Derba MIDROC Cement Factory to be inaugurated Soon in Ethiopia
Dec. 06 2011
In a unique market strategy, Derba MIDROC Cement Factory, slotted to join the industry in a month, is to sell cement on a credit basis and provide delivery services.
The factory, which has the capacity to produce 80,000ql a day, is to give 60-day credit to contractors who place a 50pc down payment and back up the remainder with an unconditional bank guarantee. This is not merely a one-time deal, as contractors can keep using it as long as the guarantee is in place, according to Haile Assegedie, CEO of Derba.
It is hard for people to get loans these days,” he told Fortune.As long as the unconditional guarantee is in place, they can buy cement, paying half of the cost.”
This is an offer that is open to individuals as well. Derba, 80pc of which is owned by Mohammed Al-Amoudi (Shiekh) and the remaining by MIDROC Ethiopia, is to give the service to employees, as long as the companies or institutions they work for put up similar guarantees.
The total cost of the factory which includes construction of roads, installation of transformers is 600 million dollars. A large portion of it, around 408 million dollars, came from Al-Amoudi while 45 million dollar is being financed by the Development of Ethiopia (DBE), the International Finance Corporation (IFC), the financing arm of the World Bank, and the African Development Bank (AfDB).
Bringing another new trend to the market, Derba, which was constructed at a cost 350 million dollars by China National Building Materials in a turnkey, is to deliver cement to clients within five days, to places located in 600km radius of Addis Abeba in the first two months.
We will expand our radius after that,” Haile told Fortune.Our aim is to deliver to any place in the country.”
This service is to be provided through 1,000 Volvo trucks, of which 750 have already arrived. The service is to be managed by Derba Transport Plc, a company that is under organisation.
The trucks are being used to transport wheat that the government imported until the factory commences operations. Having completed its erection, the factory is now undergoing performance tests and is expected to start operations on January 14, 2012.
Scheduled to inaugurate the company is Prime Minister Meles Zenawi. This is to be his first attendance at a MIDROC Group project inauguration and his second for all projects in the private sector. Previously, he attended the opening of Ayka Addis Textile & Investment Group, a Turkish textile factory, in May 2010.