By Wudineh Zenebe | Addis Fortune
ADDIS ABABA, Ethiopia – After 60 years of presence in the country, Shell Ethiopia has totally moved out of the Ethiopian market as of November 14, 2008, after Libya Oil Holding Ltd (OiLibya) finalized the purchase and sale agreement it entered with the former.
OiLibya, a new trademark in the Ethiopian oil market, has thus started operations since Shell Ethiopia’s departure from the market it has operated in for more than half a century.
The official date that Libya Oil Ethiopia Ltd begun operations in Ethiopia, November 14, 2008, the de-branding of Shell Ethiopia as well as the re-branding of its 201 retail outlets across Ethiopia, which would be concluded within six months time also occurred on the same day, sources from OiLibya disclosed.
A subsidiary of the Netherlands based Royal Dutch Shell Plc, Shell Company (Red Sea) Limited and Incorporated, was formed in 1929 in London. In October 1946, it bought depot facilities previously owned by Agip, the Italian based oil giant, and leased land from the government of Ethiopia on the premises of the current Akaki Depot, including some retail outlets in Addis Abeba.
In April 1964, it was renamed Shell Ethiopia Limited. After it bought Agip’s business in Ethiopia in 2000, it exited from the Liquified Petroleum Gas (LPG) business in 2004. Three years later, it sold some of its assets to Kobil Ethiopia Ltd, including a depot in Addis Abeba and 63 retail sites across the country.
Marking its total exit, it has signed a purchase sale and agreement with OiLibya, which gives the latter 100pc ownership of Shell’s down stream oil products marketing business share in Ethiopia. Its 142 employees have been retained by the new North African entrant.
The last months of Shell Ethiopia’s life had been characterised by the serious confrontation it had with the company’s labour union over service benefit claims the employees demanded. With its demise in the country, the dispute now seems to have come to an end.
OiLibya has entered the scene with hopes for its future business and for the employees it has taken over.
“We are now employees of OiLibya and hope to work in a better environment,” Fanuel Samson, president of the Labour Union told Fortune.
In what Fanuel referred to as unexpected good news, OiLibya has already pledged a 15pc salary increment for the employees as of January 2009.
“The superseding principle is that people on the ground are best placed to develop our business,” Manar E. Sall, Corporate Planning Manager of OiLibya said during the Oil Fair held on November 14, 2008.
The state-owned OiLibya, previously called Tamoil Africa, operates gasoline stations in African nations, including Egypt and Burkina Faso, and plans to build two pipelines on the continent, one between Kenya and Uganda and another to supply five countries with oil products from a Ugandan refinery.
With the largest oil reserve in Africa within in its territories, Libya expanded exploration with the support of international companies, including BP Plc, Royal Dutch Shell Plc and Eni SpA after the US ended almost two decades of sanctions in 2004.
Managed by the Libyan Investment Authority, a sovereign wealth fund that manages Libya’s assets in other countries, including Libya Oil Holding and Tamoil SA, which owns three refineries in Europe and more than 3,000 filling stations on the continent, the North African giant has now expanded its business to Ethiopia.
Following the agreement it signed with Shell Ethiopia in July, the company has discussed its future business with Girma Birru, minister of Trade and Industry (MoTI), Alemayehu Tegenu, minister of Mines and Energy, and Yigzaw Mekonnen, general manager of the Ethiopian Petroleum Enterprise (EPE).
As a new company in the Ethiopian business environment, it has also registered at the MoTI.
OiLibya has held further discussions with state-owned Ethiopian Airlines and the private construction company, Salini Costratori – the major customers of its predecessor.
“The change of ownership in shares does not bring any change in terms and conditions of employment to all staff, as well as to ongoing supply contracts or other business relations entered with business partners at large,” stated Bahru Temesgen, External Affairs manager of OiLibya.
The Ethiopian oil market, which had for years been dominated by the foreign based Total, Mobil, Agip and Shell, has recently been penetrated by the Kenyan Kobil and the Sudanese Nile Oil, and now the Libyan OiLibya.
With the exception of Total, all the earliest oil companies – Agip, Mobil and recently Shell – have left the market.
Following a decision in October 2004, by the Ethiopian Council of Ministers to allow both local and foreign companies to operate in the retail of oil, two local companies – National Oil Company (NOC) and Yetebaberut Beherawi Petroleum (YBP) entered the market in November 2005 and May 2006, respectively.