The Ethiopian Ministry of Trade and Regional Integration has stated that the government's decision to lift fuel subsidies has helped reduce fuel smuggling. Fully passing fuel prices to consumers, the prices are now uniform across Ethiopia and neighboring countries, according to the Ministry.
Currently, fuel prices in Ethiopia stand at around $1.3 per liter, close to the global average. This price is lower than Kenya's $1.4 per liter rate.
"The lifting of fuel subsidies has helped reduce fuel smuggling across borders. While some contraband still occurs, it is not as prevalent as before when prices differed between countries," remarked Gebremeskel Challa, Ethiopia's Minister of Trade and Regional Integration.
Standardizing fuel prices and removing subsidies aims to curb smuggling while improving the financial sustainability of the energy sector. The move brings Ethiopia's fuel costs more in line with global benchmarks.
In a report released last month, the Ethiopian Petroleum and Energy Authority analyzed fuel transactions over the first half of the current fiscal year. It showed total fuel sales exceeded 163 billion Birr from July 2023 to January 2024.
The bulk of fuel, 113 billion Birr worth, was sold with subsidies applied. However, 50.7 billion Birr worth was also sold without subsidies during this period. Specifically, 199,358 vehicles purchased subsidized fuel while 900,497 vehicles bought unsubsidized fuel.