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Countdown to the 18 COMESA Summit
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The biggest annual event in the COMESA calendar is set to take place this month in Ethiopia when Heads of State and Governments of the 19 Member bloc of countries hold their 18th meeting. The COMESA Summit will convene on 30th and 31st March 2015 at the Africa Union Commission Headquarters in Addis Ababa.
The Summit which is also referred to as the Authority is the supreme policy organ of the COMESA and meets once a year. It is responsible for the general policy direction and control of the performance of the executive functions of the organization. During the Addis Summit, the Prime Minister of the Federal Republic of Ethiopia H.E. Hailemariam Desalegn will take over the reins of COMESA Chairmanship from the incumbent H.E. Joseph Kabila Kabange, President of the Democratic Republic of Congo. 
The theme for this year’s Summit is “Inclusive and sustainable industrialization”. This theme was chosen through consultations between the COMESA Secretariat and the incoming Chair of the Authority the Prime Minister of Ethiopia. The main thrust of the theme is to address industrialization in a holistic way. This is by focusing on all factors that influence and impact on industrialization such as infrastructure.
Preceding the Summit will be the Council of Ministers meeting. This forum is the second in the hierarchy of COMESA policy organs. Its mandate is to monitor COMESA activities, including supervision of the Secretariat. This forum also holds the mandate of recommending policy direction and development and its decisions are binding to all Member States.
The curtain raiser of the policy organs fora will be the 34th Meeting of the Administrative and Budgetary Committee which kicks off on 20 March 2015. This will be followed by the Intergovernmental Committee (IC), the COMESA Business Council (CBC) forum, the Council of Ministers, EPA Council of Ministers and the 14th Meeting of the Ministers of Foreign Affairs.
The Intergovernmental Committee will bring together Permanent or Principal Secretaries designated by each of the 19 Member States. It is responsible for the development of programmes and action plans in all fields of co-operation except in the finance and monetary sector. Owing to its heavy workload, this meeting will run for three days beginning from 22 to 24 March 2015.
The IC will review progress reports on Trade and Customs, Infrastructure (Airspace Integration; River Nile Projects; and Construction of the Border Markets), report on financing COMESA Programmes from COMESA Institutions and Co-operating Partners, Progress Report on the Implementation of the COMESA Micro Small and Medium Enterprises Strategy, Co-operation among Member States in the Manufacturing of Essential Drugs, Draft COMESA Industrial Policy, Draft COMESA Monitoring and Evaluation Policy Directive.
The COMESA Business Council which is the voice of the private sector in COMESA will host a two day open forum whose key theme is Combating Illicit Trade- Taking Action for Industrial Competitiveness. This meeting will be co-hosted with the Ethiopia National Chamber of Commerce.
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Using Alternative Ports Proving Beneficial to Nation:Businesspersons and Maritime Authority
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Addis Ababa Mar 05, 2015 –
Using alternative ports to enhance the growing import and export of Ethiopia will increase the economic benefits of the country, according to some importers and exporters.
Importers and exporters using the port of Djibouti claimed that they have been exposed to unnecessary costs and delay as 90 percent of the country’s import and export is transacted through this port only.
The government has therefore been working to speed up the country’s international trade by using alternative ports, according to the Ethiopian Maritime Authority.
Marathon Motors Chief Executive Officer, Melkamu Assefa, told ENA that using alternative ports would create speedy trade activities.
Deputy Manager of Oromia Coffee Exporter Farmers Cooperative Union, Desselegn Jena, stated on his part that there has been congestion at the Djibouti port during the 15 years the union exported coffee.
“Lack of alternative ports is still causing damage to our coffee and loss to our income”, he added.
Making merchants export goods in short period would increase the exchange of goods and services, the deputy manager said, adding that this would expand the country’s trade activities.
Director-General of Ethiopian Maritime Authority, Mekonnen Abera, said the government has been working hard to bring from five to ten percent of its import goods through Barbera Port.
Following the recent agreement signed between the two sides, Ethiopia will start using port of Barbera, he added.
Besides, Ethiopia has recently imported 50,000 tons of fertilizers through port of Sudan.
Although Ethiopia is at present using mainly the port of Djibouti, multifaceted activities have been underway to utilize other ports, according to Mekonnen.
