Wednesday, January 18, 2023
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BusinessMinistry green lights fuel transporters 42% profit margin adjustment

Ministry green lights fuel transporters 42% profit margin adjustment

It will cost the gov’t 300 million birr in additional budget a month

Effective early May 2022, the Ministry of Transport and Logistics has agreed to raise fuel transporters’ profit margin by 42 percent (32,000 birr).

Transporting fuel from Djibouti to Addis Ababa sets truckers back 100,000 birr per trip. The cost breakdown includes outlays for spare parts, drivers’ wages as well as port fees.

Hitherto fixed by the government at 75,000 birr, truckers used to incur losses to the tune of 25,000 birr a trip. The loss went up to 50,000 birr for trips between Djibouti and Bahir Dar.

Three weeks ago, the Ethiopian Bulk Fuel Transport Owners Association issued an ultimatum for the Ministry to address the problem within 10 days. Failing that, it called on its members to strike. Soon after, the authorities thrashed out issues with union reps, culminating in reaching an amicable deal.

The ministry agreed to increase the profit margin from 75,000 birr to 110,000 birr per trip. Though the association asked for a raise of 60 percent, the government would not budge beyond 42 percent. Truckers would be earning 110,000 birr for hauling fuel between Addis Ababa and Djibouti.

“With the authorities finally cognizant of the situation, we have reached an agreement. Though the increment is still not sufficient, it is better than no raise at all. We can now manage to cover our expenses, though we cannot make much in the way of profit. The government has also agreed to regularly review the margin, according to Tsega Asamere, chairperson of the Association.

“Vehicle wear and tear is such that a truck needs to be replaced every five years. Yet, our trucks have been in service for well over a decade now. Meanwhile, the price of a new truck has soared to 12 million birr on average over the last five years,” he added.

As the raise does not take into account the prevailing fuel tariff, the government will allocate a new budget for the allowance made for truckers. Owing to the raise, the government would incur close to 300 million birr in additional cost, given that there are 3,000 trucks in the country making three trips per month on average.

“The revenue increment is not for us, but for the economy. If all of us leave the business, there will be no fuel transporter. We want the authorities not to misconstrue our motives for we do have the welfare of the economy in mind,” opined a truck owner and member of the board of the association, adding, “It’s encouraging to hear that the Council of Ministers has decided that fuel truckers’ revenue be revised at least every year. 

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