Ethiopia: State-owned paper Op-Ed asks gov’t to lower oil prices

The state-owned daily, Addis Zemen, asked the government to reduce oil prices inline with current global prices. Addis Zemen is an Amharic language newspaper published under the Federal organ – Ethiopian Press Agency.

The newspaper raised the issue of oil prices in its editorial last week, a day before the end of the Ethiopian month Ginbot.

Retail prices of oil products are subject to government control in Ethiopia, with the Ministry of Industry mandated to revise rates across the country based on distance. Prices revisions are usually announced at the end of each Ethiopian month, except where the surges in global oil price prompt immediate revision.

Addis Zemen’s editorial recalled that the Ministry had raised oil prices following the price hikes observed at global level last October.

However, the paper noted, global oil prices have been declining for the past six weeks, mainly due to the European economic crisis, signs of Iran’s willingness for negotiation, the underperformance China’s economy, increases in  US oil reserve and slow growth in the global economy.

As a result, the price of crude oil dropped by 25 to 30% per barrel in this month alone. Consequently, retail prices of oil products has been lowered in several countries, Addis Zemen claimed.

Therefore, the paper editorialized that: 

the Ministry should now revise retail oil prices in line with the changes in global prices and as it is mandated to revise prices at the end of each Ethiopian month.

Though crude oil price had been as high as $128 per barrel during previous retail price revisions, it has now fallen to about $100 dollar per barrel. In fact, even as low as $95 to $96 for a few days – the lowest price of the past 18 months.

The newspaper also speculated further declines in the coming months and considered the situation as a break for countries, like Ethiopia, who suffer from imported inflation.

The Editorial piece noted that the situation will create an opportunity to control traders who have been raising commodity prices using oil prices as an excuse. At least, the paper argued, the consequent decrease in transport tariff will benefit the lower class of the population.

The paper argued further that:

The price revision is eagerly awaited as it will have significant impact on the inflation. It will also help change the market’s prevailing norm of failing to reduce prices even after the reasons for the price increase have abated. The revision will not only help strengthen trust and understanding between the government and the public, but will also be exemplary to traders who maximize profits by unwarranted price hikes, thereby putting pressure on them to become rational.

The last line is a reminder of the common criticism that the government is collecting hidden tax by charging oil products above their global rates.

The Ministry of Trade, however, didn’t heed to Addis Zemen’s call in its announcement the following day.

In a brief statement sent to a local FM radio, the Ministry said that retail prices shall remain as they were for the next Ethiopian month. The Ministry claimed that the price of crude oil per barrel had been fluctuating between $97 and $113. Though global oil price ‘has shown downward trend in the last week, it is slightly moving up’. Thus, the Ministry said, it has been decided to maintain current retail prices.

What makes Addis Zemen’s Op-Ed a news is not only the merit of the issues raised but also the half a century reputation of the paper. Addis Zemen hardly entertained views critical to the incumbent except for a few months in 1974, until the Military junta consolidates power, and for a few years during the Transitional period (1991-1995).

However, the paper is showing changes in recent months by publishing news and commentary that wouldn’t normally fall into the success stories category – usually aired by the state-owned media. A recent example of which being the story of the delayed Kesem-Kebena dam and irrigation project, which was overlooked by other state-owned outlets.

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Note: All quotes above were originally in Amharic language – translation mine.

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Daniel Berhane

Daniel Berhane

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