Using alternative ports would benefit the country by saving time, cost and reducing transportation congestion.
At this time when the country is in particular working to build mega projects, using alternative ports will help to import inputs for the projects in time, it was indicated.
State Minister of Trade Ali Siraj indicated that the increase in export is part of the country’s double-digit growth.
“We are undertaking several development activities and since imports for these activities are rising annually, using alternative ports is necessary”, he stressed.
Ethiopia was not using Barbara Port previously due to instability in Somalia, the state minister said, adding that the country has started using the port as Al-Shabaab has been weakened.
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Enhancing agricultural growth key to reducing poverty
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Addis Ababa Mar 05, 2015 –
Ethiopia should further consolidate the agricultural growth to continue reducing poverty, economists said.
The economists ENA have interviewed said that the achievement gained in poverty reduction since 2000 is mainly originated from the consistent economic growth driven by agricultural growth.
According to the latest World Bank poverty assessment, poverty in Ethiopia fell from 44 percent in 2000 to 30 percent in 2011, which translated to a 33 percent reduction in the share of people living in poverty, underpinned by high and consistent economic growth.
Associate professor at the Civil Service University, Dr. Teshome Adugna told ENA that measures taken by the government towards reducing poverty has brought tangible result.
He suggested that it is important to open industries that produce value added agricultural products, since these kind of industries create more market for farmers and encourages the transformation to industrialization.
In addition from the agricultural growth, the huge public investment by the government on poverty reduction projects and provision of basic services contributed for the reduction, he said.
The allocation of 70 percent of the government’s budget for poverty reduction projects and the increase in life expectancy to 60 years from the previous 41 displays this fact, according to him.
Another economist, Mohamed Adem said that the government need to change the rain fed crop production system to a more modern one in a bid to enhance the development.
Further improving public investment on poverty reduction projects and basic services also need to be undertaken to enhance the growth thereby reduce poverty, he added.
Special priority should be given for people who are more vulnerable to poverty and help them to get away, he said.
According to State Minister of Finance, Dr Abreham Tekeste, the government has set target to pull more people out of poverty in the coming five years through the second growth and transformation plan.
Ensuring fair distribution of wealth, expanding provision and expansion of basic services, creating more jobs and enabling situation for giant industries to operate in the country are among the activities.
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Institute to conduct research on aflatoxins, toxin contaminates grains
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Addis Ababa March 05, 2015 –
The Ethiopian Institute of Agriculture Research announced that a research to identify the degree and extent of aflatoxins contamination, fungal toxin contaminates grains will be conducted in the coming five years.
Aflatoxins are highly toxic, cancer-causing fungal chemicals that suppress the immune system, retard growth, and cause liver disease and death in both humans and domestic animals. Aflatoxin exposure thus provides a challenge in efforts to improve people’s health, especially women and children.
Ethiopia doesn’t have a data showing the national aflatoxin contamination, apart from medium researches conducted by some universities on selected areas.
But these researched revealed that there is a risk from aflatoxin contamination, despite it needs detailed studies, Director-General of the Institute Dr. Fantahun Mengistu told ENA.
“It is difficult now to tell how many people died and suffered from aflatoxins contamination here in Ethiopia. A wide-ranging research is needed to know the exact status of aflatoxin contaminations and its impact” he said.
Cognizant with this fact, the Institute has set target to conduct a research to identify areas affected by the toxin and risk during the second growth and transformation plan period.
It is estimated that 25 percent of world food, including maize, peanuts and cassava, are affected by aflatoxin contamination. These crops constitute the staple foods for the majority of African countries.
More than 4.5 billion people in the developing world are exposed to aflatoxins. Children below five years remain most vulnerable, with exposure damaging their immunity and causing stunted growth.
Parallel to the research, adaptation of a biotechnology, used in Nigeria to control aflatoxin will be carried out in collaboration with the International Institute of Tropical Agriculture (IITA) working in Nigeria and Kenya to control the toxin, he added.
According to him, the bio-control technology adopted and being used in Nigeria will help to control the toxin in Ethiopia, since it addresses the aflatoxin before it contaminates the crop.
Controlling the toxins, will help the country improve productivity and increase amount of agricultural export, he said.
