Sept. 27 (Bloomberg) -- Ethiopia Sugar Corp. said it’s signed agreements with state-owned China Development Bank Corp. for $500 million in loans to build two refineries, part of a plan to boost output of the sweetener almost tenfold by 2025.
Ethiopia’s Finance Ministry and the state-run sugar company have signed memorandums of understanding with the Chinese lender for loans to build the plants in Ethiopia’s South Omo Zone, Sugar Corp. spokesman Yilma Tibebu said in an e-mailed response to questions on Sept. 24.
China Development Bank has advanced $123 million for a factory in the northeastern Afar region, he said. The factories will be built by the Ethiopian state-owned Metals and Engineering Corporation, an amalgam of former military companies. China Complant Group Inc. is also working on the Afar project, Yilma said.
Last year, Ethiopian Sugar started building 10 cane plantations and factories with the goal of making the sugar-importing Horn of Africa nation one of the world’s 10 biggest exporters of the sweetener by 2025.
The building program will cost “close to 100 billion Ethiopian birr ($5.5 billion),” with about half required in foreign currency, said Asfaw Dingamu, Ethiopian Sugar’s deputy director-general for the legal and communications department.
“We’re looking for loans,” he said a Sept. 22 interview in the capital, Addis Ababa. “We’re negotiating with Chinese banks.”
Ethiopian Sugar plans to provide about 40 percent of the money through sugar sales, with the rest of funding to be equally split between Ethiopian state banks and external lenders, he said.
Sugar Corp. generated 3 billion birr in profit from existing factories and sales of imported sugar in the year to July 7, Asfaw said. The government plans to increase production to 2.3 million metric tons of cane by 2025, and the country produced 265,000 tons last year, he said.
It spent 12 billion birr over the past two years on design work, irrigation infrastructure, roads and worker housing, he said. Ethiopian Sugar will need 100,000 workers to operate six plantations being set up in South Omo, Asfaw said.
A delayed sugar project at Tendaho in the Afar region will be producing at 30 percent capacity in January, Asfaw said. The factory is being built by India’s Overseas Infrastructure Alliance with a $394 million loan from the Export-Import Bank of India.
To contact the reporter on this story: William Davison in Addis Ababa at email@example.com
To contact the editor responsible for this story: Antony Sguazzin at firstname.lastname@example.org