Shemu Oils

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 The proposed investment consists of a corporate loan of up to US$[10] million equivalent in local currency to Shemu Plc (“Shemu” or the “Company”), an Ethiopian based edible oil refiner and household goods (e.g., soap, detergent) producer. The company has ~25% market share in Ethiopia in the soap/detergent sector and ~55% share in the locally refined edible oil market.The IFC loan will support the purchase of logistical assets (i.e., bulk ISO tanks to enable Shemu to move from containerized flexi-bag handling to bulk handling of oil) within Shemu’s US$[30] million expansion of the edible oil refining plant in Dire Dawa (Eastern Ethiopia) allowing them to increase its production from 120 ton/day to 950 ton/day. The first phase of the expansion was to increase the refinery capacity to 220 ton/day (which occurred in FY2020); current production capacity is now 270 ton/day and the second phase will bring it up to 800 ton/day (FY2025). The third phase will increase the capacity to 950 ton/day by de-bottlenecking logistics constraints. Specifically, it will consist of building storage tanks for the Crude Palm Oil (CPO) within the Dire Dawa Industrial zone adjacent to the existing refinery plant, on a parcel of state leased land, already obtained by the company in 2013 from the Dire Dawa Municipality.CPO is the main raw material currently imported by Shemu (20,000 MT/year). Upon receipt at the plant, the company engages in the following steps for CPO physical refining process. First, degumming involves washing the phosphatides out of the oil using water and degumming compounds, such as citric acid. This leaves a bright red transparent oil. Next, the oil is deodorized, which involves distilling the oil under vacuum; odor and taste are removed using sparge steam which also removes free fatty acids. The vapor is condensed to form palm fatty acid distillate. Lastly, fractionization is used to separate the liquid olein from the stearin, and the Refined, Bleached and Deodorized (RBD) palm oil is cooled so the larger stearin molecules crystallize. At this point, the oil is pressed through a filter separating the olein and the stearin. The olein is bottled and used for cooking or other food preparation purposes and the stearin can also be used in food applications but mainly to make detergents and soaps. Shemu extrudes saponified stearin into soap noodles (the most basic form of soap) as a main product.