Tuesday, January 17, 2023
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BusinessAuthority nods to increase petroleum dealers’ profit margin

Authority nods to increase petroleum dealers’ profit margin

Fuel station owners request a five-fold increment

The Ethiopian Petroleum and Energy Authority agreed to increase the profit margin of petroleum dealers a year after the Ethiopian Petroleum Dealers Association requested for the existing margin to be revised.

The authority agreed to consult with the Ministry of Trade and Regional Integration (MoTRI) and make the decision in two weeks’ time.

On October 13, 2022, close to 50 members of the Ethiopian Petroleum Dealers Association convened at the Ghion Hotel to discuss possible strikes or other protesting mechanisms to influence the government. However, the association pulled back after Sahrela Abdullahi, director general of the Authority, promised to solve the issue in the next two weeks.

The final decision on the profit margin is made by MoTRI, based on the authority’s recommendations.

Last August, the Ministry and the Authority called on gas stations to provide information to conduct a study and raise the profit margin.

Two months prior to that, the Association had written a letter to the Ministry requesting an increase in the profit margin to at least 1.20 birr per liter, a five-fold increase from the current profit margin of 0.23 birr per liter. The association demanded this after conducting its own studies.

For years, dealers have been earning only 10,350 birr per 45,000 liter fuel truck. However, it takes over three million birr to bring 45,000 liters of fuel from Djibouti and retail to consumers.

Even though the government decided to increase the profit margin for the dealers last year, it has not materialized so far. The ministry, for its part, said it is conducting a study to determine a revised profit margin.

“Officials of the Authority promised to discuss the matter with the ministry and determine the margin revision in the next two weeks. So we will wait,” said Ephrem Tesfaye, fuel station owner and board member of the Association.

The authority also said they are extracting experience from other countries. “The operating costs of fuel station owners in Ethiopia are substantially increasing due to inflation and the birr’s devaluation. The rental price of fuel stations is also increasing on us. But our operating margin has been the same for years,” Ephrem said.

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