- International Sugar Organization

Your Excellency Mr. Jose Orive
Executive Director, ISO
Honorable guests
Dear Participants
Ladies and Gentlemen
It is a great pleasure to participate with you at the 23rd ISO Seminar and I am
honored to make a speech on this very important conference. So for those
who are not familiar with current situation of Ethiopia allow me to say a few
words about my country
Ethiopia is a developing country with population of more than 90 million with
double digit GDP growth for more than 10 years. My Government is investing
in economic and social sectors in order to transform the lively hood of the
citizens. Among the mega projects that are given top priority by Ethiopian
Government sugar industry subsector found top list. And to go to my topic
Building and competitive industry
Ethiopia began investment in sugar industry in 1954 with one sugar factory
which have been expanded to four small size sugar factories up to 1998. Since
then, despite the big potential for cane sugar in the country, the development
of sugar industry have been very stagnant for more than two decades.
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In order to change the stagnation and the sluggish growth situation in the
sugar industry sub sector, My Government had established the institution
called "Sugar Industry Agency", in order to enhance the development of the
sugar industry sub sector by coordinating other public sectors such as the
local banks and insurance companies .
However, because of the complex nature of sugar industry and limited
institutional capacity in the area, the Agency couldn't register the fast growth
required in the area. in spite of the expansion of the two of the existing and
two new green field projects. By recognizing the nature of the industry, the
Ethiopian Government established Ethiopian Sugar Corporation(ESC) in
November, 2011 in order to complete the projects commenced by the Agency
and embark on the expansion of new sugar projects .With this mission , in
addition to the responsibility to manage the existing sugar factories and
finalize the projects under implementation, ESC started the development of
additional 10 big size sugar projects by expanding the factory sites from 5
location to 9 location which is distributed all over the country. and the
number of industries from 4 to more than 14.
At this particular time, ESC is working to join the ten top world sugar
producing countries by achieving the annual sugar production of 4.6 million
tons per year by year 2020 from the current 325 thousand tons of sugar My
year production.
Similarly we are working to increase the ethanol production from current
30,000 metric tons to over 298,845 metric tons per year in the same period.
With this big target ,we are working to be self sufficient in the supply of sugar
for local consumption starting from 2015 and then start supplying sugar to
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the world sugar market. With this aggressive expansion of sugar industries,
the sector is becoming one of the major sectors in creating jobs for the citizens
and private sectors development through engaging in the areas of engagement
for contractors and consultants specially in the area of construction.
Machinery supply and supply of inputs in the area of infrastructure
development is also one of the opportunities for business organizations. .
The expansion of sugar industries has played a vital role in transforming the
life of the local community through job creation, provision infrastructures
such as school, potable water, road and health institutions. In some of our
project the local community are becoming outgrows on their preference. This
modality is benefiting both the local community and ESC so that it creates
peaceful coexistence of the community with the sugar industries with the
sense of co-ownership.
In addition to this, ESC is working hard to transform the lively hood of the
Ethiopian farmers and pastoralists in general and those living around sugar
projects in particular through the supply of animal feed produced using sugar
by-products and connecting to the market through processing the animal
products. For this end, ESC is working to establish modern animal feed
factories at different location in line with distributions of our sugar industries.
In order to realize this target we have established the animal feed and agro
processing industry division in our company
As a new entrant to world sugar market as a seller of sugar, ESC is ready to
work with partners in marketing of sugar and sugar byproducts. My
Government is investing in transport infrastructures such as road, railway
and marine transport. All of our sugar projects are planned with asphalt road
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connection among which most road connection are completed before the
factories are commencing production. We are also working with neighboring
courtiers . with Ethiopian Shipping Authority and With Ministry of
Communication in order to facilitate transportation system from factory gate
to port of destination.
Ethiopia still has potential area where our company wants to work with
interested partners is in the area of animal feed production, dairy farm,
fattening, animal product processing up to supply to final consumers both
locally and to the world market. We have big potential to supply molasses,
biogases and cane top as a raw material. Since Ethiopia is first in Africa in
cattle population and 9th in the world, there is a very big demand for animal
feed. Similarly, there is a big and growing demand both locally and globally
for animal products. Therefore, our partners can benefit by working in this
area with ESC. The main reasons for involvement of ESC are, the first reason
is that raw material for animal feed are by-products of sugar industry. The
second reason is that the sugar projects are located in the areas where
pastoralists and farmers with large number of cattle are living. ESC has the
responsibility to transform the lively hood of the local community in line with
their potential and long time experience. For this end we are working with
other ministries such as Federal Democratic Republic of Ethiopia Ministry of
Agriculture and Ministry of industry. Therefore interested partners who have
the technology, experience and finance are encouraged to work with us.
