The Ethiopian government has announced that it has initiated the sale process for ten of the thirteen sugar manufacturing companies that it owns in an effort to manage the outstanding debt of the Ethiopian Sugar Corporation and six other governmental institutions.
Recent reports from the Ministry of Finance show that the Ethiopian Sugar Corporation, Ethiopian Electric Power, Ethiopian Electric Utility, Ethiopian Railway Corporation, Ethio-Engineering Group (METEC), and Chemical Industry Corporation, and Construction Works Corporation, have a cumulative debt of more than 780 billion ETB.
In order to mitigate the extreme debt of these institutions, the Ethiopian government has formed the Liability and Asset Management Corporation. Upon formation, the corporation fully took over the debts of the Ethiopian Sugar Corporation and the Ethiopian Railway Corporation. It is also slated to manage 570 billion ETB of the 780 billion ETB owed by the institutions, at minimum.
The corporation is also responsible for managing 20 percent of the debts of Ethiopian Electric Power and Ethiopian Electric Utility.
Thus, the announcement that ten of the government owned sugar companies are being sold to private investors seems a positive and rapid action taken by the Liability and Asset Management Corporation especially if, as the corporation intends, the sell of the companies is enough to cover a substantial portion of the debt owed by the seven governmental institutions that have been flagged by the Ministry of Finance.
The Liability and Asset Management Corporation’s capital is also expected to come from the sale of the companies as well as from the licensing fees of the two telecom licenses being given out by the Ethiopian Telecommunications Authority and the partial privatisation of Ethio Telecom itself.