Fuel cash base supply to start this week

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The new initiative that will change the relation of Ethiopian Petroleum Supply Enterprise (EPSE) and petroleum companies is expected to commence in the coming week.
The recently formed Petroleum and Petroleum Products Supply and Distribution Regulatory Authority, which is under the Ministry of Trade and Industry, had conducted different studies under the initiative to improve the petroleum business in general and improve the distribution without fraud.
One of the initiatives was to improve the relationship between the oil companies and EPSE, which is the sole oil supplier for companies, and payment modality for the supply of oil.
In this regard, the authority had disclosed that the companies will start buying the fuel on cash basis which will be fully implemented in one year’s time.
Ahmed Tusa, the first head of Petroleum and Petroleum Products Supply and Distribution Regulatory Authority, told Capital that the companies and EPSE will sign the new contract arrangement in the coming few days, may be up to Tuesday March 16, to introduce the cash base supply.
He said in the first phase that may stay for a month, companies will have to pay the 10 percent of the total amount of the supply and the rate will gradually become 100 percent in a year time.
The existed experience was that companies receive the product on a one month credit scheme, while it has affected the state owned enterprises because of default mainly from new entrants.
Tadesse Hailemariam, CEO of EPSE, recently told Capital that the new arrangement will improve the enterprise’s cash flow and working capital.
Ahmed said that the new scheme will not have any effect on dealers, while the minor cost incur on a liter of oil will be revised by the government to keep the companies and enterprise benefit.
“Any business has a cost like the bank charge or interest that will be revised,” he explained for the case that the new scheme will have additional charge on oil companies which may come with different instruments to settle their bill on the cash base trade with the enterprise.
“The relation with dealers to companies will continue as usual that does not have any correlation with the latest decision that the government has taken,” he added.
Initially the government had announced that the new scheme will be commenced as of March 10. “While some paper works have delayed the process I hope the two parties will sign the new contract in these few days,” he strongly underlined.