Design of Derba MIDROC Cement production line

Derba-MIDROC Cement Plc, a subsidiary company of MIDROC Ethiopia, has suspended construction work on a cement factory because of financial constraints.

Derba-MIDROC was established by Sheik Mohammed Ali Al-Amoudi with a capital of 2.4 billion birr. Eighty percent of the company is owned by Sheik Al-Amoudi and the remaining shares go to MIDROC Ethiopia. The company was granted 123.42 hectares of land near Chancho town,70 km north of Addis Ababa in Oromia Regional State, to erect the largest cement factory in Ethiopia with a production capacity of 7,000 tonnes a day.

Derba-MIDROC had hired China National Building Materials (CNBM) for all the civil work of the factory. After Derba paid 19.5 million dollars advance payment to the Chinese company in March 2007, work on the project commenced. This payment was part of the 30 percent advance payment. Reliable sources told The Reporter that since then Derba did not effect payment to CNBM. Officials of CNBM have been demanding payment for the past several months to no avail. Sources said the Chinese contractor was forced to suspend construction three month ago. Officials of Derba were not available for comment.

The construction of the cement factory commenced in March 2007 and work on the project is expected to be finalized within 24 months. The factory was scheduled to start operation in March 2009. However, sources told The Reporter that only 15 percent of the work has been carried out "The Chinese company has built its camp. Land preparation is finalized, a crasher is installed; and the cement factory, which would supply cement for the construction of the main cement plant, is under construction," sources said. The local company, which is constructing the factory, Adam Construction, has not been paid for the past eigth months.

The project includes an elementary and high school, a clinic and residences for employees. However, none of them has been built. The project also includes the construction of a 35 km road from Chancho town to Deba site. MIDROC construction, a sister company, was undertaking the contractor which was building the road. However, MIDROC construction has suspended the road project due to delay in payment on the part of Derba. Consultant of the project Hole-Tech, an Indian company has also faced a similar problem related to payment.

The IFC and ADB have recently approved 130 million dollars loan to Derba-MIDROC.  However, sources said the institutions may have not released the fund.