Friday, May 24, 2024
BusinessCurrency woes prevent securing $200m to construct largest Ethiopian fuel storage

Currency woes prevent securing $200m to construct largest Ethiopian fuel storage

Lack of foreign currency has forced the Ethiopian Petroleum Supply Enterprise (EPSE) to suspend its USD 200 million Dukem fuel depot project.

When first proposed, the Dukem depot project was predicted to boost the nation’s emergency fuel reserve supply from 36 days to 65 days.

If constructed as planned, the project would have built the largest fuel storage facility in the country, on 10 hectares of land in Dukem, Oromia Region, 35km southeast of the capital.

With a storage capacity of 300,000 cubic meters (300 million liters) of jet fuel, gasoline, and diesel fuel, the large storage tanks at Dukem could have provided the leading depot sufficient to meet the country’s demand.

The initial projected cost for constructing the fuel depot alone was USD140 million. However, the total estimated cost of USD 200 million included linking the depot to the nearby Ethio-Djibouti railway.

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“The enterprise’s plan to establish a new fuel depot in Dukem remains pending. Construction has been suspended because we have been unable to secure financing. Accessing financing has been a serious problem. To date, no financing has been secured for this project,” Tadesse Hailemariam, CEO of the Ethiopian Petroleum Supply Enterprise (EPSE), told The Reporter. 

The project was originally envisioned as a joint venture with foreign investors. However, the potential foreign investors contacted by the enterprise declined to partner in the wake of ongoing conflicts in northern Ethiopia over the past three to four years. The escalating conflict diminished hopes of attracting foreign investment for the project.

“It is difficult to find the necessary foreign currency unless we enter into a joint venture agreement with foreign investors. We may consider reviving the plan if a JV opportunity arises,” added the CEO.

Similarly, the Enterprise’s plan to develop its own fuel stations and engage in retail fuel sales also remains pending.

“Our plan to establish its own retail business by owning fuel stations is also pending. The plan was first introduced eight years ago. However, the plan was suspended because Addis Ababa city administration and regional governments failed to provide plots of land for the enterprise to install its own fuel stations. For now, we have stopped pursuing the plan,” said Tadesse.

However, construction of the Awash fuel depot is currently underway. The plan is to transport fuel from the Djibouti port to the Awash depot using the railway. The project is led by the Ethiopian Railway Corporation (ERC). Fuel transportation via railway has not started yet due to delays constructing the necessary fuel infrastructure on the Djibouti side.

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