Total pledges to invest USD 100 mln
The longest-serving fuel and lubricants marketing company in Ethiopia, Total Ethiopia SC, has pledged to invest USD 100 million in Ethiopia if the government makes adjustments on the profit margin of fuel distribution prices.
Thibault Lesueur, managing director of Total Ethiopia, told The Reporter that if the government revises the margin then Total can invest 100 million dollars in Ethiopia in the coming five years. “Total is committed to deliver quality products to the Ethiopian market. Fuel is highly inflammable product that we transport and store. It is a very sensitive product in which the government spends a lot of money on it. We should take a good care of these products and ensure safety. And to do that we need a good infrastructure. Unfortunately, the existing margin does not encourage investments in the oil distribution sector,” Lesueur said.
Lesueur said if the government applies a decent margin then Total will immediately start investing 100 million dollars in the country to build 150 new gas stations all over the country, other facilities and create 4,000 jobs. Total, which has been operating in Ethiopia since 1950, has 160 gas stations at the moment. “Our plan is to double the number of gas stations we have today.”
The Ministry of Trade and Industry revised the margin in May 2019. However, oil marketing companies still complain that the margin is minimal when compared to other African countries. A marketing company earns a profit margin of 0.15 birr per litter. The average margin oil companies get in Africa is 1.5 birr per litter. “We are still far from the African average margin. You do not call this profit margin because you have to pay salaries and cover other costs,” he said.
Total is the only oil company which has its own fuel depot in Ethiopia. Lesueur said, despite the challenges, Total has continued investing in its facilities. In 2016 the company inaugurated a new fuel depot near Dukem town, Oromia Regional State. “We made investments to regularly upgrade our service. We have several projects in various parts of the country,” he said.
Total Ethiopia, which focuses on high-value businesses, sells fuel, lubricants, bitumen and LPG. The company has 17 percent market share in Ethiopia.
Total Ethiopia has come up with a new concept dubbed Total Quartz Auto Service which operates workshops where vehicles change their oil. Since 2017 the company in collaboration with dealers opened 52 quick oil change centers in Addis Ababa and regional towns at a cost of 40 million birr. The company inaugurated a new oil change center built with an outlay of four million birr in partnership with a businessman called Ermias Isaac near Megenagna on Tuesday. Total plans to build 100 more oil change centers in the coming two years.
Lesueur said in addition to supplying quality products the oil change centers create employment opportunities. Each oil change center employs 10 people on average.
The other challenge that oil marketing companies are facing is shortage of foreign currency. The companies need foreign currency to import lubricants which are critical products for the transport industry.
“Foreign currency shortage affects all sectors. It is a national challenge. In the last two years it has been very difficult for us to get adequate foreign currency to import lubricants. We import the right quality product. Total Quartz is the most appreciated brand in Ethiopia. But it has been a challenge to find foreign currency required to import the lubricants. We are now selling two third of what we used to sell,” Lesueur said.
The oil companies need the government to address the bottlenecks that are hindering the development the fuel distribution sector which plays a pivotal role in the economy. The Ethiopian Fuel Distributers Association is holding talks with the National Bank of Ethiopia, the Ministry of Trade and Industry and the Ministry of Finance to resolve issues.
The Ethiopian government is establishing a new regulatory body that regulates the fuel sector. “We hope that the new regulatory body will address the issues,” Lesueur said.
Established in 1950 under the name Total Mer Rouge, Total Ethiopia SC is engaged in the marketing of petroleum products through out Ethiopia. In 2006 Total Ethiopia acquired the facilities and businesses of Mobil which exited from the Ethiopian market.