“The first option we are interested to apply is controlling aflatoxins with bio-control solutions. This will help to increase productivity.”
The bio-control solution widely used in the U.S reduces aflatoxins during both crop development and postharvest storage, and throughout the value chain.
By adopting this technology, a bio-control product called ‘aflasafe’ has been developed for use in Nigeria, in which the Institute is interested to adopt and use it in Ethiopia.
During the trial time, the technology produced positive results, including aflatoxin contamination of maize and groundnut was consistently reduced by 80-90 percent.
Many organizations working in the area, including IITA suggested that this technology is effective in the African context because it addresses the source of aflatoxin – the fungus in the soil – before it can contaminate the crop prior to harvest.
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In over-built potash sector, tiny segment commands premium
TORONTO, March 4
Excess production capacity over-hangs the price of potash, but its premium form may offer upside that investors have yet to cash in on.
Sulfate of potash (SOP) is a chloride-free fertilizer suited to sensitive crops such as fruits and nuts. Standard SOP traded over five years to mid-2013 in northwestern Europe for 20 percent more than granular muriate of potash (MOP), but that premium averaged 50 percent in 2014 as supplies became short and MOP prices fell, said Paul Burnside, manager of fertilizer analysis at consultancy CRU.
“Demand has proved to be very sticky and consumers have accepted that SOP prices aren’t going to fall,” Burnside said.
Global SOP production is 5 million tonnes annually, but demand may be 10-12 million, according to Potash Ridge Corp , a company developing a 645,000-ton Utah mine.
“You can take all the SOP projects on the drawing board and it won’t make a dent in that demand-supply deficit,” said Chief Executive Guy Bentinck during the Prospectors & Developers Association of Canada convention.
Norwegian nitrogen producer Yara International owns a 17 percent stake in IC Potash, which plans a $1 billion SOP mine in New Mexico.
“We see strong growth for SOP and an underlying weakness in supply,” said Yara’s Bernhard Mauritz Stormyr.
Yara and Allana Potash are also gearing up their own potential SOP production.
Major producers include Compass Minerals International , which produces SOP from salt water ponds in Utah and Belgium’s Tessenderlo Chemie NV, which combines sulfuric acid with MOP to make SOP.
New production could force out higher-cost supplies and, if the premium falls enough, expand demand as consumers switch to SOP from MOP, Burnside said.
Investors aren’t excited about SOP yet.
Shares of IC Potash and Potash Ridge have plunged 28 percent and 68 percent since mid-2014. Potash Ridge cut jobs and management salaries.
“Juniors have not received much attention from investors given general market apathy, particularly for those with capex in the billion-plus range,” said analyst Spencer Churchill of Paradigm Capital.
Compass is expanding production to match U.S. demand, but further volumes could dramatically change market dynamics, said Keith Espelien, senior vice-president of plant nutrition.
The biggest fertilizer company, Potash Corp, isn’t convinced about SOP.
“Right now the premium is there,” said Chief Executive Jochen Tilk in late January. “Will it be there down the road? We really don’t know.”
http://www.reuters.com/article/2015/03/04/mining-pdac-potash-idUSL1N0V12XN20150304
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Ethiopia: Allana seeks partner to produce premium potash
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Canada’s Allana Potash Corp said on Tuesday it will talk with Norwegian fertilizer producer Yara International and three other companies about sharing costs and output in its plan to produce premium fertilizer in Ethiopia.
A partnership would involve Allana’s plan to produce sulfate of potash (SOP), a niche, premium product that is in short supply, unlike the commodity muriate of potash (MOP).
We want to move pretty fast on this because we think there’s a huge latent potential there
Yara would be a logical partner since it is pursuing its own SOP project in Ethiopia and owns land that adjoins Allana’s.
Both projects would depend on the same road, port and power infrastructure to be built.
Allana released a positive pre-feasibility study on Monday for SOP production at its Danakhil site, where it also plans to build a $642-million mine to produce 1 million tonnes of MOP annually.
Chief Executive Farhad Abasov said the company will decide within weeks whether to structure its 1-million-tonne, $787-million SOP project as a joint venture, subsidiary, or spinoff.
