Tuesday, May 28, 2024
BusinessEthiopian Shipping to swap two fuel vessels with one big cargo ship

Ethiopian Shipping to swap two fuel vessels with one big cargo ship

The Ethiopian Shipping and Logistics Service Enterprise (ESLSE) plans to replace its two fuel-carrying vessels with a larger cargo vessel that has over 65,000 tons of carrying capacity.

From the total number of 11 vessels the Enterprise own, two carry fuel. However, it has been leasing out the fuel carrying vessels.

The two fuel carrying vessels were procured with the intention to transport petroleum products to Ethiopia without proper studies, so the Enterprise had to lease them out, Roba Megersa, CEO of the Enterprise disclosed.

“We will see a giant vessel in the history of Ethiopia docking at Djibouti port after disposing of these two soon,” Roba said in his presentation at the onboarding meeting between the Ethiopian Investment Holdings (EIH) and the newly constituted 27 subsidiaries of state owned enterprises.

The Enterprise refrained from the business of transporting fuel due to requirements including assigning captains. The income secured from the ships was barely covering their own costs, according to an official at the Enterprise.

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The board approved its plan and once finalized, Ethiopia will not have a fuel carrying vessels.

“The two vessels aren’t really profitable,” the official told The Reporter adding “We will do asset valuations for the two vessels, and evaluate the larger vessel to know if we have to add more money or get some in return as well.”

The Enterprise plans to acquire a larger vessel with a carrying capacity of up to 65,000 tons. The Enterprise’s nine cargo carrying vessels have modest capacities ranging between 25 and 28 tons. This has been one of the biggest problems with the vessels the Enterprise owns.

“A journey takes up to three months, and a smaller loading capacity isn’t lucrative,” said the official, adding, “With the bigger vessel, we will have the capacity of the two vessels.”

The enterprise appealed to the Public Enterprises Holding Administration (PEHA), the office it previously reported to, to increase its capital to 90 billion birr for over a year. Similar request have made to the Ethiopian Investment Holdings, according to Roba.

After reaching 3.7 billion birr in paid up capital six years ago, the Enterprise surpassed its subscribed capital of 20 billion birr last year. It registered a 2.5 billion birr in additional assets, Roba disclosed in his presentation.

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