By Yohannes Anberbir - FEB 01, 2010 | CAPITAL   

The Ethiopian Privatization and Public Enterprises Supervisory Agency (EPPESA) has approved the privatisation of the country's biggest leather factory, Ethiopian Tannery S.C, to Pittards, a UK-based leather firm.

Pittards has been hired by EPPESA to manage Ethiopian Tannery since 2005, earning it monthly management and royalty fees.

After evaluating the tannery's performance, Pittards put in a request to buy it. EPPESA agreed to privatise it at a cost of 3.8 million Euros (70 million birr), some months ago. However, a definitive agreement was not made until the Pittards General Assembly on December 22, 2009 accepted the acquisition of the Ethiopia Tannery for 70 million birr.

Ethiopia Tannery was originally established under the technical cooperation agreement signed between the governments of Ethiopia and Czechoslovakia on December 11th, 1959.

It is located in Oromia Regional State, 90 kilometres east of Addis Ababa.

The tannery rested on a site of some 200,000 square metres, with an initial production capacity of 3,000 skins and 400 hides per day and has now reached 12,000 skins and 7,000 hides.

Pittards has been assisting Ethiopian Tannery for the last four years, enhancing production quality and efficiency.

This helped the tannery to register a gross profit of 1.36 million birr during last Ethiopian fiscal year, after paying 400,000 Euros in fees to Pittards.

As part of the deal, Pittards is expected to own Ethiopian Tannery's existing bank debts of 70 million birr, a source from EPPSA told Capital, referring to the signed agreement. The deal also requires Pittards to keep the existing workforce and invest in the tannery to expand and upgrade it, he added.
Pittards' general assembly held a month ago in UK included a share offering to raise capital to finance its new Ethiopian acquisition, according to the company's website.

Also this month, the agency re-privatised a second factory of Adey Abeba, a state-owned yarn and thread company, which was bought seven years ago by a Turkish textile company, Addis Izmir.

However, the company left Ethiopia after failing to successfully run the factory. PPESA was forced to re-administer, but has now finally sold it for 30.2 million birr to Ethiopian businesswoman, W/o Yergalem Alemu.