Ethiopia as a country in the last decade has been on a rise, both from an economic stand point and a population stand point. As a result, Africa’s second most populous country has cemented its status as the continent’s fastest growing economy.
Moving parallel to this is the demand for fuel, and as a result oil infrastructure including terminals, storage tank farms, pipelines and other related logistics are undergoing expansion and construction out of necessity.
A nationally registered public enterprise that is the sole importer and distributor of sustainable refined petroleum products to the country, Ethiopian Petroleum Supply Enterprise (EPSE), has been responsible for facilitating a significant spike in usage that has arisen in recent times.
Owing to the recent challenges in shortages in petroleum products on the market, Capital reached out to Tadesse Hailemariam, Chief Executive Officer of EPSE, and an experienced individual with a demonstrated history of working in the oil and energy industry, for insights on what it takes to fuel Ethiopia as the economy continues to evolve. Excerpts;

Capital: What are your views on the recent shortage of petrol in the market?
Tadesse Hailemariam: Petroleum shortage in the market is manmade which technically is an evil and totally an acceptable approach, in terms of business acumen. There is no convincing reason to explain the shortage, apart from it being manmade. It is a manmade problem created by stations and sellers.
It is shameful and a wrong act which is creating misery on people’s day to day life. Of course we all have various means of obtaining money; however, this mischievous act is not fair.
The government is importing fuel properly with no stated decrease on the amount; however, the main problem comes after it is shipped from Djibouti with trucks, which are not arriving to its allocated destination. And it is a known fact that it has a huge rippling impact on the daily life of people.

Capital: What is your assessment on the control mechanism being taken? How are you as an enterprise working with other stakeholders with regards to truck monitoring?
Tadesse Hailemariam: To some extent there is lack of proper follow up of owners on trucks carrying petroleum. On our side, we send all the required information to different stakeholders on each and every truck as soon as they start their journey to their destination from Djibouti. For example, a truck could take up to a maximum of 4 days to reach Addis Ababa; and for us, we send information about the truck when it starts its journey to the trade office and if that truck doesn’t reach its destination on time, the trade office may inquire the oil company at any given time.
However, most of them (trade bureaus) fail to do this. This may be because they are connected with the traders which benefit them or its negligence to serve the community on their part.
The government is importing oil with its limited foreign currency with this chaotic global situation. Lots of countries’ governments are stopping subsiding gas and reducing their import proportion, thus I believe stringent measures ought to be put in place.

Capital: How can it be solved?
Tadesse Hailemariam: In my opinion, government should work more on creating awareness. The relationship between the government and the public should not be limited to social media. I believe awareness creation is integral to finding solutions to the issue.
If we conducted an economic analysis even on the recent shortage in the market, you will note that there was no interruption in the supply rather by a situation created by greedy traders to which the country losses significant amount of money to. There were situations where the public faced difficult to move, factories had been interrupted and so on; however, the public didn’t know the fact on the side of the government. This has to change. The public has to ask oil companies, transporters and stations too not only the government. Thus there is need for awareness creation and information provision to this regard.

Capital: Where does the country source its oil?
Tadesse Hailemariam: We have 2 procurement modalities. The first one is by Bid from the Saudi government refineries which is 50 percent of gasoline and petroleum and the other one is from the Kuwait government oil companies (corporations).

Capital: How has the Russia-Ukraine war affected the supply?
Tadesse Hailemariam: The war doesn’t directly have impacts on supply rather it has affected us on pricing as the price of oil has increased since the war occurred.
On our side, so far we have a good supply amount. However, the price of crude oil has highly increased after the outbreak of the war. One reason for this is that before the war, European countries used to get oil from Russia; however after the war most of the European countries have turned to the Middle East. Thus this creates a shift in the supply demand curve and as a result the price points become higher. Europeans countries always have a change in strategy to get out from a sticky situation. We could similarly have strategies as well for our own sustainability.

