Factors Affecting volume of Fuel Distribution Practices of Market Follower companies in Ethiopia
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Date
2018-06-06
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Addis Ababa University
Abstract
This study was aimed at analyzing factors affecting fuel distribution practices of market follower companies in Ethiopia with specific objectives of examine fuel value chain actors functions, challenges and their relationship along the whole value chain. The data were obtained from both primary and secondary sources. The primary data for this study were collected from 19 market follower oil companies selected purposively. 10 Truck transporters and 15 fuel dealers and 20 consumers selected by using random sampling procedures. MoT fixed profit margin for Oil companies, Truck Transporters and dealers are different according to their value addition activities and these profit margin was assigned before 3 years, due to current the country economic growth and devaluation of Ethiopian currency fuel value chain actors profit margin become very low than previous. It is clear that the oil companies, truck transporters and fuel dealers are not benefiting from the fuel distribution. The whole fuel distribution value chain is governed by EPSE. The result of the multiple regression model indicated that volume of fuel distributed is positively and significantly affected by, utilization of credit, dealers owned gas station, access to market information. Therefore, policies aiming at increasing market follower oil companies improving and increasing credit provider institutions and arranging special kind credit facility, facilitating and improving access land for construction of dealer owned gas station, improving, integrating and easily accessing market information to update fuel value chain actors. Distance from fuel source is negatively and significantly affected thus improving the current road quality and constructing fuel pipeline to reduced transport cost in future are recommended to accelerate the chain’s development.
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Keywords
Factor Affecting, Fuel, Distribution