It will then talk to Yara about combining projects, but is also speaking to two other fertilizer producers and an industrial company.
“There are a lot of synergies as you can imagine” with Yara, Abasov told Reuters at the Prospectors & Developers Association of Canada convention in Toronto.
“It probably makes sense to combine it and produce, say, 1 million tonnes for both companies.”
Yara released a study last month confirming potential for 600,000 tonnes of SOP annually at its site. It could not immediately be reached.
SOP is a chloride-free fertilizer useful for sensitive crops like fruits and nuts.
The company would sell its SOP to China, where SOP sells for more than double the MOP price, Abasov said.
“We want to move pretty fast on this because we think there’s a huge latent potential there.”
Allana aims to secure financing for MOP construction by mid-2015, and start building a mine by next year.
MOP production could start by 2018, with SOP output following a year later.
Allana signed a partnership for the MOP mine last year with Israel Chemicals Ltd.
Allana’s MOP mine would face competition from new capacity built by Potash Corp of Saskatchewan, Germany’s K+S AG and others.
Concerns about too much global MOP capacity make SOP a useful option, Abasov said.
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Histadrut, ICL negotiations fall apart
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Meanwhile ICL’s situation continues to deteriorate….
Talks between Israel Chemicals Ltd. and Histadrut labor federation, attempting to stave off a general strike in the South and a wave of planned layoffs, break down after one day.
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Negotiations between Israel Chemicals Ltd. and the Histadrut labor federation, attempting to stave off a general strike in the South and a wave of planned layoffs, broke down on Wednesday after just one day.
The Histadrut blamed ICL for refusing to backtrack on its plans to fire 140 workers from its Bromine Compounds plant in Ne’ot Hovav (formerly called Ramat Hovav), which the company says is unprofitable. The layoffs go into effect on Sunday.
For its part, the company management said it was not aware that talks were over until it heard about it in the media.
“The unions entered the negotiations as part of a game of deceptions, and they left it once the show was over,” the company said.
The decision, the company warned, is detrimental to all the company’s employees who are spending their days striking instead of getting paid.
ICL said it offered generous compensation or an early retirement package to those getting laid off, but warned that failure to reform the plants would lead to their closures, which would leave far more people without work.
The Histadrut once again turned to Prime Minister Benjamin Netanyahu, who is acting finance minister, to ask him to use the state’s “golden shares” in the company to strike the agreement. Israel holds shares with special voting rights, but the company argues they are not relevant for the issue at hand.
Last week, after staging massive protests and blocking traffic in several southern cities, the Histadrut declared a general labor dispute in the South. Legally, that will allow it to put the entire region on a general strike starting on Thursday, March 12.
http://www.jpost.com/Business/Histadrut-ICL-negotiations-fall-apart-392965
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PM resists pressure to intervene on Israel Chemicals
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Netanyahu will not take any action perceived as favoring Israel Corporation, regardless of the political price.
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This includes any oral promise that, if re-elected, he would consider the possibility of amending the Law for the Encouragement of Capital Investment. Ofer and Gilad believe that amendments to the law dating from Yuval Steinitz’s term as Minister of Finance are harming Israel Chemicals and its subsidiaries. Netanyahu also refused to express any willingness to discuss the possibility of revisions in the level of royalties deviating from the exact formula included in the arbitration ruling given two years ago, even if recommended by the Sheshinski 2 Committee, although these have not yet reached the Knesset. Nor will he, if elected, intervene or expedite the proceedings for extending the license date or granting a new franchise on better terms ahead of the expiration of the current franchise in 2030.
At the office of the Ministry of Finance Accountant General and the Budget Director, staff work has already begun on setting the terms for the franchise termination date, due to the company’s need to make long-term investments. Netanyahu, his confidants say, said this even though he is well aware of the enormous political price that the demonstrations in the south, which have also reached the central region, are liable to cause for the Likud.
