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The five local petroleum supplying companies are to
officially request the government to re-consider
their regulated profit margins.
As soon as the final approval of the request’s
content is given by the companies’ managing
directors, it will be submitted to Girma Birru,
minister of Trade and Industry (MoTI), in the next
few weeks.
In order to meet its annual energy needs, Ethiopia
spends 87pc of its hard currency earned from foreign
trade and commercial activities to finance imports
of close to two billion litres of fossil oil. In the
2005/2006 fiscal year, the country spent 860.5
million dollars to import fuel from overseas,
according to data from the Ethiopian Customs
Authority.
Its needs in terms of volume, however, are
comparatively low as Ethiopia stood at 198th out of
205 countries in per capita oil consumption in 2004,
requiring only 0.379 barrels per 1,000 people.
The importation of petroleum products is monopolised
by the Ethiopian Petroleum Enterprise (EPE) and
distributed among the petroleum companies such as
TOTAL, Shell, National Oil Company (NOC) and
Yetebaberut Beherawi Petroleum (YBP) as well as the
new entrant, Kobil. They earn margins per litre of
0.595 Br for benzene, 0.583 Br for diesel and 0.513
Br for kerosene.
These companies receive the imported petroleum
products from the Enterprise at wholesale prices,
while the dealers, which provide them with pumping
services at the filling stations, receive a 0.03 Br
per litre margin.
After having collected the petroleum products from
the government depots or from the Enterprise’s dry
port, the petroleum companies then pay 0.34 Br per
litre/kilometre to the transporters that carry the
commodity to the filling stations or to the depots
owned by the petroleum companies.
After these payments, the five domestic petroleum
companies collect an average of 0.6 Br per litre as
set by the Ministry of Trade and Industry (MoTI) on
August 26, 2007.
Speaking to Fortune, an insider from one of
these petroleum companies bemoans that the profit
margin was adjusted in Ethiopia 12 years ago when
oil only commanded about 50 dollars per barrel on
global markets and the local price of oil was as low
as two Birr per litre. The absence of readjustments
in accordance with the current record high prices
that reached 92 dollars per barrel last week, deters
companies in the sector, this source emphasises.
“Seeing the departing petroleum companies such as
Agip and Mobil due to the inconveniences of the
market will cause some of us in the industry to
follow suit,” he stressed.
Another company official is equally troubled.
“Although oil dealers such as the filling stations
whose profit margin remains 0.3 Br per litre have
been appealing over the past five years for the
readjustment of the profit margin, going by the
current situation of the oil market in Ethiopia, we
are unable to meet demands due to the costs we
incurred,” an official from one of these companies
complains. ”We are conducting a study to show the
detailed income and expense accounts of our
companies to present our position.”
According to sources, under the coordination of
Tadesse Tilahun, managing director of NOC, the
managing directors of the other four petroleum
companies held a consultative meeting and decided
that the companies’ financial managers should make a
detailed study for the readjustment of the profit
margin.
The latter group was meeting once a week and
submitted the study document before the managing
directors of the petroleum companies last week,
these sources added.
Though he did not deny the nature of the
readjustment request, Tadesse declined to make
further comments on the issue.
An official from the domestic trade department at
MoTI said that it would be possible to make comments
immediately after the request was officially
submitted to the office and assessed by the
Ministry.
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