Yekatit Paper Convertinig PLC is barred from selling its product to the Public Procurement Property Disposal service (PPPDS) on grounds of low quality product and delayed supply.
Yekatit was privatized three years ago at a cost of 50 million Birr.
Yigezu Daba, Director of PPPDS, disclosed to Capital they had received comments from government offices that Yekatit did not deliver orders on time and the products were of lower product quality. As a result, they have informed the company that they will not accept its product if these problems are not solved. Instead, Ama Paper and Paper works located in Hawassa which supplies 35 percent use of locally produced raw materials, and the rest five percent is imported from Indonesia, China and India is now in charge of covering the rest 60 percent paper demand that was previously filled by Yekatit. In addition, Yigezu informed the government has given Yekatit a two month grace period to fix the problem.
Demelash Tebik, General Manager of Yekatit, explained the challenges they faced on getting abundant raw materials locally, especially the soft wood that is needed to produce sheets. To this end, they ordered the raw material from Indonesia and the problem will be solved in not more than one month. He also noted they communicated the matter by writing a letter to PPPDS to temporarily stop buying paper from them.
A company official of Ama expressed although they joined the market this year, they have the capacity to produce from 15,000 up to 30,000 tons of paper annually. This amount of production is capable of fully covering the balance until Yekatit gets back on its fit. Ama has the capacity to cover 95 percent of government office demand for paper.