Yemeni Company Seeks Majority Stake in Ethiopia’s Sole Tobacco Producer

The Public Enterprises Board will decide on whether or not to accept Sheba Investment Plc’s request to buy an additional 48pc share in the National Tobacco Enterprise S.C. Friday by May 9, 2014.

The Yemeni company already has a 22pc share in the lone tobacco maker, which it acquired in 1999. The tobacco company had been producing with the one machine it acquired when established in 1941 for over 60 years, until it acquired new machinery in 2003 for 150 million Br, attaining a production capacity of six billion sticks a year in the Nyala, Gisilla, Elleni, Delight and Nyala Premium brands.

The year has not been good for the Privatisation amp Public Enterprises Supervising Agency (PPESA). It set out to sell 20 enterprises during the year, but has managed to sell only three over the past nine months, including the Ethiopian Pharmaceutical Manufacturing S.C. Hamaressa Edible Oil S.C. and Bekelcha Transport S.C .- although the buyers have missed the deadline set to make payments.

The Agency has, over the years, used different approaches, including full sale, partial sale or joint venture, as well as the lease of the factory facilities. The Bahir Dar Textile Factory had been leased to a Chinese company, but the Agency was not happy with the way that company handled it.

Sheba approached the Agency proposing to boost its shares following the Agency’s interest in selling out a more modest 27pc share – although the Agency declined to officially confirm the figure, saying it was confidential.

Sheba’s proposal has been referred to the Agency’s board, according to Wondafrash Assefa, public relations head at the Agency. However, Sheba is not likely to get a decision in its favour, as the Agency feels that it is not actively taking part in the ongoing business of the Tobacco Enterprise, according to an official.

The PPESA wants to use aggressive promotion to sell the enterprises still in state ownership, claiming in its six month report, in February 2014, that the reasons it was not able to sell as much as it would like were poor promotion and the lack of interest from investors to engage in the manufacturing sector.

Source : Addis Fortune

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