As Ethiopia is one of the fastest growing countries with peaceful and
conducive environment working in the sugar sector with ESC can help as the
entry point to other sectors potential investment area.
4
My corporation hopes to learn a lot from the experience of ISO and the fertile
experience of the member countries as a result my expectation from this
conference is very high.
Thank you!
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THE ETHIOPIAN SUGAR INDUSTRY
Current status & Future prospect
Nov. 2014
1. Some Facts for sugar development in Ethiopia
• Ethiopia is among the best suited countries for Sugar
Cane production.
•The country is endowed with vast fertile land.
•Endowed with ample amount of water source from
rivers.
•Long sunshine hour >10hrs
•Where average yield of cane is more than 150 tons/ha.
•The average milling day/ season/ is more than 220 days.
•Average field yield of cane is greater than 11 %
2. HISTORICAL BACK GROUND
 Sugar production in Ethiopia started in 1954/55 at
wonji.
 At the first time 15843 tonne of white sugar was
produced.
 The factory was owned by Dutch company, H.V.A.
(Handlers-Vereenging Amesterdam).
 The development of sugarcane was started on 5000
ha.
 The factory is located in the upper reaches of the
Awash basin, 100km South East of Addis Ababa.
HISTORY CONT…
Wonji/ Shoa Sugar factory
After that another sister factory was established at Shoa in
1962.
 Both sugar factory until last fiscal year had a gross crushing
capacity of 3,000 tons of cane per day and it was producing
76,000 tons of sugar annually.
 Total cane plantation area was about 7022 ha

HISTORY CONT…
•Metahara sugar factory
•Which is the second oldest factory in the country.
•Started production on November, 1969 with 1700
TCD.
• The current crushing capacity is more than 5000
TCD
•Having a production capacity of 130,000 tons of sugar
and 12.5 million liters of ethanol/ annum.
•Cane plantation area is about 10200 ha
HISTORY CONT…
Fincha Sugar factory
•The youngest sugar factory.
• Started operation in 1998/99 with 5400 TCD
• It was producing 110,000 tons of sugar
• Produced 8 million liters of Ethanol per annum.
• Total Cane plantation was 9000 ha
3. EXISTING CAPACITY OF THE FACTORIES
WONJI/ SHOA SUGAR FACTORY 6250-10000 TCD,
225000 TON OF SUGAR
31 MW COGENERATION
CONT…
WONJI CANE PLANTATION, >17000 HA, FURROW AND
OVERHEAD IRRIGATION, FROM AWASH RIVER, >7 SUGARCANE
VARITIES USED
EXISTING FACTORIES…
METEHARA SUGAR FACROTY, 5300 TCD, 130,000 TON OF
SUGAR, 9 MW , 10200 HA CANE PLANTATION
METEHARA CANE PLANTATION, 10200 HA, FURROW
IRRIGATED (GRAVITY), FROM RIVER AWASH,
10 SUGARCANE VARIETIES USED
12,000TCD, 266,000 ton of sugar,
30 MW cogeneration
FINCHA SUGAR FACTORY
Fincha Cane plantation 21000 ha, >7 varieties under cultivation, source of water from
Fincha & Neshe river.
INTERCROPPING OF SOYABEAN WITH SUGARCANE AT FINCHA SUGAR
FACTORY
12
TENDAHO SUGAR FACTORY
FIRST PHASE 13,000 TCD FINALIZED ON SEPT. 2014/15 (258,000 TON OF SUGAR).