Before his trip, Netanyahu charged Minister Silvan Shalom with coordinating efforts to bring about a solution and a lull in relations between Israel Chemicals management and the workers. Shalom held meetings with all the parties representatives of the Histadrut (General Federation of Labor in Israel) and the factory in the south all of whom he has known for many years, including Nir Gilad, appointed Accountant General by Avraham Shochat of the Labor Party, who was Minister of Finance in the government of Yitzhak Rabin. Gilad remained in his position after Shalom became Minister of Finance. As far as is known, Shalom repeated during his meeting with Gilad that no talks would take place beyond the matter itself, and that any matter that would have to be brought up for discussion concerning Israel Corporation would be dealt with at the proper time. According to Shalom’s officials, Gilad accepted the position of the minister, who had been asked to mediate between the workers and management, and indeed refrained from mentioning other matters.
The efforts by Shalom, who formulated five principles accepted by the parties as a basis for meeting, did lead to the beginning of renewed negotiations between the parties, but yesterday these talks also fell apart. Nevertheless, Netanyahu, in his role as minister of finance, was a party to the matter, and led the discussions that were followed at the beginning of last week by a letter sent by Ministry of Finance legal advisor Yoel Briss to Israel Chemicals CEO Stefan Borgas. The letter contained legal wording asking for information “for the purpose of considering the use of the state’s rights in Israel Chemicals conferred by the state’s special share in the company.”
This is a way to pressure the company by threatening to use the state’s golden share in Israel Chemicals, according to which the company cannot independently make decisions to close production lines or detract from the production of chemicals from the Dead Sea. There is an internal dispute on this in the Ministry of Finance. Accountant General Michal Abadi-Boiangiu, Deputy Attorney General Avi Licht, and Briss support the use of the golden share to prevent Israel Chemicals management from closing production lines, a possibility resulting from layoffs at the Bromine Compounds subsidiary. Government Companies Authority director Ori Yogev and apparently also budget director Amir Levy oppose this option, while director general Yael Andorn, who led the Ministry of Finance’s opposition to Israel Corporation’s demand for cancelation of the golden share in Zim Integrated Shipping Services Ltd., including an appeal to the Supreme Court against the ruling by the Haifa Labor Tribunal, which accepted a significant proportion of the demand by Israel Chemicals and some of its workers to cancel the golden share, is undecided.
The main problem with carrying out the threat to use the golden share is that the company, according to its official statement, does not plan to close any production lines or detract from the production of products from the Dead Sea. It is aiming at introducing streamlining involving employees enjoying high salaries, who will be retired with good terms. The company is also maintaining the independence of its personnel decisions, particularly in view of the fact that it has already “paid” heavily for those decisions in previous negotiations with the workers and the Histadrut.
It is known that pressure is being exerted on Netanyahu simultaneously by senior people in Likud, party officials, local council heads in the south identified with Likud, and company workers, who are warning that if the government does not act quickly to intervene and end the crisis to the workers’ benefit, it could have a very bad effect on voting for Likud in the south and among workers all over Israel. “You’re burning the south,” they threaten Netanyahu, “and the south will burn Likud.” At the same time, Histadrut officials, headed by chairman Avi Nissenkorn, although they say they have no political motives, are busy trying to weaken Netanyahu in the elections and strengthen Isaac Herzog’s Zionist Union party.
http://www.globes.co.il/en/article-pm-resists-pressure-to-intervene-on-israel-chemicals-1001016286
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Ethiopia to build oil, gas pipeline
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Ethiopian Ministry of Mines announced that the country is preparing to build an oil and gas pipeline to export its natural gas produce abroad.
Various studies have confirmed that there are about 4 trillion cubic meters of natural gas deposit in the Kalub and Hilala areas of Somali region.
Ethiopia and Djibouti had signed a memorandum of understanding for the pipeline building project.
According to ENA, a company is also engaged in a study to build a pipeline for transporting oil import from Djibouti port into the country. This pipeline is hoped to reduce the country’s expenditure in oil import via vehicles.
Djiboutian ambassador in Ethiopia told ENA that the newly built port at Tajura will be instrumental for Ethiopia’s other exports.
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Chinese Company to Build Textile, Garment Factory with Over 15 Million USD
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Addis Ababa March 04, 2015 – Shaoxing Mina Textile Company said it would build a textile and garment factory in Sebeta, Oromia Regional State, with an outlay of over 15 million USD.
Company CEO, Wei Chang Jun said a dying and printing factory that has been under expansion on five hectares of land will also be completed within months as 95 percent of the equipment have already been imported from Italy and South Korea.