Capital: What are the possible solutions for sustainability?
Tadesse Hailemariam: The public should understand that this situation is worldwide and should be calm. We should take strides to understand and analyze the situation from both the government and the private companies’ side. We are working to stabilize the supply and we have enough supply until next year.
Nonetheless, the public should have proper usage of the oil as the world is suffering with supply shortage.

Capital: Do you think removing the subsidy could decrease illegal smuggling of oil?
Tadesse Hailemariam: Of course, it will decrease as it will equalize the price with neighboring countries. If the government removes the subsidy fully, diesel could reach up to 80 birr while petrol to more than 75 birr. However the government is not planning to do it, considering the current economy and inflation.

Capital: For comparison, the 2020/21 versus the 2019/20 shows that the import volume was lower but the price was higher, why is that?
Tadesse Hailemariam: Compared to the previous year, the annual petroleum import bill of the Government has increased by close to 19 percent during the last budget year, 2020/21, reaching an all-time high of 72.60 billion birr. In the previous budget year (2019/20) ended July 7, 2020; Ethiopia spent a total of 62.05 billion birr to purchase close to 3.87 billion metric tons of petroleum.
The decrease in volume is because of the war in the northern part of the country. We didn’t send a single liter of oil to Tigray region and this has decreased the volume we imported. Additionally, the increase in price is because of the increasing price of gas in the world.

Capital: EPSE is now one of the 27 companies under the Ethiopian Investment Holding (EIH), could this make changes to your operation?
Tadesse Hailemariam: The investment holding was established to administer the national wealth in an organized way, in order to help support government development agencies to strength their weakness in financing development projects; in addition to creating wealth for the current and future generation of Ethiopia.
Being under the EIH umbrella will help us to solve certain challenges, such as the shortage of depots, which we face. We have been planning to build a depot at Dukem at a cost of 150 million dollars. However, it was difficult to get financing and EIH will be instrumental in achieving this and in also revising our plan to build governmental gas stations under its management. Having governmental gas stations will stabilize the market as it creates competition between the government and the private sector, especially at a time where man made shortages have bewildered the market, while underlining the merits of the governmental gas stations.
In 2015, we had been planning on joining the fuel distribution markets in the country and had identified 60 of the 130 locations in which we planned to establish the gas stations across the country. It was the hiatus of the Addis Ababa city administration which refused to give land for the construction.

Capital: How is the enterprise working to solve challenges related with Depots?
Tadesse Hailemariam: Currently, we are using the horizon port to import fuel and oil depot at the port is not at the capacity to handle our increasing supply.
Recently, Ethiopia and Djibouti signed a Memorandum of Understanding (MoU) to explore joint opportunities for the development of an oil storage facility in Djibouti’s Damerjog Industrial Park which is a joint development of oil storage terminals in Djibouti which will ultimately increase our storage capacity. Potentially, there is the Ethio Djibouti Railway SC (EDR) though not connected with Awash Depot it has 110 tankers and can provide storage if we connect the line with Awash. When connected, we shall easily transport fuel to the country from the fuel port in Djibouti, which is called the Horizon Djibouti Terminal and at the same time our daily fleet to Djibouti would be increased by threefold if the oil cargo transport was commenced. Hopefully this will be done in the coming 18 months. Additional to the existing tankers, we need 300 tankers.
Moreover, we are planning to build Depots in Dukem and Diredewa and also in Weldiya using the Awash-Haragebeya railway. Additionally, we are working to diversify our ports as we have plans to use Port Sudan to import oil and to store in Gonder using an oil-pipe. Considering that all our plans are under EIH, this will help us to smoothly succeed in our plans.
As demand is increasing supply has to increase inline.

Capital: Is there anything you want to add?
Tadesse Hailemariam: One thing I would like to reiterate and sensitize is that human interference and artificial problems are highly disturbing the market. Both government stakeholders and the public should know this and strengthen the control over illegal and greedy traders.