EPSE hopes to address fuel demand with new stations

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The Ethiopian Petroleum Supply Enterprise (EPSE) is going to build petrol stations throughout the country including in the capital Addis Ababa in the 2016/17 fiscal year.

The publicly owned sole petroleum supplier for oil companies plans to engage in the fuel dealing business in order to meet the demand in areas that have not been covered by private dealers and that need additional gas stations.
Tadesse Hailemariam, CEO of EPSE, told Capital that the enterprise is currently evaluating  potential locations for the petrol stations.
He said that the enterprise will not enter the market in the current fiscal year, focusing instead on selecting locations and facilitating land acquisition.
“In the current fiscal year, we will work on securing plots of land for selected petrol stations,” Tadesse explained.
Currently, the fuel retail industry is not growing in a manner consistent with the country’s development and the growing number of vehicles. In Addis Ababa, many old gas stations have either been shut down or have changed their business. Besides that most of the old stations have a limited capacity of carrying large amount of fuel in their containers.
Experts say that building a single service station can cost anywhere from 17 to 20 million birr, without including the cost of leasing land. Filling stations that cost up to 20 million birr are expected to offer a number of facilities such as carwash and tire repair services.
Tadesse said that the enterprise will construct stations in areas that have experienced market failure or lack basic gas stations.
“Newly developed areas in Addis Ababa need fuel stations, while current stations in the country are not fairly distributed. We will fill the gap,” the CEO said.
“There has not been a final decision on whether the land will be secured on lease or through negotiations,” he added.
The price of petroleum products is currently revised each month by Ministry of Trade based on international rates. According to experts, underestimated or overinflated price expectations have led to oil shortages, even though a stable international oil price has addressed market fluctuations in the past six months.
Experts said that at the end of the month, dealers often refrain from filling their tanks or selling their stock expecting a price change, creating fuel shortage.
The establishment of state owned stations will reportedly be crucial to tackle this challenge and informally regulate the private sector.
Today, the total number of filling stations in the country is not more than 660, having failed to grow significantly compared to figures from five years ago.
On average, oil demand is growing by 10 percent annually. In the current fiscal year, EPSE targets to import three million metric tons of refined petroleum.
The enterprise imported 2.8 metric tons in the 2014/15 fiscal year, at a total cost of 59 billion birr.