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19th of January 2018

Ethiopia



Nile Petroleum Shrugs Off 250m Br Debt, Resumes Operations

It has yet to pay half a billion Br of its debt.

Founded 11 years ago, Nile began operation by opening a retail station in CMC, Addis Abeba.

Nile Petroleum Co. Ltd Ethiopia, whose holding company commands 48pc of the fuel distribution market in Sudan, resumed operations two weeks ago after paying a quarter of a billion Birr debt to the Ethiopian Petroleum Supply Enterprise (EPSE).

Nile, one of the largest oil suppliers in the eastern parts of the country, paid off the debt accumulated over a year, forcing the Enterprise to suspend and remove it from the list of oil retailers half a year ago. It was allowed to recommence operations despite being unable to repay half a billion Birr of its total debt.

The management of the oil supplier was not available for comment in spite of our repeated attempts to reach them.

Although neither of the bodies have agreed upon a date for the remaining debt to be settled, sources confirmed that the Company would be asked to pay based on the bilateral agreement of Sudanese and Ethiopian officials- which stipulates Nile must pay its debt within 19 months.

“The case has been continuing for more than a year without a concrete solution,” said an employee working at the Enterprise’s supply and distribution department. “Now, the fact that they are allowed to get oil after paying an advance payment will help prevent further swell in debt.”

Such incidents were not the first to emerge between the Enterprise and the Sudanese oil supplier.

A year ago, the Company, despite agreeing to settle its accrued debt of 650 million Br in 18 months after being suspended for half a year, was not able to make payments to the Enterprise, eventually being forced stop operations by the mid of the recently concluded year.

At that moment, the senior executive of Nile came to Addis Abeba to meet with the representatives of the Enterprise and government officials, hoping to forward solutions to settle the debt amounting to 650 million Br as of February 2017.

Joining the Ethiopian oil retail market 11 years ago, Nile started operations by opening a retail station in CMC, Addis Abeba. Khidir El-Abadi was its founding general manager.

Nile is one of 22 fuel retail companies that possess 800 operational retail stations in the country. It is not the only company that failed to pay off debts.

Dalol Oil, which has incurred a loss of 3.5 million Br in the past fiscal year, in its annual report, announced its inability to pay 34 million Br to the Enterprise. Dalol, whose assets exceed the liability by 43 million Br, was cautioned many times by the EPSE about the unpaid debt.

Moreover, companies such as Nile and Dallol are struggling to remain afloat in oil industry characterised by low-profit margins where suppliers tend to get a majority of their revenues from imports and retail of lubricants, instead of oil sales.

The oil industry, where National Oil Company (NOC), Yetebaberut Beherawi Petroleum (YBP), Total Ethiopia and Oil Libya are major players, are carefully controlled by the Enterprise, which is the only one mandated to import oil.

On average, Ethiopia imports 3.3 million tonnes of petroleum with a growth rate of 10pc annually. In the past fiscal year alone, more than 37 billion Br worth petroleum products were imported by the Enterprise through Djibouti and Sudan.

To reduce dependency on imported fuels, the government had established Mineral, Petroleum and Biofuel Corporation (EMPBC) two years ago.

“As a first step to lower the bill for fuel imports, we are currently constructing two ethanol plants in partnership with private entities,” Mulugeta Seid, CEO of the Corporation, told Fortune.

By YIBELTAL GEBREGZIABHERFORTUNE STAFF WRITER

Published on Jan 09,2018 [ Vol 18 ,No 924]

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