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Nation’s Petroleum Supply on a Row

Three international companies are in a tough competition for the supply of fuel for the nation’s annual fuel consumption which is likely to cost the government 22 billion Br.

PetroChina International, Vitol Bahrain and Trafigura Pte passed the preliminary technical evaluation of the tender announced by the Ethiopian Petroleum Supply Enterprise (EPSE) for the procurement of 1.2 million to 1.5 million tonnes of gas oil and 280tns to 350tns of regular gasoline.

For the tender that was announced on September 19, 2017, 34 international companies showed interest in purchasing the bid documents. But, during the opening of the tender on October 31, 2017, only five suppliers submitted their financial and technical offers.

The companies that submitted their technical and financial offers were Petro China International, VITOL Bahrain, Trafigura, Afro Arab and Emirates National Oil Company (ENOC). But Afro Arab and ENOC were disqualified for not fulfilling all the requirements. Afro Arab did not present a bid guarantee, while ENOC submitted bid guarantee from a foreign bank, while it should have been from the Commercial Bank of Ethiopia (CBE).

As the international fuel price is defined, the bidders compete by offering their transportation fare and profit margin. The companies are expected to deliver the fuel to Djibouti, where Ethiopia’s depot is located.

“We will disclose the technically qualified companies in 10 days,” said Abayneh Awol, manager of Petroleum Supply & Sales Department and head of the Bidding Committee.

The country consumes 3.8 million tonnes of petroleum annually, showing an increase of 10pc every year. Last year, the Enterprise imported 3.4 million tonnes of petroleum products valued at 1.7 billion dollars, while the preceding year’s import was 3.1 million tonnes with a cost of 1.3 billion dollars.

This bid is for partial procurement; the remaining amount will be supplied by Kuwait and Sudan in terms of Government to Government (G2G) agreement. The Sudanese Petroleum Corporation and KPG from Kuwait are the main international suppliers of fuel to Ethiopia.

The winning company is expected to deliver starting from January 2018. The petroleum will be transported to Djibouti Port three times a month by oil carrier ships with the capacity of carrying 40,000tns.

Established as a joint stock company on November 5, 1999, to engage in activities related to oil and natural gas including exploration, development, production and marketing of crude oil and natural gas, refining and transportation, PetroChina was last year’s winning company.

The Enterprise distributes petroleum products to the 17 oil retail companies, which have 800 stations throughout the country. Out of the total, four are major distributors including National Oil Company (NOC), Oil Libya, Total and Yetebaberut Beherawi Petroleum (YBP), accounting for 90.4pc of the fuel distribution in the nation.

The tender was announced three weeks after the government devalued the Birr by 15pc against a basket of major currencies in a bid to increase the country’s export earnings and discourage imports. Following the adjustment of the exchange rate, there was a fear that the price of petroleum will show hike in the months ahead. However, a week ago, Prime Minister Hailemariam Desalegne, in his address to the parliament, confirmed that the government will subsidise any price increase caused by the devaluation of Birr.

Source - Fortune

Tags: Ethiopian Petroleum Supply Enterprise (EPSE),, VITOL Bahrain,, Petro China International,, Trafigura Pte,

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