Ethiopia’s decision to phase out fuel subsidies has sparked widespread concern among lawmakers and industry stakeholders, as reports of empty filling stations and supply bottlenecks mount across the country. The issue took center stage during a recent session of the House of People’s Representatives, where members questioned the government’s approach and warned of potential economic fallout if underlying problems in the fuel supply chain are not addressed.
The Ministry of Trade and Regional Integration (MoTRI) confirmed that, as of June 4, 2025, the government has suspended fuel subsidies, aligning domestic prices with global market rates. This move follows a series of price hikes earlier in the year, with gasoline now retailing at 122 birr per liter and diesel and kerosene at 116 birr per liter—an increase of 10 birr since May. The government argues that the subsidy removal is essential to reduce fiscal deficits and bring Ethiopia’s fuel market in line with international norms.
Despite these justifications, parliamentarians voiced alarm about persistent shortages and non-operational fuel stations, some of which have reportedly remained idle for over three months. They highlighted that, even though prices have not risen dramatically in recent weeks, the removal of subsidies has not led to the anticipated improvements in supply. Instead, the market appears to be grappling with deeper structural issues.
Parliament members called for a comprehensive review of the entire fuel marketing chain—from importers to retailers—citing difficulties in securing fuel imports, lengthy delays at ports, and allegations of corruption, including bribes of up to 400,000 birr to expedite shipments. “If these problems are not addressed from the bottom up, lifting subsidies could trigger even greater disruptions,” warned one lawmaker.
Minister of Trade and Regional Integration, Kassahun Gofe (PhD), acknowledged the challenges, noting that the government imported 121 million liters of fuel this year but has only managed to distribute about 55 million liters, with the rest hampered by logistical and market constraints. He emphasized that the government’s remaining subsidies are targeted at ensuring equitable access for low-income residents, but coverage is now limited to just 8.8 percent of the market.
Kassahun also pointed to ongoing efforts to crack down on fuel smuggling and illegal trading practices, which he said have distorted the market and undermined the purpose of subsidies. Companies found engaging in such activities have faced bans and hefty fines, but enforcement remains a challenge.
Industry experts and business leaders echoed these concerns. According to recent data, Ethiopia has 698 gas stations as of May 2025, an 11.68% increase from 2023, but many regions remain underserved, with over 500 districts lacking any fuel retail infrastructure.
The government has pledged to address these gaps through a new fuel master plan, which aims to identify priority areas for new station construction and improve distribution logistics. However, lawmakers questioned the pace of these reforms and called for greater transparency and accountability throughout the sector.
The debate comes amid broader economic pressures, including high inflation, foreign exchange shortages, and volatile global oil prices. The government spends more than $4 billion annually on fuel imports, and officials argue that continuing to subsidize prices is unsustainable in the long run. “If the private sector and business community do not share the burden, it will be challenging for the government to carry out major projects,” Kassahun stated.
