The Ethiopian petroleum and petroleum products distribution and marketing sector, which was dominated by four foreign companies for over 50 years before it was opened for local companies only a decade ago, is braced to welcome three more local companies – Marathon Petroleum, Tebarek Petroleum and Allway Petroleum – tilting the balance in favor of domestic oil retailers.
According to sources close to The Reporter, the three companies are in the process of completing the formalities that is required to operate a petroleum and petroleum products distribution marketing company in Ethiopia. The Ministry of Trade requires the oil company to construct a 500,000 liter depot and have a minimum of six filling stations before issuing the license to operate as an oil retailer in Ethiopia.
“We have finalized everything and we are waiting for some of our machineries to be installed,” Sisay Woldeyes, owner of of Allway Petroleum, which has been established with an initial paid up capital of 50 million birr, told The Reporter.
The new entrants will increase the number of oil retail companies to 12 further increasing the number of local retailers to seven shifting the balance towards domestic retailers. The total number of oil retailers at the moment own and operate some 3000 fuel stations across the country out which 60 percent of market share is still claimed by the foreign oil retailers.
The Ethiopian oil retail business has long been dominated by few foreign firms namely Total, Shell, Mobil and Agip. Total SA is a French multinational integrated oil and gas company which is considered to be one of the few major international gas companies in the world. Shell Oil on the other hand is a US-based subsidiary of the Royal Dutch Shell, another oil major of an Anglo-Dutch origin which is among early entrants to the Ethiopian oil retail market.
Agip, Azienda Generale Italiana Petroli or General Italian Oil Company is the former automotive gasoline, diesel, LPG, lubricant, fuel oil and bitumen retailer founded in 1926, and Mobil as well is another dominant figure in the Ethiopian oil retail business. What is known as ExxonMobil after its merger with another US oil company, Exxon in 1999 dominated the business for quite some time.
The four companies enjoyed a relative monopoly in the Ethiopian market for over 50 years before the ministerial cabinet enacted a regulation to allow local companies to take a piece of the oil retail business in 2004. After the regulation was passed, National Oil Company (NOC) PLC and Yetebaberut Beherawi Petroleum SC (YBP) became the first oil retailers to step up to the plate and join the retail business. Both established with an initial capital of 100 million and 21 million birr respectively, the two chartered the way for other petroleum retailers to surface in local market.
However, NOC and Yetebaberut were not the only ones. Other local oil retailers such as Dalol Oil SC and TAF Oil joined the retail business to diversify oil retail industry in Ethiopia. This was followed by the withdrawal of the three long established oil retailers in Ethiopia with the exception of Total.
However, foreign retailers like OiLibya, buying fuel stations that belonged to Shell, Kobil, which also took over the rights of Mobil, and Nile Petroleum Ethiopia and later on WAS have entered the Ethiopian market to bring the total number of the oil retailers in Ethiopia up to nine.
So far, only OiLibya and Nile have been accredited to blend Ethanol with Benzene for the national strategic ethanol blending program producing E-5 and E-10 fuel products for the local market at their facilities located in the outskirt of the city (Suluta, Winchiti and Akaki). In fact, Nile petroleum was the first one to start E-5 blending project and was later joined by OiLibya and Total has been contemplating to join the business.
[TheReporterEthiopia]