If the current shortage of petroleum is not resolved in the remaining few days, the Ministry of Trade and Regional Integration has stated that the market will be in disarray when the subsidies are applied starting from July 8, 2022.
In the past few days severe fuel shortage has pricked the country, including that of the Capital, Addis Ababa. However, the Ministry argues that the case is manmade.
“There is shortage of supply whilst demand is increasing,” said Tadesse Tilahun, CEO of the National Oil Company and President of Ethiopian Oil Companies Association adding that, “since there is shortage of supply we cannot provide petroleum in our stations which can cover the demand.”
“It is a manmade problem created by stations and sellers,” said Kumneger Ewnetu, Public Relation Director at the Ministry of Trade and Regional Integration, adding, “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 results it not to arrive to its allocated destination.”
“There is also lack of proper follow up of owners on trucks carrying petroleum,” explained Kumneger. The PR director also elaborated that the Ministry has also discussed the situation with the gas station owners and gave them warnings stating that if they don’t provide the service accordingly they stand a chance of facing high penalties including cancelation of licenses.
Hundreds of trucks carrying petroleum have been found in different parts of the country and some have been going to Sudan and Tigray whilst some are hording petroleum until the price adjustments are made.
“If all the stakeholders and the public work together we can have improvements and can minimize these effects,” Kumneger opined.
Apart from waiting on the price adjustments, petroleum has also been sold in the black market; to which around 400 million dollars’ worth of petroleum has been illegally smuggled from Ethiopia in 2020/21 according to reports. The contrasting prices with markets in neighboring countries have offered a lucrative prospect for profit through cross-border contraband trade, causing irregularities and disruptions in domestic fuel distribution.
Ethiopia’s annual oil consumption has reached 3.8 million metric tons of which 65 percent of this is gasoline. Ethiopia allocates an almost similar proportion of foreign currency income secured from export earnings to oil imports and removing the government subsidy from oil products are viewed as the sustainable solution.
Removing subsidies will be applied with different mechanisms where it will be removed within one to five years based on assessments and as Kumneger indicates, the government is working closely with different stakeholders on the issue.
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.
With regards to pointing out the thorn in this space, oil company executives, transport companies, and gas stations are said to be part of the problem as opposed to the solution.
Manmade fuel shortage disorients market
EEG back peddling in innovation, audit findings show
The Office of Federal Auditor General (OFAG) says that the Ethiopian Engineering Group (EEG), which is the major portion of the infamous former Metal and Engineering Corporation (MetEC) is continuing on its traditional stride with regards to assembly and sales of agricultural equipment.
OFAG which appeared in parliament a week ago for its 2020/21 budget year report through its findings showed that EEG did not have a developed quality standards or grade to date.
It added that as the previous trend, the group is continuing partly in assembling and selling bulk agricultural equipment which is imported without quality measurements and standards.
OFAG has also shown through its finding the mishaps that MetEC conducted years back.
According to the audit report that was presented by Meseret Damte, Auditor General of OFAG, the then corporation had procured 14,452 different horse power tractors from 2010/11 to 2014/15 at the cost of USD 146.1 million and 10.5 million euros. OFAG said that the purchase did not follow the proper procurement procedures, without market demand and procurement assessments, and without evaluation of whether the agricultural products were suitable for farming in Ethiopia or not.
“Up until last February, 5,825 tractors that were not able to provide service were still stored,” OFAG’s head said on her performance audit findings.
The Auditor General office said that despite EEG’s Adama Agricultural Machinery Industry which was established at the Nazareth Tractor Assembly Plant in 1984, its operation were not engaged in innovation activities and did not place it in the track of improving the sector activity or managing collaboration works with others who have experience on the area.
It added that it is still stuck on the operations of assembling imported tractors rather than producing its own products.
Over two billion birr is also not yet collected from tractor sales, in addition to the firm not settling almost two billion birr of debt that it ought to pay.
The Auditor General said that the industries which have irrigation project contracts of 1.2 billion birr for Afar, Oromia and Somali regions were accomplished as per the schedule.
OFAG which delivered a very vast and in detail financial and regularity audit findings said that on its performance audit it was able to conduct 29 audits, which is over 96 percent of the plan. On the finding it has disclosed significant gaps that were observed on the audited public institutions or enterprises like such that of the EEG.
One of the democratic institutions said that public offices mannerism in the correction of gaps that were recommended from the previous findings has improved in comparison with the preceding experience.
Huawei Ethiopia holds partners’ summit
Chinese technology company, Huawei Ethiopia, held its partner summit on Monday June 27, 2022 at the Hilton Hotel Addis Ababa.
The company has thrown the technology promotion and recognition program with its partners in Ethiopia with the attendance of Huria Ali, State Minister of Innovation, Cowin Cao, Deputy CEO of Huawei Ethiopia presenting Huawei Ethiopia’s Enterprise Business, Huawei Technology Group senior executives, the company’s domestic partners and different pertinent stakeholders.
“Huawei is contributing to the realization of the Ethiopian Digital Strategy 2025 by bringing the best technology in the world to our country,” said Huria Ali whilst opening of the forum.
Whilst indicating that the company has recently launched a 5G network with Ethio Telecom, the State Minister highlighted that government is supporting efforts to build a digital economy by building more infrastructures, creating jobs and importing smart technologies. “We are working with both local and international institutions to build a digital Ethiopia,” she said.
Cowin Cao, Deputy CEO of Huawei Ethiopia on his part expressed that Huawei Technology is working with 158 domestic partners in Ethiopia, which has led to job opportunities for 3,700 residents.
The program, developed by Huawei Technology Group, recognizes various companies and organizations that work in partnership with the company.
Addis Chamber celebrates momentous 75-year journey
Addis Ababa Chamber of Commerce and Sectoral Associations (Addis Chamber) celebrates its 75th anniversary.
The celebrations began from Tuesday June 28 and stretched to June 30; and featured major policy panels and symposiums on various trade and investment issues. The three-day panel discussion and symposium at Skylight Hotel and Hilton Hotel focused on Ethiopia’s private sector development and environmental policy, illegal trade and competitiveness challenges, enactment of laws and regulations on private sector development, women’s business leadership, social enterprise opportunities and challenges, and business organizations and institutions. Prominent scholars, policy makers and private actors also presented on these panels.
“The 75th anniversary of the Addis Ababa Chamber of Commerce and Sectorial Associations (AACCSA) is a sign of hope for the future,” said President of the Chamber of Commerce, Mesenbet Shenkute.
The Chamber also released its new book, which narrates its 75th year’s anniversary journey alongside a photo exhibition to commemorate the council’s 75 years of travel. The celebration also focused on educating the next generation on the opportunities and challenges of the past, as well as educating others on the institutional secrets that the institution has maintained in the face of adversity.
Mesenbet said the chamber will continue to focus on providing timely policy recommendations and being part of the solution to challenges, as well as strengthen its role as a bridge between the public and the private sector in line with its mandate to continue the growth of the private sector and modernize its business system.
The secretary of the council, Shibeshi Bete-Mariam pointed out that the new chamber, established in 1939, has carried out various activities over the past 75 years.
“The chamber has shown that it is a transitional institution that has not been affected by influences,” stressed Shibeshi.
Established in 1947, AACCSA is a voluntary, non-governmental, business membership organization with more than 15,000 member companies. The chamber serves as a credible voice of business and advocates for the creation of a conducive business environment. It also promotes trade and industry, disseminating business information, consulting government and members on economic development and business issues, establishing friendly relationship with similar chambers in other countries, and exchanging information as well as engaging in arbitration in times of disputes among businesses.
