Ethiopia: Fate of the Stranded 4,400tn of Sugar at the Kenyan Border

Politics News

The controversy over this sugar export comes at a time when the country was hit by acute shortage of sugar.

The Sugar Saga: Sugar export to Kenya stranded at Moyale (Photo: Bloomberg)
Ethiopia has found itself in a middle of a controversy as sugar export worth US $2.2 million, destined to Kenya, was stuck at Kenya border. But what happened to this 44,000 quintal of sugar?


In the midst of controversy over the recent sugar export to Kenya, the Ethiopian Sugar Corporation has accepted the request of Bright Border Crossing Transport Association to return 44,000 quintals of sugar to Wenji Sugar Factory.

The Association has agreed to cover all the loss incurred during the stacking of the sugar at Moyale, 794.7Km from Addis Abeba.

The sugar, valued around 2.2 million dollars, was stacked at Moyale for 55 days, exposing the products to unfavourable temperature conditions and spoilage, a source close to the case disclosed to Fortune.

A Dubai based company, Agri Commodities & Finance, bought the sugar from the Corporation two months ago with an EX Factory Arrangement, where the buyer covers all the expenses from the factory to its premise. The company has made no payment to the corporation so far, while it should have settled all the payments.

Established in Kenya five decades ago, Agri, a subsidiary of ETG World, is a Dubai-based company engaged in the supply and distribution of grains, crops, sugar, coffee and tea. The company has representative offices in more than 30 countries with 7,000 employees globally.

Bright was hired by Agri to collect the goods from Wenji to Agri’s warehouse, located in the capital of Kenya, Nairobi, 1,528Km from the factory. It agreed to transport the sugar using 110 trucks, each carrying 400 tonnes of sugar.

Bright was contracted to facilitate the delivery at the cost of 110 dollars a ton in no more than a month. However, the reality was a complete reverse of the duo’s agreement.

“The company did not show up for almost 45 days,” Mekuanint Eshete, board chairman and shareholder of Bright, told Fortune. “Had all the required documents been fulfilled, we should have transported all the items within five days.”

This prompted the company to request the return of the goods to their original location the Sugar Corporation, citing the outdating of the insurance coverage for the exported goods, melting of the sugar and the damage of the trucks.

The company has agreed to cover all the costs including transportation and labour while returning the goods to the factory, according to Mekuanint.

“After returning the sugar, we will have a full right to repatriate all of our costs when the buyer claims its product,” he said. “Otherwise, none of us will be benefited as the sugar will melt if it stays any longer.”

Following their request, the Corporation, in a letter written on September 26, 2017, has accepted the demand of the company to transport the sugar to the place it was shipped from.

“We agreed upon the return of the consignment, considering the loss incurred by the transport company,” said Gashaw Aychiluhim, corporate communications director of the Corporation.

Nonetheless, despite the agreement of the two parties, the representatives of Agri Commodities showed up last week and had a discussion with the Federal Transport Authority and Ministry of Transport over ways of transporting the sugar and reversing the decision of returning the consignments, according to sources.

“We will not hesitate to carry on if the company is still interested in receiving the sugar,” said Mekuanint, whose company won 50pc of the advance payment from Agri.

But to do so, Bright expects the Dubai-based firm to cover their demurrage cost and submit a bank guarantee for the remaining amount, according to Mekuanint.

The buyer’s representative promised to email the preconditions to the company and respond to the transporter before next Tuesday, according to a source close to the case.

For the parties, another reason to further putrefy the items at the border can be the law of the Kenyan government, which forbids the entrance of any items weighing beyond 280tn.

“The buyer must repack the sugar after the arrival of the consignments at Kenya’s  customs office,” said Mequanint.

The controversy over this sugar export comes at a time when the country is hit by a shortage of sugar. Sugar-dependent businesses including soft drink bottlers, candy and chocolate producers quit production since the first week of last month.

“Almost all the companies have stopped production due to the unexpected severity of the rainy season,” said Gashaw. “As a quick response, the Corporation is working to import 700,000qls of sugar from Pakistan.”

Last year, the total production of sugar stood at 3.5 million tonnes- 70pc of the target and half of the demand.
Also, Omo Kuraz II and Tendaho sugar factories are expected to become operational in the coming two weeks. Trial production of the two plants has already been finalised.

“This will also help us give a sustainable solution to the problem,” Gashaw said.