Adama Hotelier Joins the Petroleum Distribution Business

The new venture by the owner of Sisay International Hotel will become the 10th distributor in the country

All Way Petroleum Plc, the tenth petroleum supplier, is going to start petroleum distribution within two weeks.

The company, which has an authorized capital of 30 million Br, is owned by Sisay Woldyes, owner of Sisay International Hotel, located in Adama. He is also one of 100 dealers who work with Yetebaberut Beherawi Petroleum S.C (YBP).

The company secured the license in July 2014 from the Ministry of Trade (MoT) and it will commence distribution on March 9, 2015, Sisay told Fortune.

The depot of the company is located in Adama, 99Km south east of the capital, in Oromia Regional State on 20,000sqm plot of land. All Way has 16 depots, each having a capacity of 50,000lts, which will be used for benzene, diesel and kerosene. The MoT requires that a supplier have a reserve capacity of at least 500,000lts of fuel.

“We are registering dealers who are going to work with us,” said Desalegn Alemayehu, general manager of All Way.

With the addition of All Way, the number of oil distributing companies in the country has reached10, including National Oil Company (NOC) established in 2003, YBP found in 2002, Dalol Oil, established in 2009, Oil Libya, Total, who has been in the business over for 60 years, Kobil, Wadi Al Sundus, Nile Petroleum and TAF Oil S.C.

The 10 distributers receive fuel from the Ethiopian Petroleum Supply Enterprise (EPSE), which has been supplying fuel to the local market as the only body that buys fuel from international suppliers such as the Sudanese Sudan Petroleum Corporation, Saudi Arabia and KPG from Kuwait since its establishment in 2012, a result of the merger of the Ethiopian Petroleum Supplier Enterprise (EPSE) and the National Petroleum Depot Administration (NPDA).

“New distributers are encouraged by the government as the sector has only nine distributers while neighboring countries such as Kenya have 30 distributers,” said Ali Siraj, state minister for Trade. “As the sector demands huge investment, local companies are not motivated to join the sector.”

During the 2013/14 fiscal year, the nine petroleum companies distributed 2.6 million tonnes of fuel worth 48.9 billion Br. Of the total amount, 207,819tns was benzene, worth 4.2 billion Br, 256,739tns of kerosene worth 5.2 billion Br, 1.7 million tonnes of diesel worth 32 billion Br.

From the nine distributors, four are major distributors including NOC, Oil Libya, Total and YBP, accounting for 90.4pc of the fuel distribution of the country and the remaining is covered by the other five companies.

“To encourage new entrants into the sector, the government is working on the possibility that the private investors can work with foreign companies through joint venture,” Ali told Fortune.

During the six months of the current fiscal year, the nine distributors distributed 1.3 million tonnes of fuel at a total cost of 25.9 million Br, where the largest market share went to NOC at 33pc, followed by Total at 23.1pc and Oil Libya at 22pc. Nile came in last with 0.84pc of the market share. Between January 9, 2015 and February 8, 2015 the distributed fuel accounted for 252,198 tons.

The price of fuel was adjusted by the MoT last month, which regulated diesel to be sold at 16.10 Br, down from 17.49 Br. Similarly, the price of benzene went down to 17.43 Br, down from 19.41 Br, while kerosene went down to 14.13 Br from 15.40 Br. This was followed by a problem of fuel supply in the market.

Fuel distribution was controlled for long by longstanding companies until 2002, when NOC and YBP entered the market.

Prior to the aforementioned date, only four suppliers, Mobil, Agip, Shell and Total were operating in the country over 30 years with license from the then Ministry of Trade and Industry.


Published on March 02, 2015 [ Vol 15 ,No 774]



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