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Oil suppliers’ earnings from lubricants fall

Oil suppliers’ earnings from lubricants fall

Revenues of Ethiopian licensed oil suppliers from the sale of lubricants declined as “illegal importers wreak havoc on the market.”  

With profit margin earned from sales of oil significantly low due to the low profit margin set by the government, local oil suppliers usually offset this from sales of lubricants.

According to oil suppliers The Reporter spoke to, although companies other than licensed oil suppliers are not allowed to import lubricants, small-sized companies with an import license import sub-standard lubricants, resulting in unfair competition and price wars.

“We have complained the market is falling under the control of illegal suppliers who charge a very unfair price and sell a substandard item, but the government has turned a deaf ear to our problem,” said a CEO of an oil supplier who wants to remain anonymous.

Oil suppliers, through their association, have already lodged their complaint letter to the Ministry of Trade & Industry, according to sources.

The surge in ‘illegal suppliers of oil’ witnessed has added to the forex shortage challenge faced by suppliers.

“We are importing a very small amount of oil due to the forex crunch. Some of us did not even get forex from the Commercial Bank of Ethiopia for a year, while the waiting period at private banks is very long– taking more than six months,” said a senior executive working in an oil supplying company.

On average, one liter of oil product costs around USD two. There are over 30 oil suppliers in Ethiopia, more than twice the figure four years ago.

Sales from lubricants account for less than 10 percent of the profit of oil suppliers, despite having over 90 percent of the share in their revenues. Oil suppliers have asked the government for long to adjust profit margins put on petroleum products, including benzene and naphtha.

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