Ethiopia China Merchants Eyes 40 Percent Stake in Eslse

Addis Fortune (Addis Ababa) Ethiopia: China Merchants Eyes 40 Percent Stake in Eslse.

Related Topics. Asia, Australia, and Africa. East Africa. China Merchants Holdings is in hot pursuit to acquire no less than a 40pc stake of the Ethiopian Shipping & Logistics Services Enterprise (ESLSE), a state-owned monopoly with a near complete control of the logistics business, sources close to the deal disclosed to Fortune. The Hong Kong registered Chinese state-owned company, a subsidiary of China Merchants Group (CMG), is currently undertaking due diligence work, aiming to determine the value of the ESLSE. Headquartered on Ras Mekonnen St., the Enterprise which was amalgamated in 2012, comprises three lines of business: shipping, maritime and dry ports. The flag bearer of the Enterprise, the Ethiopian Shipping Lines (ESL), launched its operations 52 years ago as Ethiopian Imperial Shipping Company, with a fleet of three vessels. Last year, the company called on 260 ports, operating 11 vessels and chartering slots, and lifting 1.4 million tons of cargoes, mainly from Far East routes, as well as Middle East and the Indian sub-continent. In its latest disclosure, the Enterprise has shown revenues of 16.5 billion Br, registering a net profit of 1.29 billion Br.

However, the company's current market value is yet to be determined as China Merchants prepares to acquire a slice of the company. The Chinese company first moved to the East African market after it acquired 23.5pc of the Port of Djibouti in 2008 for 185 million dollars, which also owns two-thirds of Doraleh Container Terminal. If CMG is successful in its bid, its presence in the Ethiopian company will pave the way for its consolidation of both infrastructure and operations in the growing market in the Horn of Africa, according to maritime experts. The Ethiopian Government has an incentive to generate foreign currency from the transaction to address its chronic shortfalls in its balance of payment. But more importantly, it has been trying to bring foreign expertise to address the bottleneck in the logistics corridor, a subject of gross dissatisfaction among customers. Close to 56pc of the company's customers were dissatisfied with its services while 19pc were very dissatisfied when surveyed in February 2015 by Tadesse Kenea and Girma Gebresenbet, for their paper submitted to the Swedish University of Agricultural Science, Energy & Technology Department. One of the main complaints remains competence and infighting among senior management members of the company, sources in the company said. Enjoying a state shelter from international competition, the ESLSE has evolved to control the logistics corridor with the implementation of multi-modal transport services. Almost all inbound cargoes are transported and facilitated through the different entities under the Enterprise when Ahmed Tusa, chief executive officer (CEO), arrived five years ago. Moved from the Ministry of Trade following a rather vexatious experience, Ahmed was burdened with the task of running a mammoth corporation despite no prior experience in either of the operations under it. But he has proven to be a pleasant surprise to even skeptics.