Olivier Chalvon-Demersay, is Executive Vice-President for the Mediterranean and Middle East including Ethiopia and Djibouti, for Total Marketing & Services, meaning for the downstream activities of the Group. He is also the Chairman of Total Ethiopia and came from Paris to Addis Ababa especially for the World Safety Day on April 28th.
Capital: Total became a key player of the downstream oil sector in Africa. How do you explain that?
Olivier Chalvon-Demersay: As Total we have a very long presence in Africa and in Ethiopia. We have been in Ethiopia for over 60 years and we have been in other African countries as long as 80 years. We consider it as a big asset for Total to be present in Africa and we will continue to invest and increase our presence. Very recently we acquired Shell and Caltex distribution activities in Egypt and we now have 15 percent market share in retail in this country which is the biggest downstream oil market in Africa. We are also expanding in Jordan and we have strong positions all over the continent including East, West and South Africa.
If you consider the full map of Africa Total is nearly in all the countries. We share the idea that as this African market will continue to increase and to offer great perspectives of development for all companies like Total who are constantly investing. We have a 15 percent market share in Africa, which indicates the strength of our presence.
Especially in Ethiopia we have a 27 percent market share and we definitely want to increase and pour presence here by investing more.
Capital: When all other major oil companies like Mobile and Shell decided to leave Ethiopia, Total continued to invest. Why?
Olivier Chalvon-Demersay: As mentioned above, we consider it as a big asset for Total to be present in Africa. So today we continued to invest in the continent. And of course one of the key countries in Africa is Ethiopia. Total is a key player in Ethiopia in retail stations, serving key governmental projects and customers like Ethiopian Airlines. It is the main player in lubricants and the only oil company with a fuel card (Abyssinia card). Total Ethiopia is also promoting new energies and distributing solar lamps in its retail network.
We have more than 180 stations all over Ethiopia and we will build 4 to five stations this year. We are also investing in a fuel depot in Dukem at a cost of 10 million Euros (270M ETB) with a capacity close to 10,000 cubic meters, including an ethanol blending facility. This depot will be operational by the end 2014 and will help us in the distribution of fuel to Addis Ababa. We also have 3 aviation depots (Addis Ababa, Bahir Dar and Mekele and a projected one in Lalibela) and one fuel depot in Akaki.
The Dukem depot is also located near the new Ethio-Djibouti railway. So we hope that in the future we will have the possibility to bring the fuel partially by train from Djibouti which will help to secure the supply of central Ethiopia on a safe way.
Total is investing in Ethiopia for the long term. To support this strategy we have eight Ethiopian executives working outside of Ethiopia in Total’s affiliates and at the Group Head Office in Paris, on top of the 150 local employees that we train and develop to accompany our growth. Total Ethiopia is also a responsible citizen company supporting government initiatives on Malaria and fight against HIV.
Capital: Recently the Ethiopian parliament voted a new petroleum bill. Do you think it is addressing the challenges of the oil downstream industry?
Olivier Chalvon-Demersay: We receive the Proclamation as a very positive sign coming from the government because it addresses some of the issues of the sector. The government sets sector players to have a minimum amount of storage capacity, to declare any fuel product spill and more generally is aiming to better standards for the industry which we fully support. We also believe that other aspects related to the market, not included in the proclamation, should be considered such as for example the fuel margin of oil companies and retailers which remains very low compared with other countries. There is a need to give incentives to all the stakeholders of the distribution of petroleum products to invest more to accompany the growth of the economy.
The Ethiopian petroleum market is growing by 8% per year and in about eight years from now the consumption is to double. This means as an industry we have to invest in a lot of facilities (inland depots and retail stations) to cope-up with the demand but those investments have to be profitable enough. In order to do so we need the fuel margin to be adjusted.
Capital: What do you say about the new law on transportation?
Olivier Chalvon-Demersay: This is good news for Ethiopia and for all the industries relying on road transport. It will contribute to the professionalization of the sector. We also have to look at the lack of trucks for fuels. This needs to be looked at carefully as today the number of fuel trucks is not sufficient to accompany smoothly the growth of the market.
Capital: You came to Ethiopia for the World Safety Day. Why is safety so important?
Olivier Chalvon-Demersay: We are present in more than 150 countries. And on the World Safety Day top managers visit different affiliates in order to share with the local staff the events they do organize on this occasion and also to demonstrate the strong commitment of the top management of the Group towards safety. In Ethiopia the safety issue is extremely sensitive as the fuel is transported by trucks from Djibouti which does take a while. It is not an easy road. So we have to minimize the risks on this long road trip.
We also have a very good partnership with the transporters. Our transporters are inspected every year to assess their level as far as road safety is concerned. And we managed to dramatically decrease accidents in this area.
Capital: Ethiopia is a challenging country for road safety with many accidents and fatalities every year. How do you think this could improve?
Olivier Chalvon-Demersay: It is very challenging to drive anywhere in the world. Ethiopia is no exception. So we have a very comprehensive policy to improve road safety which includes driver’s theoretical training and practical coaching, check of the physical conditions of the trucks and reduction of the age of the fleet, and trip management. We have installed On Board Computer (OBC) on each and every truck that we use to control the speed and route of the truck. Before leaving the facility the truck will be inspected thoroughly and the driver will be assisted with routes where he should be extremely careful or where he should never stop for example. Using this we have been able to tremendously reduce accidents on the road and we will continue doing this.
We have 11 transporters with whom we work and these companies help us a lot to improve the safety of the trucks and the drivers.
When we also look at some statistics we noticed that most accidents happen because of driving behavior and not mechanical failure. That’s the reason why we implemented several tools to avoid these kinds of accidents. One of them consists in training the drivers to improve their personal behaviors through coaching made by former drivers. We also meet every week with groups of drivers to discuss road safety tips and this is having good results. For all our initiatives on road transport safety we work closely and receive excellent support from the Road Transport Authority and other governmental institutions. We believe that in order to continue to improve in road safety we need to work with all the other stakeholders and to give priority to some key areas such as safety on the corridor Djibouti-Addis Ababa.