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Ethiopia to Revise Petroleum Profit Margin

Ministry of Trade (MoT) and Ministry of Mines, Petroleum and Natural Gas (MoMPNG) are undertaking a study together to adjust the profit margin for petroleum companies operating in Ethiopia. Currently the profit margin of a company engaged in fuel distribution is 8 cents per liter while fuel station owners make 7 cents.
The law makes Ethiopian Petroleum Supply Enterprise the sole importers and provider of benzene, diesel and kerosene in the Ethiopian market.

Commenting on the matter, Motuma Mekassa, Minister for Mines, Petroleum and Natural Gas, said there was a committee drawn from MoT and MoMPNG that is undertaking a study on the profit margin. “The committee will soon finalize the study and the required adjustment will be made based on the study,” Motuma said.

One of the problems with the distribution of fuel in Ethiopia is scarcity of land. Oil companies and investors that intend to build fuel stations face challenge trying to secure land, particularly in Addis Ababa.

According to Jemal Redy, Addis Ababa City Administration Industry Development Bureau head, the previous 9 city master plans did not incorporate gas stations. However, the tenth master plan embraced the construction of gas stations. “We have allocated land in the four corners of Addis Ababa in accordance with the traffic flow and demand of the public. We will make land available for gas station construction after we evaluate the investors’ proposals,” Jemal said

Motuma explained his Ministry is had discussions with the Addis Ababa City Administration over the availing land for gas stations. “Studies indicate that the city needs 250 additional gas stations. The city administration is under preparation to offer 60-65 plots of land for gas station construction. They will make more lands available based on the new city master plan,” Motuma explained.

Currently there are 710,000 vehicles in Ethiopia, out of which 480,000 are in Addis Ababa. However, there are only 100 gas stations Ethiopia’s capital, meaning 1 station is for 4,000 vehicles.

Coupled with other problems, now there are long queues at every gas station.

Source: The Reporter