This was disclosed after President Mulatu Teshome held talks today with CEO Wei Chang Jun here in Addis Ababa.
The president said on the occasion Ethiopia has been giving prime attention to supporting investors that engage in the manufacturing sector.
The country has favorable investment atmosphere, cheap labor, market and geographical location, he added.
President Mulatu noted that the Sebeta railway and the expressway planned to connect the town with the capital city will further enhance investment.
The textile and garment factory plans to export its products to Europe, USA, Thailand, Turkey and other African countries, it was learned.
Upon going fully operational, the textile and garment factory would create 5,000 jobs.
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Newly Established Research Center to Assist Gov’t Development Goals
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The center, which is to work under EDRI, will have a wide focus area and will collaborate with a number of stakeholders working on implementing Ethiopia’s Climate Resilient Green Economy strategy.
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Newai Gebreab, executive director of EDRI and economic advisor for Prime Minister
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An Environment and Climate Research Center (ECRC) to engage in undertaking policy oriented research inside the Ethiopian Development Research Institute (EDRI) as an input for policy makers, was officially launched last Monday February 23, 2015.
The center was established in partnership between the EDRI, Environment for Development Initiative (EfD) and Global Green Growth Institute (GGGI). It will be built upon EDRI’s long-running collaboration with EfD in Environmental Economics research.
The establishment of the center was initiated more than a year ago within EDRI with the main aim of helping attain the target of the government of reaching middle income country status by 2025 in a green and climate resilient way by providing research based findings, according to Haileselassie Medhin, (PhD) coordinator of establishment process of the center and researcher at EDRI.
ECRC’s core functions include undertaking policy-oriented research on the economics of climate and environment in Ethiopia, conducting real-time impact evaluation of the Climate Resilient Green Economy (CRGE) strategy’s implementation process, and serving as an interaction hub for research and policy, according to the statement from the center.
It is overseen by a steering committee (SC), which has three members including Newai Gebreab, executive director of EDRI and economic advisor to Prime Minister Hailmariam Dessalegne in the rank of minister, Gunnar Kohlin (PhD) director of EfD and Myung Kyoon Lee (Prof) director of Knowledge Services Department at GGGI.
The center will also have a National Advisory Committee (NAC) with representatives from government offices and non-government stakeholders involved in the design and implementation
of the CRGE strategy including ministries, government agencies, universities and research institutions, civil society and the private sector.
The Centre expects to involve more than 40 fulltime and par time researchers in the planning and implementation of its programs, most of them are PhD holders and trained in different international academic institutions, according to Haileselassie.
The CRGE strategy was initiated in 2011 with the ambition of making the country, which has a low carbon emission, a middle income economy by 2025. And has been driven by seven sectoral teams involving 50 experts from 20 leading government institutions under the leadership of the Prime Minister’s Office, including the Environmental Protection Authority, and the EDRI.
“The center will finalize the plan which will lead to implementation by July, 2015 and will be fully operational by the beginning of the 2016,” Haileselassie told Fortune. “The center by itself will source its budget from different institutions by proposals of the researchers,’’ he added.
The Norwegian government, through the GGGI, will contribute 500,000 dollars for the planning phase, according to Melaku Gebreeyesus, Advisor of GGGI in Ethiopia. EfD will also make a significant core support to the center, and also continue its support to specific research projects, according to Haileselassie.
Research focus areas of the center include sustainable environment, sustainable agriculture, forestry, industrial and climate policy, urbanization, water and energy. The center will work with the Ministry of Environment and Forestry, Ministry of Irrigation, Water and Energy, Ministry of Industry and local and international universities.
The combination of EfD’s academic excellence and a rich network of local and international scholars, GGGI experience in global policy process, and EDRI’s critical mass of highly qualified researchers and central place in Ethiopia economic policy research will be instrumental for the center to achieve its objectives according to Haileselassie.
The ECRC functions will be delivered as four main programs: Policy Research and Impact Evaluation program, Policy Interaction and Communication program, Data Management and Knowledge Repository program and Capacity Building program; each overlooked by the director of the center.
As of last Wednesday February 25, 2015 Haileselassie, who played a critical role in the establishment of the center, was assigned as a director of the ECRC.
