The Ethiopian government’s fuel subsidies have significantly increased the debt of the Price Stabilization Fund, now totaling 133 billion birr over the past five months, according to the Petroleum and Energy Authority. Of this amount, 30 billion birr is attributed to subsidized payments, highlighting the growing financial strain on the government.

Sahrela Abdullahi, Director General of the Petroleum and Energy Authority, presented these figures during a session of the House of People’s Representatives. He noted that the failure to adjust oil prices in recent years has severely depleted the funds originally allocated for price stabilization. The fund’s reserves have dwindled from 58 billion birr to 133 billion birr in just five months of the current fiscal year.

Sahrela explained that despite stable global oil prices, the government’s losses have escalated. He stated, “The loss of 58 billion birr in July 2016 has now risen to 133 billion birr due to increasing debt from fuel subsidies.” This alarming trend was discussed during a session where lawmakers adopted a new bill aimed at regulating the trading system for petroleum products.

The new proclamation mandates that petroleum importers must prepare annual procurement plans based on national fuel needs and adhere to quality standards for imported products. Additionally, it imposes obligations on fuel distributors to maintain adequate reserves and build depots capable of holding significant quantities of fuel.

The authority also highlighted accessibility issues, revealing that over 500 districts in Ethiopia currently lack gas stations. To address this, regulations have been introduced to improve distribution networks and ensure better access to fuel.

Severe penalties have been established for violations related to petroleum product sales. Those found trading outside government-set prices or mixing fuels with foreign substances could face imprisonment of three to five years and hefty fines ranging from 300,000 to 500,000 birr. Similarly, storing or selling petroleum products outside authorized locations may result in up to three years in prison and fines between 350,000 and 500,000 birr.