Thibault Lesueur has been Managing Director of Total Ethiopia since September 2018. He was Head of Petroleum Specialties for Africa Middle East responsible for sales and marketing development for LPG, Jet A1, lubricants and care ranges, bitumen and solvants in Africa and Middle East. Capital talked to him about recent investments of Total in Africa and the situation in Ethiopia. Excerpts;
Capital: Why is Total diversifying and buying acquisitions in Africa?
Thibault Lesueur: The Oil and Gas sector requires one to continually consolidate one’s resources, balance one’s assets and integrate new energies into one’s portfolio. TOTAL has historically been a present and significant actor in Africa and naturally, the Group continues to invest in Africa. You may have heard recently of our plan to buy Anadarko’s Africa assets. . In fact, one of our key priorities in our development road map is the environment.
Capital: What is the vision of environment by Total?
Thibault Lesueur: As far as Total is concerned, we want to play an active role in developing the renewable energy sector as well as reducing our carbon footprint in all of our activities. For example, the Total Group has recently taken many initiatives towards new energies, with several acquisitions such as SAFT, a battery manufacturer, or EREN to form TOTAL EREN, a joint-venture dedicated to renewable energy. In Western Europe countries, TOTAL is now selling environmental-friendly electricity with Total Direct Energy to individuals.
Capital: Why do big international Oil companies leave Africa while Total remains?
Thibault Lesueur: Other Oil companies first moved out from the distribution sector, but some still remain in Africa with other oil related activities. TOTAL believes in Africa, where you must have a long-term approach and accept current challenges. One of these key challenges is safety, as where ever the Group operates, we do not compromise on our safety standards; creating the safest working environment for our employees, contractors and stakeholders. We do monitor and communicate the number of days without accidents in Ethiopia on a daily basis to our teams. We are really focused on this indicator.
Capital: Is Total a leader in Africa?
Thibault Lesueur: Total is certainly the most present company in Africa with direct presence in more than 40 countries, activities in resources exploration, production, refining and distribution with more than 4000 stations across the continent. Total is considered the 1st retail company in Africa, with the largest chain of retail shops on the continent. In some countries, Total has been operating for more than 90 years! In Ethiopia, we have been here close to 70 years. On top of figures, Total is also considered as a leader in standards, as very often, we are the first to implement international standards in our various markets.
Capital: So what do you want to do in terms of being a leader in standards and safety in Ethiopia?
Thibault Lesueur: In transportation, Total Ethiopia is the only company tracking its trucks wherever they are within a GPS system in Ethiopia. We have a real-time vision of our fleet and we can survey key violations such as speeding, over driving, harsh braking and night driving. For example, over driving is a major concern for us, as the drivers need rest to drive safely in our very challenging road conditions.
I hope soon, all the fuel transportation will be supported correctly with a minimum set of standards; starting with training of drivers, controlling speed and work time, for example. Today, we train our drivers on a truck cabin simulator. It may be the only one in the country. We believe this kind of hands-on training would greatly improve the safety on our roads if every commercial driver were to complete it.
Environmentally, we are the only Ethiopian oil company to install double-envelope tanks in our stations. This is to avoid any kind of pollution of fuel in the soil. Total Ethiopia also has a state-of-the-art fuels depot commissioned 2016, in Dukam, designed specifically to serve Addis Ababa region.
Capital: Why not?
Thibault Lesueur: That is a good question. We are working with governmental entities to put this project on the table once again. Connecting a fuel depot with railway means fewer road risks, safer operations and a more reliable supply for Ethiopia. Fuel supply safety is everybody’s responsibility, as the products are highly flammable and the country needs a constant supply to support the nation’s development. For that matter, the sector needs regulation, standards and authorities who play an active role; ensuring sector support and control. Today, the minimum requirements to be a fuel marketer are too low and are not sufficient to address properly the safety issues at stakes. They are not properly monitored either.
Capital: What are the challenges you face?
Thibault Lesueur: As I mentioned earlier, standards are the key to avoid accidents and ensuring a reliable supply of such strategic products as fuels. Standards cannot be ignored. I believe there is willingness now in our communities to support this method of operation. We see things moving in the right direction. The fuel market shall also be well governed by a sustainable system, enabling all actors to live economically from normal operations, respecting rules towards authorities and giving the right quality of products to all Ethiopian consumers. Today, the fuel activities are not remunerating the sector companies and you may have seen some companies closing petrol stations sites. The fuel margins are far less than what the sector needs to operate sustainably and far below the margins you see in neighbor countries. Therefore, the fuel market suffers from lack of investment, unable to follow the market growth for many years now. To develop a more dynamic fuel sector, like what we see in every African market with state of the art petrol stations and depots, you need to attract investment with the right margin level.
Capital: What do you suggest as a solution?
Thibault Lesueur: For the last two years we have established an association of fuel distributors (Ethiopian Oil Companies Association) that is made up of five principal actors. The association has already completed an industry study and submitted suggestions to authorities to improve the sector in Ethiopia. The recently created Regulatory body is in line with one of our suggestions. This official entity should now design the vision of the sector, leading all actors towards a sustainable and professional supply of the country, based on international standards and under strict control. For the fuel prices and margin, the authorities should remunerate all actors in the value chain, from oil companies to dealers and including transporters. If all actors are correctly paid from operations, I am sure this sector will actively participate the new era of Ethiopia, resuming investments, creating stations, investing in fuel depots to ensure adequate inventories and to avoid shortages and create many jobs in all the Ethiopian territory. Today, Ethiopia has less than half the number of stations of Kenya, for a larger territory and a much larger population. The Minister of Trade and Industry is also looking at specific sector regulations and our Association is supporting this initiative, bringing its own expertise to design the best fuel sector Ethiopia deserves together.
