Page 14 - DMEA Week 06 2021

DMEA FUELS DMEA

Ethiopian fuel distributors urge govt to

rethink cash payment system

ETHIOPIA THE Ethiopian Petroleum Dealers Association could be used to pay their suppliers, Tesfaye told
(EPDA), an industry association representing Addis Fortune at the weekend. “Those that may
Ethiopia’s hundreds of local fuel distributors, has once again asked not be able to secure these loans will have to leave
distributors do not have Addis Ababa to reconsider its plan to switch to the business,” he said. “This might create need-
the physical collateral a cash-based payment system. less disruptions in oil provision in the country.”
to secure loans to pay Traditionally, state-owned Ethiopian Petro- EPDA has already made multiple inquiries
their suppliers. leum Supply Enterprise (EPSE) has extended about the new payment system to the govern-
credit to all 30 of the firms that supply petro- ment, he noted. “When the law first came into
leum products to domestic distributors. In Sep- effect, we were not sure this would trickle down
tember 2019, however, EPSE announced plans to us, as it pertains to the companies,” he said.
to switch to a cash-based payment modal- “That was why we initiated a discussion with the
ity in order to overcome problems with debt relevant government bodies.”
collection stemming from the rising number To date, authorities in Addis Ababa have
of companies involved in the business. Since mostly ignored EPDA’s queries, he stated. As
then, it has been phasing out the credit system a result, he said, the group has now formally
in stages. requested an audience with the Ministry of
With this process due to be completed in less Trade and Industry and the Ministry of Mining
than a month, the suppliers working with EPSE and Petroleum.
are now demanding that distributors – includ- As of press time, neither of the ministries had
ing the members of EPDA, which number more responded to this request. EPSE has said previ-
than 100 – pay for all the fuel they receive in ously that it is ready to reimburse fuel suppliers
full. This demand is putting great pressure on for expenses incurred as a result of the switch to
distributors, which have no way to obtain the cash-based payments, including but not limited
short-term credits they need to cover opera- to interest payments on bank loans.
tional expenses, and could cause some firms to Tadesse Hailemariam, the CEO of EPSE, reit-
go out of business, according to Ephrem Tesfaye, erated that point at the weekend. “All expenses
a member of the association’s board of directors. incurred by the [supply] companies associated
Ethiopia is home to more than 800 fuel distri- with the new modality will be compensated,” he
bution companies, and most of them do not have told Addis Fortune. “The expenses will not be
the physical collateral needed to secure loans that transferred to the companies.” ™

P14 www. NEWSBASE .com Week 06 11•February•2021