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Local Oil Company hit by hard currency shortage

Local Oil Company hit by hard currency shortage

Yetebaberut Beherawi Petroleum S.C., a local oil company founded predominantly by oil transporter companies more than 15 years ago, expressed its frustrations over the lack of access to hard currency needed to import oil products in to the country, making it difficult to operate its main line of business in the past two years, and threatening its existence, The Reporter has learnt.

According to Haileleul Olana, chairman of the Board of Directors (BoD) of the company, Commercial Bank of Ethiopia (CBE) used to avail USD five to seven million annually, for oil products. However, in the past two years, accessing currency for oil-product importers has become a nightmare; and this year, for instance, the company was only allowed to receive USD 200,000.

Haileleul said oil products are among the priority commodities that the government has given exclusive access to in terms of hard currency. However, in recent times, the company is unable to access much needed hard currency. “We never had this difficulty before. It started happening only in the past two years; and this year, we were told we will have access only to USD 200,000, which we can’t understand,” Haileleul said.

The chairperson also revealed that numerous appeals have been made to respective authorities. Appeals to the management and the Board of CBE, to the governor of the National Bank of Ethiopia (NBE) and to its Board chairperson, and all the way to the Ministry of Trade and Industry; but none have resulted in conclusive outcomes.   

On average, one liter of oil product could cost around USD two. Hence, USD five million could have helped to purchase some 2.5 million liters. However, with the dwindling foreign currency access, Yetebaberut was given only USD 200,000. Its imports have considerably reduced to 100,000 liters of products. The company said it requires USD eight to 10 million to be able to have a positive and profitable business.

The import of oil products is associated with the least attractive profit margins of the oil distribution sector in Ethiopia. Currently, in addition to Yetebaberut, National Oil Company (NOC), Total and OiLibya vie for the petroleum distribution business in the country through imports of oil products.

Accessing private banks for hard currency, according to Haileleul, has one potential disadvantage. “They require us to deposit as much as 300 percent in local currency against the amount of hard currency we asked for; and we can’t afford that,” he said stressing that his company could not afford such large amount of liquidity. Efforts to include comments from CBE bore no fruit as of press time.

Established in 2004, Yetebaberut Petroleum was able to stretch across the country with 130 gas stations. With its depot under construction, the total worth of its assets currently is estimated to be around one billion birr. With an authorized capital of 400 million birr, Yetebaberut has managed to increase its paid-up capital to 267 million birr. Currently, Yetebaberut is an exclusive distributor of BP and Castrol oils in Ethiopia, Djibouti and South Sudan.