Address Discrepancy Begets Tensions Between East Africa Bottling, Oromia

Address Discrepancy Begets Tensions Between East Africa Bottling, Oromia

 East African Bottling’s 720qls of sugar were confiscated by the region and auctioned by a Court Order

East africa bottling
The vehicles, which carried the sugar of East Africa Bottling, stalled at Gohatsion checkpoint before the sugar, labelled as a contraband commodity, was confiscated.

(addisfortune) —Oromia Regional State Trade & Market Development Bureau and East African Bottling, bottler of Coca-Cola, are in a dispute over 720qls of sugar confiscated by the regional state alleged to be a contraband commodity.

 

The sugar was confiscated at a checkpoint in Gohatsion, Wara Jarso wereda along the borders of Amhara and Oromia regional states. The checkpoint became fully operational this year, even though it was arranged by the Ethiopian Revenue & Customs Authority (ERCA) to be established two years ago.

For the checkpoint, a committee with six individuals was formed. It is composed of officials from the Zone’s  Trade & Market Development Office, the region’s customs office, ERCA and Ethiopian Coffee & Tea Development & Marketing Authority.

The confiscated sugar worth 1.4 million Br was in the process of being shipped from the warehouse of the Company, located in Addis Abeba, to its newly commissioned plant in Bahir Dar, about 550Km from the capital. The sugar was to be transported in two batches.

The first batch of the sugar, amounting to 420qls, was confiscated on November 4, 2017, while the second was seized on November 16, 2017. Both batches were auctioned off by the Committee to the locality, and it deposited the cash in a closed account.

The first batch was dispatched in a single vehicle, while the remaining was transported in three trucks, each carrying 100qls.

Right after the confiscation, the case was taken to court at the wereda’s First Instance Court which ruled in favour of the regional state to auction off the sugar. The court also fined the drivers of the vehicles 12,000 Br and 50,000 Br. It also ruled the sales amount of four quintals to cover the administrative expenses of the committee.

“The sugar was impounded after we found out that it did not have sufficient documents for customs clearance,” Hailu Kumssa, head of the region’s North Shoa Zone Trade & Market Development Office.

Nigus Alemu, Industrial Relations & Legal Affairs manager of the Company, refutes the argument.

“It is ridiculous, to suspect a company with an international reputation of a contraband product,” he said.

While seising, the drivers were asked to show receipts, but the delivery address was Addis Abeba. The Committee at the checkpoint argued that the final destination had to be Bahir Dar.

“We usually get receipts from the Ethiopian Sugar Corporation at our headquarters’ address,” Nigus said.

Along with the confiscated sugar, East Africa Bottling had also purchased 20,000qls of sugar in four batches of  5,000qls each on November 1, 2017, and November 10, 2017, from the Mexico branch of the Sugar Corporation. The Company took the sugar from the Corporation’s warehouse located in Adama, and shipped it to the one in Qality.

“After identifying the demand in the three plants, we transported the sugar to the Bahir Dar plant,” said Tafesse Refera, Public Affairs & Communications director of the company.

The Bahir Dar plant has a production capacity of 16,000 crates of soft drinks a day.

“As long as they don’t provide the necessary documents, it will be considered as contraband sugar,” Hailu told Fortune. “We consulted the region’s trade bureau, and they recommended us to follow the formal procedure if they fail to submit the documents.”

East Africa was the only operational soft dink company during the recent sugar crisis in the country. Moha Soft Drinks Industry, bottler of Mirinda and Pepsi, entirely suspended production for about a month as a result of the shortage. But later, it resumed production after the Corporation supplied it.

The disagreement of the company with the regional state comes just after the three local shareholders of the company, Abinet Gebremesqel, Munir Duri and Dereje Yesuworq sold their shares to the South African major shareholder for one Billion Birr. This made Nigussie Hailu, the current board chairman of the Company, its sole local shareholder.

The recent buyout benefited Nigussie, whose shares are under injunction after fighting court battles for over two decades on corruption charges involving the then Prime Minister Tamrat Layne, in raising his share value at the company.

In his case with the government, the Court ruled in favour of the latter to reinstitute its loss by auctioning his share in the Company. But later he managed to gain a court order over the auction.

According to sources, Nigusse paid the government’s share and is awaiting the decision of the Prime Minister’s Office to pay the interest on the amount.

“We don’t know what to do as the Bahir Dar plant needs sugar, if not it will cease production,” Tafesse said. “We are now appealing to both the regional and federal authorities.”

Currently, East Africa Bottling is running three plants in Dire Dawa, Bahir Dar and Addis Abeba. Its annual production has reached 50 million litres from the plants. It also collaborates with over 49,500 distributors.