Addis Fortune (Addis Ababa)
Issayas Mekuria
11 February 2008
The persistent profit margin review request of the five oil distributing companies has finally been terminated by the Ministry of Trade and Industry (MoTI).
"The government does not currently believe that there is a need to review profit margins," read a reply issued by Ahmed Tusa, state minister of MoTI, dated February 8.
The companies' latest request was tabled before the Ministry on January 14, 2008, at a time they were instructed to distribute ethanol blended benzene to the market.
The government instructed Shell Ethiopia, National Oil Company, Total Ethiopia, Kobil Ethiopia and Yetebaberut Beherawi Petroleum (YBP) to enter into a contractual agreement with Nile Petroleum Ltd, which blends ethanol with benzene at its depots located in Sululta, 25Km north of the capital in the Oromia Regional State.
Agreeing to the instruction of the Ministry, the companies also forwarded what seems to be a precondition for signing the agreement with Nile Petroleum.
"We, the marketing oil companies, in order for us to invest in the upgrading of our facilities and get ready for the ethanol operations without delays, have to secure the approval of our respective shareholders, which in turn are expecting an increase in the margins," reads the letter addressed to Ahmed.
The government sets profit margins and commissions of transporters for the politically and economically sensitive fuel product commodities. The margin the oil companies currently collect from benzene (0.0595 Br/litre), diesel (0.0583 Br/litre) and kerosene (0.0513 Br/litre) according to them does not even cover running costs. Despite their recurrent attempts to solicit the government, the Ministry smashed their requests saying no.
In a letter they wrote to Ahmed two weeks ago, the five oil companies had stated that they have collectively lost 5.4 million Br.
"It will be based on your audit report that the impact of this blending will be seen on your respective company's financial performance," reads the reply.
The general manager of one of the company's however, is sceptical that the government has not found the intention behind the letter.
"There is therefore a consensus to meet government officials in person," he told Fortune. "We are going to request the State Minister talk to us."
The request is being signed by Tadesse Tilahun, general manager of NOC; Bernard Lacaze, managing director of Total Ethiopia; Yoaz Zilber, general manager of Kobil Ethiopia; Jean Pierre Vyns, general manager of Shell Ethiopia; and Desalegn Alemayehu, general manager of YBP. These executives also tabled the previous request.
Current Profit Margins (Br/lt)
Benzene: 0.0595
Diesel: 0.0583
Kerosene: 0.0513
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