Oromia plans oil company to address youth unemployment

Addis Ababa, June 21, 2017 (FBC) – The Oromia regional state is planning a new private oil company and is in talks to import Middle Eastern crude, part of an economic initiative authorities say will address youth unemployment.

Oromia Petroleum Share Co., the planned venture, will import the oil via Djibouti, process it at a new large-scale refinery and distribute it to gas stations owned and operated by local youths, Takele Uma, head of the region’s transport authority, said in an interview.

Potentially creating more than 50,000 jobs, it will build a transportation network initially benefiting farmers and manufacturers in the Oromia region who send their products to the capital, Addis Ababa, and other cities, he said.

The company would compete with the National Oil Co. (NOC), whose shareholders include Saudi Arabian billionaire Mohammed al-Amoudi.

NOC is one of Ethiopia’s biggest fuel suppliers, according to a feasibility study shared by Takele. Oromia Petroleum targets a 21 percent share of Ethiopia’s fuel market within five years of operations.

 ‘Economic Revolution’

Tekele described the fuel project as part of an “economic revolution” that seeks to answer economic grievances and issues of good governance.

Further plans will be announced in the coming weeks and months, Takele said. He declined to name the companies in talks to supply the oil.

Oromia Petroleum seeks to capture seven percent of Ethiopia’s commercial fuel market in its first year, according to the feasibility study produced in May.

Four companies currently control 90 percent of Ethiopia’s fuel market, while demand is growing at an average 7 percent a year, it said.

The planned refinery, in Oromia’s Dukem town, would be linked to Djibouti by a recently completed 4.2-billion US dollars Chinese-built railway that runs to Addis Ababa.

In its first two years, Oromia Petroleum will aim to build 80 gas stations in Oromia, the Southern Nations, Nationalities and People’s Region, and Dire Dawa -- facilities that will employ 2,500 people in total, according to the study.

Besides distributing fuel, the company plans to operate related businesses such as cafes, spare-part shops and mechanical workshops, it said.

Within five years, Oromia Petroleum plans to expand to 165 stations across the nation, according to the study.

Ethiopia’s annual fuel consumption was about 3.5 billion liters (925 million gallons) last year, according to the feasibility study.

Thirteen oil companies currently supply about 740 fuel stations in the country, with Oromia having 220, the largest concentration in all Ethiopia’s regions. The companies include Total SA, OiLibya and NOC.

Source: Bloomberg

Posted by Amare Asrat