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The multi-national group of energy and petrochemical
companies, Shell, is to exit Ethiopia, selling its
properties. The Dutch company is also set to leave
10 other African countries, sources at the company
told Fortune.
Frenzied by leaks of the news, the 144 employees of
the company have requested an explanation by the
management through their union as nothing has yet
been officially released. Regional executives from
South Africa and Kenya held discussions with the
employees two weeks ago saying no decision has been
finalised.
The visiting delegation claimed the objective is not
to exit the country as they are also considering
franchising, sources told Fortune.
“Indeed, executives of the company have come from
abroad to discuss human resource issues,” Bahru
Temesgen, external affairs manager of Shell Ethiopia
and Djibouti, confirmed to Fortune. “However,
I am not aware of any deals made concerning the
sales of the company’s properties.”
Shell Ethiopia, whose market share had once reached
over 50pc, currently commands less than 30pc.
Sources told Fortune that the reason for the
decline of the company’s market influence is its
hesitance to compete in bulk oil and oil product
supply tenders.
Shell has rather instructed the country office to
immediately culminate litigations involving the
company either in its normal course or through
negotiations, a Shell management member who wished
to remain anonymous told Fortune.
With 318 billion dollars in 2006, Shell began
negotiations with other companies to sell its
properties in West African countries six months ago,
and selling its retail stations in Eritrea to a
Libyan company, Tamoil. The sale to the subsidiary
of Oilinvest, the Netherlands Antilles-based group
established in 1988 as the oil investment arm of the
Libyan government, seems to signal Shell’s move to
totally exit the African market.
Launching operations in Ethiopia in 1929, with the
name Shell Company (Red Sea) Limited and
Incorporated in London, it bought the Akaki Depot in
1946 which was jointly owned by the Italian
multinational, Agip, and the Ethiopian government,
as well as other outlets in Addis Abeba. In the same
year it changed its name to Shell Ethiopia Ltd.
The Ethiopian oil industry, which until 2003 was
monopolised by Agip, Mobil and Total, as well as
Shell, seems to be losing its long time retailers.
Shell Ethiopia, which boosted its market share
acquiring the properties and business of Agip, had
200 retail stations all over Ethiopia as of 2000.
The company, which sold its Liquefied Petroleum Gas
(LPG) business in 2004 to Ghion Industrial Group,
this year sold the depot it procured from Agip -
located around Gotera - as well as its 63 retail
sites to the Kenyan franchise, Kobil Ethiopia Ltd.
Though the company’s external affairs manager and
Edgar Omoto, general manager, did not confirm it,
sources told Fortune that negotiations were
held with the Sudanese Nile Petroleum some months
ago to no avail.
Mobil also exited the Ethiopian market last year,
selling its properties to Total. In addition to
Total and Shell, currently the National Oil Company
(NOC), established in 2004, Yetebaberut Beherawi
Petroleum (YBP), established the following year and
the very recent entrant, Kobil, are operating in the
country. Nile Petroleum is also poised to join the
market soon.
The prices of Ethiopian oil products are regulated
and imported by the government. Of the total
consumption in the country, 80pc of the Benzene and
90pc of the LPG comes from Sudan.
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