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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Thu Feb 10 2011 - 13:46:36 EST
Ethiopia braces for oil shortage as Sudan shuts pipes
Thursday 10 February 2011 <http://www.afrik-news.com/archives-2011-02.html>
/ by Desalegn Sisay <http://www.afrik-news.com/writer1398.html>
Fuel prices in Ethiopia will be raised in March following an increasing
consumption of fuel and its consequent impact on the government's fuel
expenditure. A recent decision by its Sudanese suppliers could also affect
fuel availability in Ethiopia. The Horn of Africa country spends an average
annual 20 billion birr on the importation of petroleum products.
Ethiopia's projected budget of 1.42 billion US dollars for fuel importation
for the current fiscal year is expected to cover 2,176,188 tonnes of fuel
including benzene. An amount that, according to reports, exceeds by 30
percent the 72.2 billion birr annual budget approved for this fiscal year.
Despite the Ethiopian government's decision in 2008 to introduce the
blending of ethanol following an increased demand in fuel, the increasing
trend has continued.
And the ever increasing local consumption of benzene coupled with the
fluctuation of prices on the international market has resulted in an extra
500,000 tonne import of fuel as against the projected imports set for the
current fiscal year, according data obtained from Ethiopian Petroleum
Enterprise (EPE), an entity in charge of petroleum importation and
distribution.
Recently, the country signed an agreement with Sudan Petroleum Company (SPC)
to import 80 percent of its benzene demand from the neighboring Sudan. This
agreement was to enable the government cut the huge transportation costs,
which would in consequence lower the price of benzene on the local market.
The agreement with SPC has however been suspended following a three month
closure of the Sudanese company's refinery beginning February 1. And
although this is not expected to impact the petroleum deal between Ethiopia
and The Sudan, the three-month break coupled with Ethiopia's inadequate
storage capacities may lead to a fuel shortage.
As a result, Ethiopia has designed a contingency plan by raising the
percentage of blended ethanol in Addis Ababa, the capital, to 10 per cent
from March 7. This follows the success of a similar move in 2008 when the
introduction E5 helped the country to reduce the volume of benzene imports
by over a million dollars annually.
Having acquired the technology to produce a considerable volume of Ethanol
to buttress fuel imports following its various expansion projects, mainly of
its sugar factories, including the state owned company Fincha, which has
been producing up to eight million liters of Ethanol, and Metehara, which
has also embarked on an annual production of 10.5 million liters as of the
current year, Ethiopia could handle the arrest of oil imports... to an
extent.
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