SECOND PHASE 26,000 TCD (618,000 TON OF SUGAR), 120 MW COGENERATION,
TENDAHO CANE PLANTATION CURRENTLY 18,900 HA --50,000 HA, FURROW IRRIGATED (GRAVITY) RIVER AWASH
The total cane plantation
area will be 50000 ha
4. Factories capacity and their current performance
Previous
Capacity
S. Factory Cane
Ethanol
N
crushin producti
g TCD
on
Year of
Establis
hment
Current Capacity
Ethanol
Cane
Productio
Crushin
n in
g In TCD
Metric
cube
1
WONJI
1,400
-
1954
2
SHOA
1,700
-
1962
3
METEH
ARA
5,000
12,500 M3
1969
5,300
12,500
4
FINCHA
4,400
1998/99
12,000
20,000
5
TENDA
HO (1st
phase)
-
8,000 M3
-
2014/15
13,000
1998/99
40300
Total
12,500
20,500
6,250
10,000
32500
5. ETHANOL PLANT AT FINCHA
105,000 LITRE/DAY, 20,000M3/ANNUM.
THE FIRST ETHANOL PLANT IN ETHIOPIA
METEHARA ETHANOL PLANT, 50,000 LITER/DAY OR
12.5 MILLION LITER/ ANNUM
6. THE LAST TEN YEARS ETHIOPIAN PRODUCTION PERFORMANCE
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Crashed cane in Ton
Sugar production in Ton
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2,457,917 2,578,148 2,555,757 2,398,129 2,636,076 2,695,345 2,520,132 2,478,562 2,189,950 2,883,685
281,382
292,011
283,918
276,009
302,517
290,934
275,943
264,857
232,357
325,031
7. THE LAST TEN YEARS ETHIOPIAN ETHANOL PRODUCTION PERFORMANCE IN METRIC CUBE
Ethanol In metric cube
25,000
20,000
15,000
10,000
5,000
‐
Snapshot of Ethiopian Sugar projects
8. Strategic Plan
•The main themes of the Growth and Transformation Plan
(GTP) with regard to sugar production are :• Finalizing projects started before the GTP period,
• Operating Arjo Dedessa factory at full capacity,
• Operating projects started during GTP (2010/112014/2015) period at minimum of 70% capacity.
The GTP period targets in terms of Sugar, Ethanol and
Electricity generation are depicted below.
8 . Strategic Plan of the Sugar Sector
Socio-economic importance of the sugar sector:• Value addition in Gross Domestic Product
• Rectifying balance of payment
• Employment generation
• Regional development
• Technological transfer
• And sectorial integration
9. Production Capacity of the existing factories &
Descripti
on
OPERATING
FACTORIES
Tenda Tenda
Methar Finch ho
ho
Kuraz
Wonji
a
a
phase phase
1-5
1
2
future plan of projects
PROJECTS
Arjo
Beles Welki
Kesem
dedesa
1-3
t
Factory
12,000/
12,00
crushing
13,000 13,000
12,000 24,000 10,000 8,000
6,250
5,300
capacity
24,000
0
in TCD
Net
Irrigable
17,00
21,00
Area
25,000 25,000 175,000 75,000 44,000 20,000 20,000
10,200
0
0
(Plantatio
n) in Ha
Note:
• kuraz -Three factories (kuraz1-3) 12,000 TCD each and other two factories
(kuraz 4 & 5) 24,000TCD each.
• Beles - All the three factories will have a crushing capacity each.
• A total area of cane plantation will be 430,000 ha after the completion of all
projects.
5,000,000
4,606,576 4,500,000
Amount of sugar produced
4,000,000
3,746,388 3,500,000
2,959,425 3,000,000
2,500,000
2,280,968 2,000,000
1,500,000
1,672,566 1,217,437 1,000,000
500,000
‐
2014/15
2015/16
2016/17
2017/18
Sugar production in Ton
2018/19
2019/20
11. ETHANOL PRODUCTION PLAN
Ethanol production plan in meter cube (2008-2010)
35,000
28,620
30,000
25,380
5,000
-
20,790
25,380
20,790
20,790
20,790
Ethanol
production
plan in
meter cube
(2008-2010)
15,120
13,230
11,250
10,000
20,790
19,845
20,000
15,000
25,380
20,790
25,000
9,900.00
12. Cogeneration of Electricity
• From the existing and the future sugar factories,
Ethiopia will cogenerate a total of >800 MW electricity
till the end of the next Growth and Transformation plan
GTP (2019/20).
