Red Light on Benzine Gauges, Fuel Prices Down

There is frustration at the pumps, sometimes spilling over into banging and slanging matches needing traffic police intervention. But why is there a shortage when gas prices are down everywhere? DAWIT ENDESHAW, FORTUNE STAFF WRITER, joins the gas station lines (on foot) to talk with drivers, distributors and also representatives of the sole supplier to find out what has created the oily mess.

Mekbeb Estifanos and Ashenafi Kebede passed six gas stations as they drove from Kality to Bole, before finding one at which they could fill their Volkswagen.

Gas stations owned by OiLibya, National Oil Company (NOC), Total, and Yetebaberut Beherawi Petroleum (YBP) all turned them away before the seventh stop at the Bole NOC, where they finally had luck.

“I was almost done; my tank was getting empty,” said Mekbeb, speaking to Fortune at the station at nine o’ clock on Friday night.

He said he normally bought 17.2lt of gas for 300 Br. Now he pays 500 Br for 30lt with the revised price of 16.61 Br a litre. He purchased five more litres, which he carried away in a jerry can.

The Bole NOC station has a tanker capacity of 170,000lt, 120,000lt of which is dedicated to benzene. It was one of the busiest stations in Addis Abeba that night, as it was among the few that were still selling.

NOC has 175 stations across the country.

The stations started getting busier some three days ago, said the operator of gas dispenser who reported that traffic officers were getting involved to keep order. He said he had witnessed cars hitting each other and drivers engaging in physical fights.

“We could not get the time to take a breath. All the five dispensers are busy,” said the worker, explaining the hectic scene.

Managing the line and dealing with the drivers was a headache.

For Yenehun Mulualem, a taxi driver along Sierra Leone Street, the shortage has at least cost him a day’s income, because he had to stop operating his taxi which had run out of gas.

“I would have made 400 Br to 800 Br,” he said.

That was on Wednesday. The day before, he waited 40 minutes at a Total station in Kera and was told the gas had finished as his turn approached. He then drove to Mexico where an hour’s wait got him a day’s supply

At the Total station by the ring road at Bole, there was congestion similar to that at NOC on Friday.

“We are not really sure what really happened and what caused the problem,” said Dereje Weldu, marketing officer at Total.

He explained that such shortages usually occurred before a revision of price, because depots withhold gas to benefit from the higher price. But that is not the case now, Dereje said.

Two weeks ago, government revised the price of gas on the retail market. Accordingly, the retail price of one litre of benzene was reduced from 17.43 Br; kerosene is now down from 14.13 Br to 12.43 Br; light black diesel and hard black diesel decreased from 13.91 Br and 13.27 Br to 12.42 and 11.77 Br. The last price revision was made was a year ago.

Since 2015, Ethiopia has decreased the price of petroleum by 12pc so far. Kenya has reduced its prices by 15pc at the same time, according to Internet sources. Global oil prices are down by 40pc.

Kenya imported 3.9 million tonnes of petroleum in 2013/14 while one year after, it’s imports reached 4.5 million tonnes.

In 2013/14 Ethiopia’s national supplier distributed 2.62 million tonnes of petroleum, purchased at the price of 2.49 billion dollars; one year later, in 2014/15 it bought 2.79 million tonnes at the lowest price of 1.88 billion dollars. This shows that though there was an increase in fuel purchase, there was an average price decrease from 950.32 dollars to 675 dollars a tonne.

In other words, one kilogram of petroleum in 2013/14 was purchased at 0.95 dollars and in 2014/15 at 0.67 dollars.

The Enterprise determines the imported amount after receiving demand lists from distributors, considering the volume of development projects. In general the demand for ilis is said to increase by an average rate of 10pc, every year.

Re-established in 2012 merging with National Strategic Petroleum Reserve the Enterprise is the sole purchaser of petroleum, which it sells to nine distributors to the country.

But currently, Total and other distributors cannot supply market demand.

“We have finished 23,000lt within one and half days, which in a normal scenario would take three days,” said Dereje.

As might be expected, all forms of vehicular transportation are being affected.

Etalemahu Gebre, a purchaser at Alliance Transport, a private intercity transport company, says that previously Alliance filled its buses from any station at its convenience.

“But now we are mostly using NOC stations around Addisu Gebiya, which has sufficient supply,” she said.

Alliance manages 25 buses, each with 200lt tankers.

Fortune met her at Total gas station near Mexico Square.

“We don’t usually bring the buses to this particular station,” she added, as she waited for a company minibus to fill up at that station

As consumers frantically searched for stations during the fuel scarcity, the Ethiopian Petroleum Supply Enterprise’s (EPSE) explanation was that the shortage is artificial.

“We have distributed enough fuel to the market,” said Alemayehu Tsegaye, senior public relations officer at the Enterprise.

A review of the past six month performance of the current fiscal year shows that the Enterprise purchased 1.51 million tonnes of petroleum at a price of 710.3 million dollars. From this, the benzene purchase was 109,783tn, representing and increase by 35pc over the same period last fiscal year to 148,304.8tn.

Major local distributors account for the 89pc of the total fuel distribution in the country, while the remaining distributors, such as Kobil, Dalol Oil S.C., TAF oil S.C. and WadiAlsundus – a Sudanese Company, take the remaining 11pc.

These distributors independently transport their quota from either Sudan or Djibouti. The benzene is then mixed with 10pc ethanol before going to market.

For the past six years Ethiopia has been satisfying 75pc to 80pc of its oil demand, including all of its benzene, from Sudan. The rest comes from Kuwait and Saudi Arabia.

As of February 19, 2016, 30 trucks with 45,000lt capacity arrive daily from Sudan, a source from the Enterprise told Fortune. Other sources in the industry say that it is only 20 to 25 trucks that are coming.

YBP’s daily quota is 90,000lt, according to Mesfin Kassahun, marketing head.

YBP has seven stations in Addis Abeba, each with a 50,000lt carrying capacity for benzene. The quota is not enough the supply all its stations, and shortages are common at Kality station, where Mekbeb and Ashenafi stopped first, with the Volks.

Mesfin said that Kality and Modjo stations were being filled. While denying the shortage of supply, the Enterprise is allowing gas companies to have some from the strategic reserve located in Sululta, north of Addis Abeba, starting from February 19, 2016.

An industry source has disclosed that the shortage is related to reduced production in Sudan, which led to reduced supply at a major depot called Al-Jaili.

“I don’t have such information,” responded Alemayehu.

The source went further, saying the problem may persist for at least one more week.

That is not troubling Alemayehu, who said that the reserve is enough to meet demand for 60 days.

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