Worry and frustration in Ethiopia as subsidies cut and fuel prices soar

Fuel prices soared in Ethiopia on Wednesday after the government reduced subsidies, adding to economic hardship for people already struggling with high inflation.

There were long queues at petrol stations in the capital Addis Ababa, with drivers reporting shortages as they tried to fill up their tanks.

The price of petrol at the pump jumped almost 30 percent to 48.83 biir (about 94 US cents) while diesel went up almost 40 percent to 49.02 birr under the new price regime that will run to August 6, the trade ministry said.

The federal government -- which had already hiked prices in May -- plans to lift fuel subsidies progressively, according to the Addis Fortune business newspaper.

Prices of fuel, food and other basic goods have rocketed globally because of the Ukraine war, hitting vulnerable countries in Africa and elsewhere.

The trade ministry said the cost of fuel for Ethiopian consumers should be almost double if it was calculated on current global prices.

"But considering the state the country is in, the government is covering 75 percent of the (price) difference while it was decided that the remaining 25 percent would be transferred to consumers," it said.

Henok Girma, 26, said he had been waiting in line at a petrol station in Addis Ababa for an hour and a half.

"At most of the gas stations, there is a long queue. I don't know what the problem but there is a shortage," he said.

"Whenever I want to fill up with gas, I will have to wake up early in the morning or wait like this for hours."

Businessman Mekibib Abebe added: "Sometimes you can wait for half a day and may not find fuel at the end.

"The obligation of the government is to provide fuel, or at least control how gas stations provide fuel properly."

The Horn of Africa country of more than 110 million people has seen inflation hovering at around 35 percent over the past six months, with food prices in particular registering a sharp rise.

The global surge in prices for basic goods has also eaten into the foreign exchange reserves of the largely importing nation.

In a report covering the first quarter of 2022, Ethiopian investment fund Cepheus Capital said that in December, foreign currency reserves at the central bank were at their lowest in a decade.

Imports of petroleum products in the first nine months of the 2021/2022 fiscal year had jumped by 75 percent to $2.2 billion, and those of cereals by 121 percent to $1.8 billion, it said.