In a groundbreaking move, Ethiopia’s Minister of Trade and Regional Relations, Dr. Kasahun Goffe, revealed that the government plans to open the fuel importation sector to private companies, ending the state monopoly that has existed for years. This decision is part of the government’s broader initiative to liberalize various business sectors and encourage market competition.
Dr. Kasahun made the announcement on Monday, November 16, 2017, during a detailed discussion on a bill concerning the petroleum products marketing system. The session was chaired by the Standing Committee on Trade and Tourism Affairs of the House of Representatives.
According to the Minister, the government intends to allow private sector participation in the importation and distribution of fuel by next year. This is in line with the broader economic reforms aimed at creating a more competitive business environment. The draft bill, which had been submitted to the House of Representatives, includes several amendments, one of which allows other companies to enter the market, breaking the long-standing monopoly held by the Ethiopian Oil Supply Company.
Dr. Kasahun emphasized that the proposed changes will enable private companies to import oil products just like any other commodity, with the goal of operating the sector based on market principles. He noted that the government’s reform efforts in the oil sector aim to reduce the country’s dependency on expensive oil imports, which has been draining the nation’s foreign exchange reserves.
“A country that spends its entire export earnings on importing oil cannot grow. This has been slowing down our development,” Dr. Kasahun stated. “The bill was designed to fundamentally change this situation.”
The Minister further clarified that if the government successfully adjusts oil product prices to market levels by the end of this year, private companies may begin importing and selling fuel by next year.
The reform, if successful, will shift the role of the Ethiopian Oil Supply Company, whose focus will be narrowed to supplying fuel for large government projects and providing affordable fuel to lower-income segments of society.
Tugset Nguse, the head of legal services at the Ethiopian Oil Supply Company, raised concerns during the discussion. He suggested that, if private companies are allowed to import fuel, they should be subject to the same responsibilities as the state-owned company. This includes building reserve fuel depots and maintaining a stock of reserve fuel, a provision he argued should be included in the draft bill.
Regional officials also voiced concerns about the inequitable distribution of fuel across the country and called for the bill to address this issue. In response, Dr. Kasahun acknowledged the importance of ensuring fairness in fuel distribution and said the government would engage in further discussions with all companies regarding the fuel quota system.
The bill also includes provisions aimed at curbing illegal fuel trading and smuggling. A reward system is proposed to incentivize the public to report illegal fuel activities, as part of efforts to ensure transparency and fairness in the market.
The proposed amendments to the bill are expected to be reviewed and approved by the House of Representatives in the coming weeks, marking a significant step toward transforming Ethiopia’s oil sector.