EfD currently has research centers hosted by academic and research institutions in nine countries including Ethiopia. It has been working with the EDRI for the past 10 years since the institute was
established while GGGI has been supporting the Government of Ethiopia in both the Green Economy and Climate Resilient components of the CRGE strategy.
http://addisfortune.net/articles/newly-established-research-center-to-assist-govt-development-goals/
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Petroleum Price Fall Confuses Demand, Supply for Ethiopia’s Transporters
Ethiopia sees 12% 12% increase of supply of fuel annually.
Asrat Dergu, a minibus driver for the past 12 years, always travels from Adama (Nazareth) to Kality terminal in Addis Abeba three times in day, transporting commuters in his 15-seat vehicle specifically named High Roof.
He has been driving this minibus for the past three years; as the owner of the vehicle is his close friend. But in the past two months, the schedule of his daily trips was reduced to two, following the fuel shortage in the towns located on his way from Adama to Kality.
He fills his vehicle twice a day, totaling 40lts but now he is facing a problem of refueling at Modjo, Bishoftu (Debre Ziet), Dukem, Akaki, and Kality.
“I spend one or two hours a day in the long queues at the gas stations, so I always miss my turn,” he explains.
Following the global price decline, gas prices were adjusted twice in Ethiopia since December 2014, which saw most of the gas stations getting closed for fear that the price would decline even more, causing them to lose money on gas already purchased before the price decline. This has become a challenge for drivers across the country such as Asrat.
The Ethiopian Petroleum Supply Enterprise (EPSE) buys fuel from international suppliers such as the Sudanese Sudan Petroleum Corporation, Saudi Arabia and KPG from Kuwait. It sells to the nine distributors in the country. The Enterprise supplies fuel based on the assessment of demand of the country and maintains and administers the national petroleum reserve. In 2012, EPSE succeeded its predecessor, Ethiopian Petroleum Enterprise, with a paid-up capital of 500 million dollars in kind and cash. The National Petroleum Reserve Depots Administration also preceded the EPSE.
The nine distributors who receive fuel from the enterprise are Oil Libya, Total, National Oil Ethiopia (NOC), Yetebaberut Beherawi Petroleum (YBP), Kobil, Dalol Oil S.C., TAF Oil S.C, Nile Petroleum, and Wadi Alsundus. The last two are Sudanese Companies. A tenth company, licensed by the ministry of trade (MoT) is soon to join.
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 and 1.7 million tonnes of diesel,worth 32 billion Br.
From the nine distributors, four are major distributors in the country including NOC, Oil Libya, Total and YBP, accounting for 90.4pc fuel distribution of the country. They distributed 190,836tns of benzene and 1.36 million tonnes of diesel in the 2013/14 fiscal year. But the frequent shortage at gas stations mean that people like Asrat may lose revenues of up to 800 Br a day, by his own estimation.
The recent notable decline in the international oil price is considerably affecting the transporters and businesses in Ethiopia. The price of oil was 76 dollars in 2008. This year, the average price of oil drawn in June, 2014, at 111.8 dollars per barrel, declined to 97 dollars in September, 2014. Now the international price of oil stands at 56.85 dollars.
The Ethiopian government makes price adjustments of gas every month. The government has made five price adjustments on fuel prices in 2014. In September 2014, the price of benzene was 20.47 Br per litre. This price reached its peak of the four at 20.99 Br per litre in May 2014. Then, when the global market showed a decrease, the price went down to 19.95 Br per litre, as adjusted in November 2014 to 19.41 Br per litre. As of the December adjustment, it currently stands at 17.43 Br.
The current price adjustment has regulated the price of diesel, to be sold at 16.10 Br per litre from 17.49 Br. Similarly, benzene is arranged to be sold at 17.43 Br, down from 19.41 Br, while kerosene has gone down to 14.13 Br, from 15.40 Br. The price for a litre of each kind of gas by the beginning of September 2015 had been 19 Br for diesel, 20.99 for benzene, and 16 Br for kerosene.
“Last week, I had been searching for fuel in the towns between Addis Abeba and Ambo and Hawassa and Butajira. But I could not find any in the Total, NOC, or YBP stations that I went to. It worries me that I could run out of fuel before reaching Addis Abeba,” said Solomon Mulatu, a distribution minibus driver for a food company selling traditional Ethiopian food items and spices.
