Regulators Tighten the Noose on Fuel Market

Aug 23 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

The fuel industry is facing its biggest shakeup in decades as federal regulators roll out a sweeping directive weeks after lawmakers ratified a new petroleum marketing law.

The changes bring real-time digital reporting to a sector long criticised for opacity, with every distributor and station now required to upload transaction details within 24 hours.

For decades, fuel distribution has operated in the shadows, plagued by unrecorded markups, hoarding, and widespread contraband. The Petroleum & Energy Authority’s (PEA) new measures, under  Destaw Mekuanent (PhD), director general, seek to implement a systemic reset.

The most disruptive change comes in the form of digital enforcement and real-time reporting. All market actors in the fuel supply chain, from distributors to station owners and transporters, are now subject to enhanced scrutiny. They are required to submit detailed transaction data within 24 hours to both the Authority and the Ministry of Trade & Regional Integration (MTRI), ensuring a dual layer of bureaucratic oversight. The directive has effectively made the traditional paper trail and informal communications obsolete.

Fuel stations are required to install flow metres, replacing deep-stick methods, a technological upgrade that not only promises measurement accuracy but also exposes loss patterns.

“We’re not just modernising the system,” said Habtamu Milki, the Authority’s legal head. “We’re closing loopholes that have enabled theft and fraud to flourish. There wasn't a proper penalty framework for distributors and stations. This regulation brings the entire trade under a legalised system."

This state-backed support helped cushion EPSE’s razor-thin trading margins. Gross profit rose to 1.37 billion Br, up from 1.18 billion Br in 2022/23, while operating profit soared to 917.4 million Br, marking a stunning turnaround from the 117.3 million Br booked a year earlier.

Transporters diverting fuel trucks face escalating sanctions, and regional governments are moving swiftly. In the Somali Regional State, the Trade Bureau fined 136 stations 150,000 Br each, collecting 20.4 million Br in penalties. Only 20 companies were spared after proving technical connectivity issues with Ethio telecom, Abdulah Sheikh-Hassen, head of the Bureau, disclosed.

This shows a broader shift towards accountability in enforcement, moving beyond dependence on Telebirr logs to include other platforms, such as E-Birr, signalling the officials' newfound digital awareness.

"This change unveiled our region's heavy reliance on E-birr," he said.

Despite the regulatory muscle-flexing, the economic reality for many operators remains grim. Distributors complain that they earn as little as 40,000 Br a load, on deliveries worth up to 60 million Br. Station owners fare even worse, often eking out 8,000 Br a truck. With annual overheads such as rent running into millions of Birr, even large increases in margins would barely make a dent.

"Some stations pay up to one million Br monthly for rent, relying on illicit trade," said one official, speaking anonymously. "Even a threefold increase in margins wouldn't make many of them profitable."

The official confirmed that the Authority is reviewing profit margin reforms, but acknowledged that incomplete audited financials from many operators may complicate efforts. This uncovered the broader informality embedded in the fuel economy, where low returns and operational opacity have fed the informal trade.

The Ethiopian Petroleum Dealers Association (EPDA), representing 1,590 stations, is in favour of mandatory flow meters. Losses due to discrepancies, up to 1,000 litres a vehicle, translate into tens of thousands of Birr gone, often untraceably.

"We're pleased about this," said Ephrem Tesfaye, board member of the Association.

However, this solution brings its own technical challenges. Fuel volume changes with temperature, an issue that Ethiopia’s hot climate heightens.

“A single truck can lose 500 litres on a hot day,” said Ephrem.

Unless the meters adjust for these fluctuations, station owners may still absorb the cost, undermining the reform’s intent. While quantity losses dominate the debate, quality degradation looms larger. The influx of counterfeit lubricants has raised red flags, with the Ethiopian Oil Companies Association calling for enforceable standards.

"We've been lobbying for a national standard," said Tadesse Girma, the secretary general.

He disclosed that the Standards Institute is developing specifications to eliminate substandard imports, a move seen as vital to safeguarding engines, public trust, and the broader downstream market.

The crackdown is not merely theoretical. Several companies, such as Ful M Oil Ethiopia, Halfay Petroleum, Nejashi Petroleum, Top Oil, and Yenat Petroleum, were suspended for failing compliance checks. They face a two-month embargo on receiving fuel, a clear signal that the rules now carry consequences.

According to Ahmed Tusa, a former adviser to the Ministry of Trade, scaling up fuel sales, not margin tweaks, is the only sustainable solution.

"The industry thrives on volume," he told Fortune. "The more you sell, the more you earn."

While Ahmed welcomed the flow metre requirement, he believes that for the system to self-correct, reforms should incentivise volume, not just punish divergence.

The ongoing regulatory intervention represents the authorities' most serious attempt yet to formalise and digitalise a fuel industry long dominated by informality and inefficiency. While implementation issues remain, particularly around technology calibration, profit structures, and supply chain discipline, PEA officials hope the foundation is being laid for a more accountable and transparent market.

PUBLISHED ON Aug 23,2025 [ VOL 26 , NO 1321]