Saturday, June 15, 2024

Govt dips into national benzene reserve


1.5 million liters used since January 15

Oil companies are still struggling to get oil from the Djibouti depot to gas stations in Ethiopia. It is currently taking four days for one oil truck to load its cargo. Oil comes to Ethiopia from depots in Sudan and Djibouti. However, the majority of the four types of oil Ethiopia uses comes from Djibouti.
Benzene, which is a major ingredient in gasoline and used to make plastics and other synthetic materials is what the country is shortest on at this time. According to official data from EPSE, 80 percent of the nation’s benzene is consumed in Adds Ababa.
Demand for benzene has increased throughout the country with the increasing number of Bajajs, motor bikes, generators and water pumps.
Because benzene is used by smaller vehicles it is liable to nefarious transactions.
Whereas large trucks are diesel powered and thus it takes a lot of fuel for them to even start their engine. It is common to benzene being illegally sold in condominium houses and dark corners of Addis Ababa.
A liter of benzene was sold to the maximum 80 birr per liter in Addis Abba last week.
With the gas shortage that caused panic last week, it encouraged the sale of informal benzene as witnessed by the traffic jams that still occurred in the city despite long lines at petrol stations.
The path to supplying Ethiopia with oil begins at the Ports and then leads to the Ethiopian Petroleum Supply Enterprise (EPSE) where the oil is stored in their depot. The Enterprise gives 40 to 45 vehicles benzene every day where four of the major oil distribution companies take the 80 percent of the supply, and the remaining share the 20 percent.
National Oil Company (NOC), Yetebaberut Petroleum, Total, and Oil Libya take the highest amount and then distribute the oil throughout Ethiopia. Before registration, the companies are obliged to build a reserve depot for different kinds of oil they purchase containing more than 500,000 liters. The companies have built depots but often don’t use it for reserve.
The Ministry of Mines and Energy (MME) gives companies a competence license after checking they have fulfilled every criterion required by the law. The Ministry of Trade and Industry (MoTI) will issue the trade license after the companies obtain the competency certificate.
The oil companies are regulated by the three institutions directly and by many other government bodies indirectly, and which many industry insiders agree is a systemic problem that needs reform.
The average unloading time for one vehicle is one hour. Last week, however it took around three hours for each truck to unload their benzene at gas stations. The gas station employees were witnessed taking a long time to add benzene on the vehicles; a lot longer than the time it took them to add diesel.
On Tuesday the government took 552,000 liters of benzene out of its reserve depot in Awash. On Wednesday a little less than 600,000 liters of benzene was distributed while on Thursday only 368,000 liters of oil was distributed.
Gas station owners have rationalized the longer loading times for trucks as being due to waiting for employees with the Ministry of Trade and police to witness them discharging the oil. They say the action is not intentional.
The shortage of benzene begun to erupt back on November 20, 2018. Speculation was that the shortage was being caused by its contraband sale to neighboring east African countries.
Ethiopia has the lowest gas prices in the region. In some countries drivers pay twice as much for gas. This is due, largely to higher gas taxes imposed on benzene to discourage automobile use and encourage public transport.
In Eritrea the selling price of benzene is 60 birr per liter and in other regional nations gas hovers around 50 birr.
It was on January 13 that the main road leading to Djibouti was blocked by protestors which stopped transportation between the Semera and Awash cities.
The two-day blockage came to an end on January 14, 2019, after a negotiation between the youth and the leaders of the region who agreed to solve the issue. To solve the shortage created in the country the government used its National Reserve on three different occasions since January 15.
“As the vehicles carrying the benzene arrive in town in addition to what we have distributed, there should be a surplus in the market if it was not for bad management and control mechanisms made on the supplying stations,” said Tadesse Hailemariam, CEO of the EPSE. “The crisis is artificial and there should be a sustainable mechanism set to stop the parallel market.”
The two regulatory ministries disagree on who should control the mess created last week, which has aggravated the problem. The Ministry of Trade argues that its responsibility extends only to price-related issues.
Fuel distribution companies have contributed to the problem but keeping an inadequate supply in reserve, while still managing to keep extra Diesel in storage. No one is enforcing the requirement that they maintain a reserve of fuel. One reason companies do not store more is that depots are located in rural places outside of the capital city. Capital attempted to discuss the issue of keeping more fuel in reserve with Samuel Horka (PhD), Minister of MME and Fetlework Gebregziabher Minister of MoTI but they were not available for comments via telephone.

Read more