“After passing a couple of towns, I managed to get diesel at Butajira, where I had to pay 18 Br even though the actual price is 16.10 Br,” claims Solomon.
Ali Siraj, state minister of Trade attributes the problem to the miss-match of demand and supply of fuel in the country.
There is a problem of fuel in the country following three main reasons said Ali, one is the increase of economic flow of the country, the expansion of the transport sector and the increasing demand of fuel by the mega projects.
The demand of fuel is increasing at a 12pc rate annually and we are increasing the supply in line with the growth of the demand, stated Ali.
During the first six months of the current fiscal year, the nine distributors distributed 1.3 million tonnes of fuel with a total cost of 25.9 million Br, where the largest market share went to NOC with 33pc, Total followed with 23.1pc market share and Oil Libya came in third with 22pc while Nile was last with a 0.84pc market share. Between January 9, 2015, and February 8, 2015, 252,198tns of fuel was distributed,where the last six months average supply was 221,000tns.
“We are confused as to where the fuel is going as the distribution is increasing,” said Alemayehu Tsegaye, public relation officer at the EPSE. “We are in the process of forming a committee to asses where the fuel went after we received continuous claims from many people, especially from the regional towns.”
“The current problem is mainly caused by the increased demand of fuel by the mega projects in the dry season because most of the projects become operational after the end of rainy season,” said Ali.
Last year, the government spent three billion dollars on petroleum import, according to Ali, nearly all of the 3.2 billion dollars collected from exports. That has not abated the worries of the drivers.
“I spend an hour and a half daily at the fuel stations to get benzene, which led me to losing at least 100 Br in daily income,” said Tariku Bezabeh, a taxi driver from Dire Dawa.
Ali attributes this to limitations in distribution, the number of fuel stations as well as the limited number of distributers.
The problem in Ambo is related to the existence of one fuel station only as the others are closed following the disagreement between the suppliers and the dealers, according to Ali. In Adama, the problem is mainly occurring because there are a limited number of fuel stations in the town as it is the Ethiopia Djibouti corridor, said Ali.
The number of vehicles in the country has increased from 132,000 to 520,000 within the past 10 years, which cannot be accommodated by the existing nine distributers and 654 filling stations, he claims.
In neighboring countries, the profit margin of fuel is no less than one Birr while in the Ethiopia’s case, it is five to nine cents, which is the main reason for the private investors not joining the sector, said an official from one of the nine distributers.
Furthermore, the existing companies such as YBP, one of the major fuel suppliers operating with 100 dealers across the country, are facing a problem of limited vehicles to transport the fuel to regions.
“We have a problem of vehicles to transport the fuel to the regions of the country,” claims Tesfaye Mekonnen, CEO of YBP.
As a sustainable solution, the government is licensing 140 additional fuel stations and two distributers, which will be fully functional during the current fiscal year, stated Ali. In addition, the government is also working on the establishment of suppliers by the private sector with foreign innovators with a joint venture.
“There is a major problem of planning and coordination in the import and distribution of fuel,” said another official from one of the distributers who preferred to stay anonymous. “It is known that the mega projects need more fuel at this time and it is obvious to the importing Enterprise and distributers.”
As a solution, the government is planning to increase the consumption of fuel mixed with ethanol to 20pc from 10pc. In addition, the finalization of the Djibouti to Ethiopia fuel pipeline will be a sustainable solution for the fuel problem we are facing and may solve the problems faced by the likes of Asrat and Solomon.
http://addisfortune.net/articles/petroleum-price-fall-confuses-demand-supply-for-ethiopias-transporters/
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Adama Hotelier Joins the Petroleum Distribution Business
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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.
http://addisfortune.net/articles/adama-hotelier-joins-the-petroleum-distribution-business/
Filed under: Ag Related, Economy, Infrastructure Developments, News Round-up Tagged: Agriculture, Allana Potash, Business, East Africa, Economic growth, Ethiopia, Fertilizer, ICL, Investment, Millennium Development Goals, Potash, SOP, Sub-Saharan Africa, tag1, Yara International
