By Tedla Yeneakal, The Capital

Major towns throughout Ethiopia have been hit by a major shortage of diesel fuel, starting Thursday, July 10, 2008 this week, gas stations were congested with vehicles queuing to fill up their tanks. Damenu Kibret, Public Relations head of the Ethiopian Petroleum Enterprise (EPE), told Capital that the shortage occurred from reduced supply at retail companies.

Relevant government officials are discussing with oil retail firms to particularly identify the main factor behind the shortage. However, an official of one of the oil companies blamed EPE for the shortage saying that the enterprise has restricted supply of diesel by setting quotas to limit the amount that enters the country. “The amount was not restricted before, now there is a limit on imports that has been put in place,” said an official from one of the retailing companies.

During the first nine months of the current Ethiopian year, the country spent slightly over 10 billion birr on fuel imports of 1.37 million tons, an increase in the volume of fuel imports during the same period by 10 percent.

The cost of fuel import has been a major element offsetting gains in the export sector, where it has been consuming up to 80 percent of foreign currency secured from international trade previously. Although export earnings were said to grow by about 30 percent, the rate at which fuel import bills have increased has offset the gains. With world oil price hikes continuing unabated, fuel import bills for the current fiscal year are expected to hit well over the amount of export earnings expected to be secured during the same period.

The outcome of the meeting between the Ethiopian government and oil retailing firms did not finalize as Capital went to print.