Oil companies get fund to cover financial cost


Ministry of Trade and Industry (MoTI) approves extra sum of price adjustment for fuel companies for the compensation that occurred in relation with new payment modality, while the adjustment will be covered from petroleum stabilization fund rather than the public.
On the letter that MoTI issued on Wednesday March 17 and sent to Ethiopian Petroleum Supply Enterprise (EPSE), it stated that the enterprise and Ministry of Finance informed MoTI that the cost compensation that related to the new cash based payment modality for oil companies needs further adjustment.
It reminded that on February 22, EPSE had written a letter to MoTI that indicated the tariff adjustment with regards to the implantation of the payment modality. Further the letter of MoTI that was signed by Eshete Asfaw, State Minister of MoTI, added that the tariff adjustment was applied as of March 6 and the additional cost was covered by the public.
For instance four cents have been adjusted on benzene product which was covered by the consumers.
However, as per the clarification, the enterprise secured from Commercial Bank of Ethiopia a bank guarantee arrangement that considers which companies shall access finance to undertake the new modality. Moreover, the financing cost shall be calculated by 90 days rather than the previous one year that EPSE had calculated for the new tariff adjustment.
Since the new clarification, the tariff adjustment shall have additional costs; for instance it will be increased by 13.74 cents per liter for benzene and reached 17.74 in total with the previous adjustment that was four cents.
As per the new revision, MoTI has directed EPSE to revise the tariff for the sake of the benefit of companies which are supposed to cover their cost that occurred due to the new payment arrangement.
However, in this case MoTI has announced that the additional new cost for instance 13.74 cents for benzene per liter will be covered by the petroleum stabilization fund.
Eshete told Capital that this time the government has decided to cover the additional cost from the fund rather than impose on the public.
The letter said that the revised rate will be applied as of March 24 and compensate the cost of companies that paid from March 10 to 22 with the new rate.
Due to different reasons the government has decided to undertake a new path on the oil supply into advance payment. Under the new scheme oil companies shall be involved on cash base trade with EPSE. The new scheme has commenced by 10 percent cash payment or bank guarantee.
The information Capital obtained indicated that starting from this week, companies which are about 36, are already signing the new contract arrangement with EPSE under the new arrangement.