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Govt inks tannery chemical deal with BASF
06 May '10
2 min read
A German-based company, BASF, will soon supply chemicals to Ethiopia in local currency, Birr, to the domestic tanneries.
Based on the tanneries' buying history, BASF was one of the six companies that has been short-listed. Other than BASF, there were four more German companies and one Spanish company in the list.
The 20 tanneries in the country purchased their requirements individually and had to keep a six month inventory with them, which froze their working capital, as the purchase procedure was also too long.
According to an official from the Ministry of Trade and Industry (MoTI), the tanneries will make the payment for the chemicals in the local currency, after which, the government intends to change the local currency in to dollars, to be paid to BASF.
As per Ethiopian Finance Director, Dagnachew Demelash, this new deal was the biggest positive news for the country. He said that, the country currently utilizes over 80 chemicals that cost around 25 – 30 million Br for stocking six month's quantity.
With the help of this new deal that is inked with the German company, the same money could now be utilized for developing other aspects of the industry.
Supporting this new agreement is the Leather Industry Institute that falls under MoTI, which wrote a letter to the Ethiopian Investment Agency (EIA) to aid BASF in commencing with their operations.
BASF has already started with its preparations of setting up a warehouse at Modjo Dry Port, as it is the most convenient port for stocking chemicals.
With an intention of earning revenue of USD 500 million from the leather industry, government has given a boost to the industry, by imposing 10 percent punitive duty on exports of leather hides.
Based on the tanneries' buying history, BASF was one of the six companies that has been short-listed. Other than BASF, there were four more German companies and one Spanish company in the list.
The 20 tanneries in the country purchased their requirements individually and had to keep a six month inventory with them, which froze their working capital, as the purchase procedure was also too long.
According to an official from the Ministry of Trade and Industry (MoTI), the tanneries will make the payment for the chemicals in the local currency, after which, the government intends to change the local currency in to dollars, to be paid to BASF.
As per Ethiopian Finance Director, Dagnachew Demelash, this new deal was the biggest positive news for the country. He said that, the country currently utilizes over 80 chemicals that cost around 25 – 30 million Br for stocking six month's quantity.
With the help of this new deal that is inked with the German company, the same money could now be utilized for developing other aspects of the industry.
Supporting this new agreement is the Leather Industry Institute that falls under MoTI, which wrote a letter to the Ethiopian Investment Agency (EIA) to aid BASF in commencing with their operations.
BASF has already started with its preparations of setting up a warehouse at Modjo Dry Port, as it is the most convenient port for stocking chemicals.
With an intention of earning revenue of USD 500 million from the leather industry, government has given a boost to the industry, by imposing 10 percent punitive duty on exports of leather hides.
Fibre2Fashion News Desk - India
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