Ethiopian shipping urges government to use its idle ships

Ethiopian shipping urges government to use its idle ships

Trade

The Ethiopian Shipping and Logistics Services Enterprise (ESLSE), the government company which has been in shipping business for over 54 years, says it has been deprived from transporting Ethiopia’s major import items such as fuel, fertilizers and wheat.

If the Enterprise was given the opportunity to do the job mandated by the government as a national carrier, the country, which has been suffering from shortage of hard currency could have saved huge amount, according to CEO of the Enterprise.



This is indicated today by CEO of the ESLSE Roba Megerssa. He stated that Even though the price ESLLSE has been giving the government agencies in charge of importing those strategic goods to Ethiopia, the company has not been given an opportunity to transport these goods and save the foreign currency the country spends paying foreign shipping lines.

Speaking to the state broadcaster ETV program, Mr. Roba indicated that local insurance companies could have also benefited had ESLSE been awarded to transport these goods by applying the FOB. The shipping company has been implementing the FOB procedure for the past eight years for transporting containerized goods.

He noted that the application of FOB procedure allows the importers to use local currency for the services, which includes transportation and insurance fees.

“For instance after a long struggle we were allowed to transport coal since last year. By using leased ships we helped the importers to $20 dollars per ton. They used to pay $40 when they were using other transporters,” he said.

One of the reasons often mentioned by the government agencies, which import goods such as fertilizers is they do last minute purchase and tell us that they don’t have time.

The CEO also mentioned that even though two ships are bought to serve oil import of the country in 2013, the ships are now underutilized because the oil supplying agency of the country is not giving opportunity to ESLSE to transport the oil.

He indicated that the petroleum supplying state enterprise of the country (Ethiopian Petroleum Supply Enterprise) has been giving different excuses not to use those ships. Meanwhile the petroleum supplying agency of the country was consulted during the purchase and signed on the minute agreeing when the purchase decision of the ships was made, according to Mr. Roba.

As a result the petroleum enterprise is incurring additional cost such as demurrage cost until the oil will be unloaded from the big ships they are using to import the oil. Using big ships for importing oil in a situation there is no oil depot at the port is costly. The petroleum supplying agency of the country is now budgeting up to $6 million for demurrage every year.

“Our ships can also serve as floating storage saving the extra cost the oil supplying agency is now spending. If necessary we can also charter other ships to do the job as we are given the mandate by the government of Ethiopia as a national carrier,” he said.

Ethiopia’s current annual fuel import is estimated to reach around 4 million tons. Mr. Roba says, his company can provide the service of transporting a ton of fuel for up to $27.

“The country could have saved a lot of foreign currency if we have been given the opportunity to transport the fuel, fertilizers and wheat. It also helps the local insurance companies to be part of the business,” he said, urging the government or use the idle ships or use them.

The two ships bought for $74 million in 2013 have the capacity of transporting 41,000 tons each. Currently, Ethiopia, which is among the few countries left with a national shipping lines, has 11 active ships.

Recently the government has decided to sell minority share of Ethiopian Shipping and Logistics Services Enterprise for foreign companies.