PETROL, DIESEL AND COOKING GAS: HOT COMMODITIES IN

C O N F I D E N T I A L ASMARA 000804

SIPDIS

SIPDIS

LONDON, PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 10/06/2016
TAGS: PGOV ECON EPET ER
SUBJECT: PETROL, DIESEL AND COOKING GAS: HOT COMMODITIES IN
ERITREA THESE DAYS


Classified By: AMB Scott H. DeLisi, for reasons 1.4 (b)
and (d)


1. (U) Summary: Lines snaked through petrol stations over
the weekend of September 30, as word of gasoline
shortages spread. The mothers of Asmara, who have been
increasingly reliant on kerosene for cooking, feared it
might be the next fuel to disappear and rushed to stock
up, adding to the fuel "panic." Fuels - gasoline,
diesel and kerosene - all require the expenditure of
Eritrea's scarce foreign currency. We anticipate that
the GSE, which continues to exercise strict control over
the economy, will shift resources to ensure a steady
trickle of these fuels, although perhaps not all at the
same time. Recent changes to diesel distribution and the
choice by the GSE to temporarily stop the transport of
gasoline from Sudan to Eritrea all add to the on-going
fuel problems in Eritrea. Furthermore, with no private
sector supply alternatives to the GSE's fuel
distribution, fuel problems for the population are likely
to continue. End Summary.


2. (U) For the past few months the propane supply, the
primary gas used for cooking in the urban areas, has been
nearly non-existent. As a result, Asmarinos have
resorted to using kerosene for cooking. Recent
shortages in gasoline fueled a panic that kerosene will
be the next to drop off the list of available fuel and
thus created a run on the limited market. Gasoline
reportedly will become available again between October 6
and 8.


3. (U) The shortage of propane began several months ago
forcing many restaurants to close for several days at a
time. Until recently, diplomats had been able to get
propane, although only by formal request to the Ministry
of Foreign Affairs. (In one instance, the Embassy had to
provide a restaurant owner with a letter that enabled him
to procure cooking gas to cater a representational
event.) On October 3, a staff member of the European
Commission (EC) told Poloff the GSE had informed them
that the EC would no longer receive their supply either.


4. (C) On the diesel front, the GSE transferred the
control of diesel fuel from the Petroleum Corporation of
Eritrea to the Ministry of Defense in late August but
offered no public comment on the reasons for the
transfer. Following this development, Embassy Asmara,
the UN, and various other foreign missions received
letters indicating that their diesel allotment would be
restricted. For some, such as the European Commission,
the new allotment represented nearly a 50 percent cut
from their previous one. The United Nations Mission in
Ethiopia and Eritrea (UNMEE) ration was also cut, by
almost 40 percent. The SRSG told Ambassador that he was
concerned that the cuts would severly constrain UNMEE
operations though others in UNMEE were not as concerned.
(Comment: While the Embassy also received a reduced
allotment, the amount is sufficient for business needs
under current power availability, described septel. End
Comment.)


5. (U) For locals, diesel is now available for purchase
only with ration coupons. Residents must justify the
need for diesel when applying for these coupons, for
example by proving a business need or a special event
like a wedding, which are then issued through the local
municipality. In practice, the reduced diesel supply has
only minimally affected the small percentage of
individuals driving privately owned vehicles. Of much
greater impact to local residents has been adjustments in
public transportation. This weekend, the two public bus
systems (and only bus lines) suddenly saw a 40% reduction
in service in the greater Asmara area. In typical
Eritrean fashion, the GSE-controlled media reported on
the cuts only after people waited during the weekend for
busses that never arrived. The media reassured the
public that this reduction in services would allow the
bus companies to "implement major development programs"
and to "help achieve goals".

6. (C) In a meeting on September 29 with Emboffs, Ahferom
Tesfagabir, the General Manager of Total Oil(formerly
Mobil),confessed to the complete absence of petrol in
Eritrea. He said that Total Oil had provided diesel fuel
to the GSE for a tanker to travel from Massawa to Port
Sudan to receive a supply of gasoline. For some reason
unknown to him, the tanker had not yet departed Massawa.
He speculated that the reason might be political, given
the exchange of harsh words during the week between
Sudanese President Bashir and the GSE about Darfur and
Sudan's internal stability. According to Ahferom, upon
transferring control of diesel to the Ministry of Defense
the GSE immediately charged it with the task of
significantly reducing diesel consumption. He further
noted that the on-going issues with the fuel supply are
all related to the Eritrea's continuing trouble in
obtaining hard currency.


7. (SBU) Comment: The lack of gasoline for the past few
days has not had major impact - so far. However, should
the problem continue and should kerosene stockpiling by
individuals lead to GSE restrictions, the rural
communities would most likely feel the pressure first.
They are heavily dependent on kerosene for cooking, since
harvesting wood (unless it is already on the ground) is
strictly prohibited and charcoal is expensive. With
severe penalties for black market activities and, as
such, nearly no black market, no other options exist for
Eritreans seeking fuel. We expect that the GSE's limited
supply of hard currency will continue to result in its
inability to procure enough fuel to meet demand, and
shortages like those seen in the past weekend will
continue. End Comment.
DELISI