Asrat Dergu, a minibus driver for the past 12 years, always travels from Adama (Nazareth) to Kality terminal in Addis Abeba three times in day, transporting commuters in his 15-seat vehicle specifically named High Roof. He has been driving this minibus for the past three years; as the owner of the vehicle is his close friend. But in the past two months, the schedule of his daily trips was reduced to two, following the fuel shortage in the towns located on his way from Adama to Kality.
He fills his vehicle twice a day, totaling 40lts but now he is facing a problem of refueling at Modjo, Bishoftu (Debre Ziet), Dukem, Akaki, and Kality.
“I spend one or two hours a day in the long queues at the gas stations, so I always miss my turn,” he explains.
Following the global price decline, gas prices were adjusted twice in Ethiopia since December 2014, which saw most of the gas stations getting closed for fear that the price would decline even more, causing them to lose money on gas already purchased before the price decline. This has become a challenge for drivers across the country such as Asrat.
The Ethiopian Petroleum Supply Enterprise (EPSE) buys fuel from international suppliers such as the Sudanese Sudan Petroleum Corporation, Saudi Arabia and KPG from Kuwait. It sells to the nine distributors in the country. The Enterprise supplies fuel based on the assessment of demand of the country and maintains and administers the national petroleum reserve. In 2012, EPSE succeeded its predecessor, Ethiopian Petroleum Enterprise, with a paid-up capital of 500 million dollars in kind and cash. The National Petroleum Reserve Depots Administration also preceded the EPSE.
The nine distributors who receive fuel from the enterprise are Oil Libya, Total, National Oil Ethiopia (NOC), Yetebaberut Beherawi Petroleum (YBP), Kobil, Dalol Oil S.C., TAF Oil S.C, Nile Petroleum, and Wadi Alsundus. The last two are Sudanese Companies. A tenth company, licensed by the ministry of trade (MoT) is soon to join.
During the 2013/14 fiscal year, the nine petroleum companies distributed 2.6 million tonnes of fuel, worth 48.9 billion Br. Of the total amount, 207,819tns was benzene, worth 4.2 billion Br, 256,739tns of kerosene, worth 5.2 billion Br and 1.7 million tonnes of diesel,worth 32 billion Br.
From the nine distributors, four are major distributors in the country including NOC, Oil Libya, Total and YBP, accounting for 90.4pc fuel distribution of the country. They distributed 190,836tns of benzene and 1.36 million tonnes of diesel in the 2013/14 fiscal year. But the frequent shortage at gas stations mean that people like Asrat may lose revenues of up to 800 Br a day, by his own estimation.
The recent notable decline in the international oil price is considerably affecting the transporters and businesses in Ethiopia. The price of oil was 76 dollars in 2008. This year, the average price of oil drawn in June, 2014, at 111.8 dollars per barrel, declined to 97 dollars in September, 2014. Now the international price of oil stands at 56.85 dollars.
The Ethiopian government makes price adjustments of gas every month. The government has made five price adjustments on fuel prices in 2014. In September 2014, the price of benzene was 20.47 Br per litre. This price reached its peak of the four at 20.99 Br per litre in May 2014. Then, when the global market showed a decrease, the price went down to 19.95 Br per litre, as adjusted in November 2014 to 19.41 Br per litre. As of the December adjustment, it currently stands at 17.43 Br.
The current price adjustment has regulated the price of diesel, to be sold at 16.10 Br per litre from 17.49 Br. Similarly, benzene is arranged to be sold at 17.43 Br, down from 19.41 Br, while kerosene has gone down to 14.13 Br, from 15.40 Br. The price for a litre of each kind of gas by the beginning of September 2015 had been 19 Br for diesel, 20.99 for benzene, and 16 Br for kerosene.
“Last week, I had been searching for fuel in the towns between Addis Abeba and Ambo and Hawassa and Butajira. But I could not find any in the Total, NOC, or YBP stations that I went to. It worries me that I could run out of fuel before reaching Addis Abeba,” said Solomon Mulatu, a distribution minibus driver for a food company selling traditional Ethiopian food items and spices.
“After passing a couple of towns, I managed to get diesel at Butajira, where I had to pay 18 Br even though the actual price is 16.10 Br,” claims Solomon.
Ali Siraj, state minister of Trade attributes the problem to the miss-match of demand and supply of fuel in the country.
There is a problem of fuel in the country following three main reasons said Ali, one is the increase of economic flow of the country, the expansion of the transport sector and the increasing demand of fuel by the mega projects.
The demand of fuel is increasing at a 12pc rate annually and we are increasing the supply in line with the growth of the demand, stated Ali.
During the first six months of the current fiscal year, the nine distributors distributed 1.3 million tonnes of fuel with a total cost of 25.9 million Br, where the largest market share went to NOC with 33pc, Total followed with 23.1pc market share and Oil Libya came in third with 22pc while Nile was last with a 0.84pc market share. Between January 9, 2015, and February 8, 2015, 252,198tns of fuel was distributed,where the last six months average supply was 221,000tns.
“We are confused as to where the fuel is going as the distribution is increasing,” said Alemayehu Tsegaye, public relation officer at the EPSE. “We are in the process of forming a committee to asses where the fuel went after we received continuous claims from many people, especially from the regional towns.”
“The current problem is mainly caused by the increased demand of fuel by the mega projects in the dry season because most of the projects become operational after the end of rainy season,” said Ali.
Last year, the government spent three billion dollars on petroleum import, according to Ali, nearly all of the 3.2 billion dollars collected from exports. That has not abated the worries of the drivers.
“I spend an hour and a half daily at the fuel stations to get benzene, which led me to losing at least 100 Br in daily income,” said Tariku Bezabeh, a taxi driver from Dire Dawa.
Ali attributes this to limitations in distribution, the number of fuel stations as well as the limited number of distributers.
The problem in Ambo is related to the existence of one fuel station only as the others are closed following the disagreement between the suppliers and the dealers, according to Ali. In Adama, the problem is mainly occurring because there are a limited number of fuel stations in the town as it is the Ethiopia Djibouti corridor, said Ali.
The number of vehicles in the country has increased from 132,000 to 520,000 within the past 10 years, which cannot be accommodated by the existing nine distributers and 654 filling stations, he claims.
In neighboring countries, the profit margin of fuel is no less than one Birr while in the Ethiopia’s case, it is five to nine cents, which is the main reason for the private investors not joining the sector, said an official from one of the nine distributers.
Furthermore, the existing companies such as YBP, one of the major fuel suppliers operating with 100 dealers across the country, are facing a problem of limited vehicles to transport the fuel to regions.
“We have a problem of vehicles to transport the fuel to the regions of the country,” claims Tesfaye Mekonnen, CEO of YBP.
As a sustainable solution, the government is licensing 140 additional fuel stations and two distributers, which will be fully functional during the current fiscal year, stated Ali. In addition, the government is also working on the establishment of suppliers by the private sector with foreign innovators with a joint venture.
“There is a major problem of planning and coordination in the import and distribution of fuel,” said another official from one of the distributers who preferred to stay anonymous. “It is known that the mega projects need more fuel at this time and it is obvious to the importing Enterprise and distributers.”
As a solution, the government is planning to increase the consumption of fuel mixed with ethanol to 20pc from 10pc. In addition, the finalization of the Djibouti to Ethiopia fuel pipeline will be a sustainable solution for the fuel problem we are facing and may solve the problems faced by the likes of Asrat and Solomon.
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