Forex crunch compels gov. to delay payments
The dearth of foreign currency is compelling the Ethiopian government to delay payments that should be made to international companies in US dollars.
The Reporter has learnt that the government has been unable to settle payments to oil companies that delivered petroleum products to the country in 2015-2017 according to schedule. Vitol Oil supplied diesel and gasoline to the Ethiopian Petroleum Supply Enterprise in 2015 and 2016 after winning the international tenders put up by the enterprise in two consecutive years. Vitol Oil’s second contract was terminated in December 2016.
Reliable sources told The Reporter that EPSE now owes Vitol Oil 20 million US dollars. “Though the company’s petroleum supply contract expired on December 2016 EPSE is unable to settle the remaining 20 million dollars due to foreign currency shortage. The National Bank of Ethiopia has not been able to provide dollars to settle the payment,” sources said.
Similarly the government is unable to settle a 170 million US dollars payment that was supposed to be made to Petro China, the Chinese oil company which has been supplying petroleum products to the country since January 2017. Petro China won the international bid floated by the EPSE in September 2016 and won the tender to supply diesel and gasoline for the 2017 fiscal year. Petro China’s contract will expire on December31, 2017.
Sources told The Reporter that the government now owes Petro China 170 million dollars for the petroleum products it supplied in the fiscal year. Usually payments should be settled within 90 days after the petroleum products have been delivered. According sources, the payment arears are now more than one year old.
Meanwhile international airlines flying to Addis Ababa are facing difficulty in repatriating their sales to their countries. Foreign carriers sell their tickets in the local currency Birr and repatriate their sales revenue in US dollars to their respective countries.
The International Air Transport Association (IATA) told The Reporter that Ethiopia has joined the list of African nations where international airlines face difficulties in repatriating their funds. According to IATA, Ethiopia owes foreign carriers 22 million dollars.
In an interview in his office in Geneva, Switzerland Alexander de Juniac, director general and CEO of IATA, said that nine African countries have a total of 1.1 billion dollars in airlines’ blocked funds. Angola has the largest airlines blocked fund-507 million USD, Algeria-146 million, Sudan-125 million, Nigeria-121 million, Eritrea-64 million, Zimbabwe-52 million, Mozambique-33 million, Ethiopia 22 million and Libya 20 million.
Juniac told The Reporter that most of the countries faced shortage of foreign currency due to the drop in oil price while others have their own economic challenges. “We have been working with African governments to get the airlines blocked funds released and we are successful in releasing most of the funds in Egypt and Nigeria,” Juniac said.
The Ethiopian government officials explain that the country is facing the foreign currency crunch due to the commodity price decline in the international market stunting the foreign currency earnings. The increasing fuel imports and hefty expenditures on mega infrastructure projects are among the long list of contributing factors to the foreign currency shortage. The government is taking various measures to stimulate the weakened export.