Capital: The fuel prices are different from one country to another country since each country has different tax laws and regulations. What is your view point?
Thibault Lesueur: This product is imported, you know, and distributed locally. I believe it’s best for local prices to reflect international prices or at least be linked to them somehow. There are other economic consequences that occur from having fuel prices that are too low. For example, lower prices motivate smuggling and other unscrupulous activities with our neighboring countries. Today, you pay far less your fuel in Ethiopia compared with Kenya for example. Ethiopia needs to have a good balance across the region and to discourage these activities that are challenging Government resources and a cost to all Ethiopian community.
Capital: Recently, we just have an increased price on the fuel market, does this affect your margin?
Thibault Lesueur: The Ethiopian government answered our request recently to revise the sectors margins, and we do appreciate this positive move. As an international company, we know and understand to be careful in pricing the fuel. The product is highly sensitive as it is serving all of Ethiopia. It is a basic need for transport and industries. Nevertheless in Ethiopia, everybody should keep in mind that since the beginning of 2016, the gasoline price has been increased by more than 3 birr per liter, and the margin for oil companies has only been improved by 6 cent of Birr per liter. We cannot say the oil companies are benefitting from the price changes, rather the contrary. The current margin for oil companies is far less attractive compared to bank saving rates, and therefore, does not take in consideration any of the daily efforts, initiatives and risks taken by all the sector stakeholders to serve the country with fuel.
Capital: If the margin is not motivating you why are you still in the market?
Thibault Lesueur: Total is an historic and responsible actor in Ethiopia, we do notice a kind of smooth economic revolution that Ethiopia is experiencing. Both the proclamation for the new regulatory body and the new regulations project, with the strong intention to implement standards in Ethiopia are the positive signals for the industry to motivate investors to resume investment activities. We need an additional positive sign regarding the profitability of the sector. As we do understand the access to foreign currency is a real challenge for Ethiopia and sales of lubricants no longer compensate for minimal fuel margins. Fuels profitability has thus to be addressed. For the time being, we are waiting for such a sign, limiting all unnecessary costs, optimizing the small amount of dollars we are able to capture and even welcoming Total trainees from all over affiliates of the Group to be an internal training center. The day the sector has normal fuel margins, Total will invest massively in the market to build new stations and create jobs and the Ethiopian consumers will have modern petrol stations to serve them. For your information, with an acceptable margin level, like near the average level in Africa, we can double our network and generate 5000 jobs in 5 years.
Capital: What are the prospects for green energy investment in Ethiopia?
Thibault Lesueur: Total already participated in the early solar farm tenders, but we were not selected. And we now have a team in place that is working on the scaling solar tender. We are waiting for the awards and hope to be among the selected companies. Should it become possible for us, we may also one day implement solar panels in our petrol stations to develop more autonomy from the grid as we do in many countries in Africa. But, for the time being, it is not an option due to the lack of profits in fuel distribution for us and our dealers.
Capital: Talk about how you are giving back to the communities
Thibault Lesueur: Total Ethiopia as a responsible company in its Corporate Social Responsibility programs involved in Safety on the roads, Education, Health, Small and medium scale entrepreneurs support, and Capacity building actions. Total Ethiopia has a yearly budget to support these projects with several million Birr. The second round of Total’s StartUpper program was very successful in Ethiopia. This year, Total worldwide launched the program in 62 countries in Eastern Europe, South America, Asia and Africa. For Ethiopia, we received thousands of projects and we supported the pre-selected young entrepreneurs with teachings about creating an effective pitch, a long-term business plan and how to endure rigorous questioning from experts about their visionary, sustainable projects for the country. 3 teams were awarded with prizes, and one of the three winners, a young woman, was invited to Paris to join the Digital National Women’s Day of France, hosted by the Prime Minister. We will continue to support young Ethiopian entrepreneurs with ideas, projects and who are full of energy. We also have a Young Graduate Program where we select the very best candidates to work in Total Ethiopia and offer them an international assignment for one year. Total Ethiopia works every year to eradicate malaria with local associations in Ethiopia. Total Foundation donated funds for water points to farmers. We are engaged in educating children on road safety awareness program in elementary schools located in the risk zones of Addis Ababa. The affiliate also took the initiative of truck drivers’ road safety awareness program along the Djibouti corridor. Moreover we donated servers, computers and science laboratory equipments to universities, colleges, high schools and hospitals. We have made funds available for critical research such as waste oil treatment. We also signed a MOU with Addis Ababa University for technology development in the near future we also work to reduce environmental pollution.
Capital: A lot of Interesting programs in a very challenging situation.
Thibault Lesueur: We look at the situation and market challenges and we are optimistic as we have already seen a lot of improvements. We are committed to focusing on our collective future and positive sector developments for Ethiopia. We still see a very bright future for Ethiopia and we believe Ethiopians deserve the best products and services regarding fuel.