The cash crunch is smearing into the economy. International companies often trading with Ethiopia, a country with a sound track record of faithfully servicing its debts, are becoming reluctant to take the risk of furnishing transactions on credit, knowing that the balance of Ethiopia's current account has become the lowest in several years, gossip claims.

A revealing incident happened a few weeks ago; the state owned Commercial Bank of Ethiopia (CBE) had wanted to open a letter of credit (LC) worth 120 million dollars, on behalf of another state owned company, the Ethiopian Petroleum Enterprise (EPE), according to gossip. It was to be paid to a beneficiary in Hong Kong (with an Indian name). Unfortunately, CBE's most favoured corresponding bank, Citibank, declined the business, to the disappointment of managers at the first, disclosed gossip.

Gossip says that the business finally moved over to the German Commerz Bank, which was kind enough to open the LC for 50 million dollars. The purchase for diesel has yet to be made, with the company in Hong Kong proving to be a pain in the neck for authorities here; in a global market where oil is selling like a piece of cake, no supplier is under pressure to sell as fast as the stuff could go, least of all on credit, according to assessments at the gossip corridor.

But this has nothing to do with the whole town going wild last week, with rumours and speculations that the nation suffers from an acute shortage in the supply of oil. Many were seen rushing to fill their tankers, and attempting to keep barrels in anticipation of a dry season ahead.

For one, there is sufficient reserve inside the country, and at the Port of Douraleh in Djibouti. And almost all supplies of benzene, estimated to reach over 150,000tns a year, come from Sudan. Importing the diesel from Sudan was also an option on the table for decision makers, gossip disclosed. But diesel there comes from the deep central part of Sudan, where it is a bit too far from Ethiopia and involves too much of uncertainty concerning the security of trucks.

The consumption of diesel is critical now, not simply because vehicles, trucks and industries are using it. It has also become indispensable for too many businesses in Addis and major towns, where generators are roaring, replacing power supply from the state utility monopoly. The rush to store as much diesel as possible comes also from fear of paralysis as a result of a shortage of fuel and power shedding imposed by EEPCo.

There is, however, good news in the offing; managers at EEPCo, whose reputations were bruised due to the unexpected power shedding, are hopeful that they will soon stop imposing it. They are also under immense pressure from higher authorities, who could not conceal their embarrassment at claiming infrastructural expansion on the one hand, and witnessing EEPCo's utter failure on the other.

They had a meeting last week to decide whether or not to resume daily supply of power, gossip disclosed. Although the deficit on power generation narrowed from 80Mw to 45Mw last week, the officials are divided into camps on what course of action to take. Officials like Asfaw Dingamo, minister of Water Resources, and Shferaw Jarso, the ruling party's parliamentary whip and board member of EEPCo, who is also a predecessor of Asfaw, are advocating an immediate resumption of daily power supply, after confirming that the level of water in the dams has risen, said gossip.

Girma Birru, minister of Trade and Industry, and chairman of the Board, remained cautious, suggesting that EEPCo should wait until it gets into a comfort zone, and move slowly towards implementation of daily power supplies, according to gossip.

Gossip claimed that they finally settled on the decision to let Miheret Debebe, general manager of EEPCo, to use his management discretionary power on what to do. Judging from the continuous supply last week, it would seem that he has proven to be the cautious man he has always be seen as in the gossip corridors.