Capital Ethiopia Newspaper

Ministry willing to revise oil retail profit margins

Motuma Mekasa

At a forum held in Addis Ababa sponsored by the African Refinery Association (ARA) the small profit margin for dealers was addressed as a problem that needs to be solved for the sector to move forward.

During his presentation Tadesse Tilahun, CEO of National Oil Ethiopia (NOC), said that the profit margin for dealers is very low compared to other African nations.

He said that low profit margin have affected the oil market. Experts said that oil dealing and retailing is not growing as much as the rest of the economy. Oil imports grew 10 percent in the last few years.  The CEO explained oil consumption has grown significantly. “For instance in terms of volume the country’s consumption  grew to 3.6 million cubic meters from one million cubic meters in 2010,” he added.

Motuma Mekasa, the recently appointed Minister of Mines, Petroleum and Natural Gas, said that the government is looking at the experience of other countries.

He agrees that profit margins should be raised as long as oil remains affordable to the public.

Motuma said that his ministry is conducting a study to see possibilities in terms of improving profit margins for companies.

Tadesse told Capital that the Ethiopian oil distributers have conducted a study about profit margins.

He said that the distributers have submitted tariff recommendations to the Ministry of Trade. “I hope they will make some changes,” he expressed.

“The network of oil stations is looking at the profit margin of the sector,” the oil distributers said as they recommended that the oil network needs to expand.

The number of stations in Ethiopia is less than 800 and that is a small number compared with similar economies. During his presentation Tadesse indicated the number of oil stations in Kenya  is almost double compared with Ethiopia.

He said that the profit margin issue is directly related to investment in the oil sector, which is the fuel for the country’s economic growth.

NOC was established about 12 years ago it is leading the oil market by 35 percent share and followed by Total, OiLibiya which have 23 and 22 percent market shares respectively.