13. Cane Planting plan
Factory
Unit
2014 /2015
plan
Furure plan
Tendaho
ha
15,521
50,000
Kesem
ha
4118
20,000
Kuraz-1
ha
11,548
24,000
Kuraz-3
ha
6000
24,000
Belese-1-3
ha
15,145
75,000
Wolkait
ha
Arjo Dedesa
ha
3000
4118
44,000
20,000
Total
ha
257,000
Plan of Cane Planting cont…
2014 /2015
plan
Furure plan
Factory
Unit
Kuraz-2
ha
24,000
Kuraz-4
ha
50,000
Kuraz-5
ha
50,000
Borena
ha
somale
ha
24,000
24,000
Total
ha
172,000
New Projects in Progress
KESEM SUGAR PROJECT, 6,000( 1ST PHASE) -10,000 (2ND PHASE) TCD,
26 MW, WILL BE FINALIZED ON DEC, 2014, 250,000 TON OF SUGAR
WILL BE PRODUCED ON 2ND PHASE, 20,000 HA OF CANE PLANTATION
FURROW IRRIGATION FROM KESEM RIVER
Arjo Dedessa Factory 8,000 TCD, 20 MW cogeneration,
170,000 ton of sugar will be produced, 20,000 ha Cane
plantation will be developed, over head irrigation from Dedesaa
river
KURAZ- 1, 12,000 TCD, 240,000 TON OF SUGAR , 45 MW COGENERATION, 24,000 HA
CANE PLANTATION, FURROW IRRIGATED (GRAVITY) FROM OMO RIVER,
BELES-1, 12,000 TCD, 270,000 TON OF SUGAR, 45 MW
COGENERATION,
24,000 HA CANE PLANTATION, OVER HEAD IRRIGATION FROM
BELESE RIVER.
14. Existing Sugar factory Construction status
Project
Completion
Date
Factory
Crushing
capacity (TCD)
Tendaho 1ST phase
13,000
Sept, 2014
Tendaho 2nd phase
13,000
February, 2015
Kesem
6000-10000
December, 2014
Arjo Dedesa
8000
March, 2015
Remark
Started crushing
Will be tested &
commissioned
New Sugar development Factory completion
plan cont…
Factory
Crushing capacity (TCD)
Completion
Date
Kuraz- 1
12,000
Feb, 2015
Kuraz -2
12,000
Mid 2016
Contract signed
Kuraz -3
12,000
Mid 2016
Contract signed
Kuraz -4
Kuraz -5
Belese-1
Belese-2
Belese-3
24,000
24,000
12,000
12,000
12,000
Welkite
24,000
April, 2015
May, 2015
Mid 2016
Remark
Signed
Not signed
Under construction
Under construction
Not singed
Contract signed
15. Investment Incentives in the Sugar Sector
• To encourage private investment, the Ethiopian Government has
developed a package of incentives under Regulations No.84/2003.
1. Investment Guarantee and Protection:- In Ethiopia both the
Constitution and the investment Code protect private property.
2. Customs Duty Exemption:• A 100 percent exemption from the payment of import customs duty
and other taxes levied on imports of investment goods.
• Exemptions from customs duties or other taxes levied on imports are
granted for raw materials and packing materials necessary for the
production of export goods.
• All goods and services destined for export are exempted from any
export and other taxes levied on exports.
3. Income Tax Exemption
• Income tax exemption for new investment from 2-8 years
depending up on the area of investment, the volume of export
and the location in which the investment is undertaken.
• Income tax exemption for expansion investment for a period
of two years if it exports at least 50% of its products and
increases, in value, its production by 25%.
4. Loss Carry forward
• Carry forward losses for half of the income tax exemption
period, after the expiry of such period
16. Area of Cooperation with foreign partners
• All sugar factories are intended to have ethanol
production plant. And, any interested foreign company
can engage in ethanol production as a Joint venture or
any other modality.
• Joint venture in both agriculture and factory projects of
Beles 3, Borena and Ethiopia Somali each have 12,000
TCD and 25,000 Ha capacity .
• Since we start export of sugar in 2014/15, we
need partners in the area of international trade
and marketing to be competitive in the world
market.
• The Sugar Corporation is seeking partners to
get assistance in technical & management
training and agricultural research.
• In 2014/15 Ethiopia will be self sufficient in
sugar supply & Starts sugar export in 2014/15
(600,000 )tonne.