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Fuel demand falls as COVID-19 slows down economic activities
Tadesse Hailemariam

Fuel demand falls as COVID-19 slows down economic activities

Country saves 470 million USD from reduced fuel import

Ethiopia suspends benzene import from Sudan

The demand for petroleum products has declined significantly as the COVID-19 pandemic slows down economic activities in the country.

The amount of gasoline (benzene) and jet fuel import has shown a decline following the outbreak of COVID-19 while diesel consumption remains the same.  

Tadesse Hailemariam, CEO of the Ethiopian Petroleum Supply Enterprise, told The Reporter after the WHO declared the COVID-19 as a global pandemic in March, benzene and jet fuel consumption has shown a 20 and 70 percent decline, respectively. Ethiopia’s daily benzene consumption is 2.2 million liters, diesel nine million liters and jet fuel 2.6 million liters on average. According to Tadesse, due to the lockdown in some regions and slow economic activity observed in connection with the COVID-19 pandemic, daily benzene consumption has declined to two million liters, diesel 8.5 million liters and jet fuel to one million liters.

According to data obtained from the Ethiopian Petroleum Supply Enterprise (EPSE), in March the enterprise planned to import 50 metric tons of benzene but it actually imported 45 metric tons of benzene. In April it planned to import 49 MT but it imported 39 MT of benzene. In May the enterprise planned to import 49 MT of benzene but managed to import only 42 MT.

EPSE planned to import 228 MT of diesel in the month of March and brought 210 MT. In April it planned to import 224 MT of diesel and brought 202 MT and in May it planned to import 227 MT but managed to import only 195 MT.

The COVID-19 crisis has hit the air transport industry hard. Due to the flight and travel restrictions global airlines have grounded more than 15,000 aircraft. Africa’s largest airline, Ethiopian Airlines, has grounded 90 aircraft. Consequently, the demand for jet fuel has fallen by a whopping 70 percent.

EPSE planned to import 71 MT of jet fuel in March but it actually imported only 29 MT. In April there was a plan to import 74 MT and 75 MT in May but it did not import any jet fuel in the past two months. “We used to bring two vessels of jet fuel. In March we had only one fuel tanker carrying jet fuel. In April and May we did not order for any shipment,” Tadesse said. “We have been using the jet fuel imported in March. Our national carrier is operating cargo flights only. Other airlines are not operating at all,” he added.

Tadesse said due to decline of fuel price and consumption downturn in connection with COVID-19, saving of nearly USD 470 million is observed from March to May. “As we lack storage, we couldn’t capitalize on the advantage, especially on Jet fuel,” he said.

The price of fuel in the global oil market has been declining. A barrel of crude oil, which used to be traded for USD 80-90, nose-dived to USD 30-40.

The average monthly freight on board (FOB) price of benzene in January was USD 69 per barrel, diesel USD 74 and jet fuel USD 73. In April, the price of a barrel of benzene was USD 20, diesel USD 24 and jet fuel was USD 15.

Tadesse said when the price of fuel hit bottom rock Ethiopia could not take an advantage as it does not have extra storage facility. “There was a time when the petroleum producers wanted to clear the stock because they run out of storage space. One day in March the price of a barrel of jet fuel was five dollars. Unfortunately, in Ethiopia we do not have jet fuel depot so we could not store jet fuel,” Tadesse said.

Ethiopia’s 12 depots have a total storage capacity of 420,000 m.cu of fuel. The main depot is located in Awash. “We have limited storage capacity so we could not buy and store fuel when the price was so low,” Tadesse said. Recently, EPSE dedicated the Sululta Fuel Depot only for benzene. The Sululta depot has the capacity to store 60,000 cu. m of fuel.     

Ethiopia’s annual fuel consumption stands at four million metric tons and the government spends 2.9 billion dollars to purchase and import the petroleum products. Neighboring Sudan used to supply up to eighty percent of benzene but in recent years this has declined to only 20 percent. Kuwait Petroleum Corporation supplies 50 percent of the diesel demand, 75 percent of the jet fuel consumption. UAE’s Abu Dhabi National Oil Company (ADNOC) delivers 80 percent of the benzene consumption, 50 percent of the diesel and 25 percent of the jet fuel consumption.

Ethiopia recently stopped the benzene import from Sudan as the country closed its borders due to the spread of the COVID-19 pandemic. Following the outbreak, in February the government of Sudan closed the country’s airspace as well as the land borders. Consequently, Ethiopian fuel tanker trucks were unable to ferry benzene to Ethiopia.

Tadesse said the benzene import from UAE via the Port of Djibouti is covering the country’s benzene demand. “Even though we suspended the 20 percent import from Sudan ADNOC’s supply is adequate to satisfy the local benzene demand. As the benzene consumption has declined, we did not make additional order to compensate the Sudanese benzene,” Tadesse said.