintenance at a certificate level. It has now reached on a potential of producing 400 to 600 graduate trainees a year. A road map is prepared to
  25. 25. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 48 49 enable the Academy internationally competent and become a center of excellence of technology transfer. And, coming up with short and long term strategic goals to attain this, works are going on to give training programs on regular, pre service and short term training schedules. Using regional integration forum in the future, it has also set a plan to create regional ties with higher educational institutions and thereby be able to graduate about 2000 professionals in first degree, masters and doctoral degree levels. The Sugar Academy has facilities for practical training programs and one among them is revamping the former Wonji Shoa Sugar Factory and its workshop. In addition to this the Academy is equipped with facilities which include classrooms, library, dormitory and other services. Currently, the Academy is striving to obtain accreditation as domestic and evaluation training center. Sugar Distribution The task of distributing sugar all over the country is managed by quota system set by Ministry of Trade and Industry. Using the domestic production as well as imported sugar, Sugar Corporation monthly supplies 61,300 tons of sugar for Addis Ababa Consumers' Associations, Regional Cooperative Unions, industries and service provision institutions such as (hospitals, higher educational institutions, defense forces, etc.). The distribution follows the following three systems: Sugar Distribution in Addis Ababa For residences of Addis Abeba sugar is distributed by the Metropolitan's Bureau of Trade through Consumers’ Associations in a quota system. It is distributed from the association’s shops and outsourced retailer merchants represented by them. Fruit and Vegetable Trading Business Unit (former ET Fruit) and Alee Bejimla (a whole selling government institute) also distribute sugar for service providing institutions according to a quota set by the Trade Bureau. Sugar Distribution at Regions Sugar is distributed for regions every month by cooperative associations, endowments, Ale BeJimla and Ethiopian Industrial Inputs Development Enterprise (former Merchandise Wholesale and Import Trade Enterprise/MEWIT). After the product is transported to regions, it is distributed by their respective trade bureaus to retailers. Sugar Distribution for Industries Industries which use sugar as an input (such as soft drinks, beer, biscuit, candies factories, etc) are supplied monthly with sugar as per studied quotas set by Ministry of Trade and Industry and Sugar Corporation together. All aforementioned institutions which take part in the sugar distribution get sugar from stores of Sugar Corporation and sugar factories.
  26. 26. ETHIOPIAN SUGAR INDUSTRY PROFILE ETHIOPIAN SUGAR INDUSTRY PROFILE 50 51 Locations of sugar Factories and Sugar Development Projects Producer: Corporate Communication Corporate Communication Executive Officer: Gashaw Aychiluhim Editorial Address: Kazanchis Behind Ministry of Trade and Industry Telephone : Mobile: 0911677754 Office: 0115527475 Email: info@ethiopiansugar.com www.ethiopiansugar.com facebook.com/etsugar
  27. 27. Ethiopian Sugar Industry Pro�ile 0115527475 info@ethiopiansugar.com www.ethiopiansugar.com

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