Yetebaberut Beherawi Petroleum S.C (YBP), the first local petrol station operator,
announced that it has made a net profit of 18.7 million birr in the last Ethiopian fiscal year. At the 7th annual meeting of the share company held at the Hilton hotel on Monday, January 2, Tsega Asamere Board Chairman of the company said that YBP made a 27. 6 million birr pre-tax profit which is 40.1 percent higher compared to the previous year profit before tax of 19.7 million birr.
“We are happy to announce that our net profit is 13 percent above our target. We collected revenue of 3.342 billion birr from the sale of 253.6 million liters fuel. We also collected 60.5 million birr supplying 34,000 liters of oil to the market. This has shown a 1.06 billion birr or 45 percent increase compared with the previous year,” Tsega said while presenting his report to the share holders.
The share company’s profit is also 74 percent higher than its target. YBP announced that it has constructed 75 fuel stations in this fiscal year, which is below its target by four stations as the company faced problems to get land for the stations. “Our study showed that the land we leased around Wolete in the outskirts of Addis Ababa can’t be used for fuel station. However, we found it difficult to get another land that will replace it,” Tsega reported.
YBP is the first company organized by Ethiopians to penetrate the oil sector. “At the start we were told that a company of this kind owned by Ethiopians would not be as competitive as the others. We disproved this,” Desalegn Alemayehu, Managing Director and Board member of YBP told Capital.
The fuel price is going up on the international and local market. But companies engaged in this field regularly complain that the profit margin is extremely minimal. Desalegn responded that compared to the huge investment level, the return is not that attractive. “We requested the government to reconsider the profit margin. We hoped that it would be reviewed at the start of this Ethiopian year. Accordingly we drew to have a better profit at the start of 2004, EC. But that doesn’t work because, so far, there is no consideration on the government side,” he added.
Despite this complaint the company has made significant profit since its formation seven years ago. During its first year of operation YBP pocketed only 273,000 birr profit.
The Managing Director explained that the company was able to gain this profit because of several factors. “One is, though minimal, the difference between the purchase and sale. The second is efficiency and third minimizing our expenses. With the combination of these we maximized our profit,” he said.
“With 3 billion birr transaction, engaging in this kind of business for a low profit margin is risky. These days to construct a fuel station one needs to invest 5 to 6 million birr. It is hard to invest such huge sum of money for a minimal margin of profit. It takes 15 or more years to get back the money invested. This is very discouraging,” he complained.
Still Yetebaberut also plans to construct an aviation fuel depot. Desalegn said that the aviation investment is high. “It is in our strategic plan. We have the feasibility study. It may cost the company between 80 and 90 million birr.”