Ethiopia’s Government Officially Ends Fuel Subsidy: Prices to Follow Global Market Rates













Addis Ababa – June 21, 2025The Ethiopian government has officially announced the complete removal of its fuel subsidy, a policy shift set to recalibrate the country’s fuel pricing structure in line with international market rates. The Ministry of Trade and Regional Cooperation confirmed that the new directive, which has been in development for over a decade, marks a significant move toward liberalizing the domestic energy market.

End of a Gradual Phase-Out

The fuel subsidy, introduced to protect low-income households from global price volatility, had been undergoing gradual phase-out measures since 2022. The government initially planned to fully terminate the subsidy by June 2024, but mounting concerns over its impact on economically vulnerable populations led to its partial reinstatement in July 2024.

Despite these adjustments, the economic burden of maintaining fuel subsidies—coupled with increasing incidents of cross-border fuel smuggling—forced the government’s hand. “The sharp price disparity between Ethiopia and neighboring countries made it lucrative for smugglers and harmful for state revenues,” the ministry noted.

Implementation Timeline

According to the statement:

Gasoline and jet fuel subsidies were removed effective May 9, 2025.

White diesel and all remaining petroleum product subsidies were lifted as of June 4, 2025.

From these dates forward, domestic fuel prices are being pegged directly to global oil market trends, with regular adjustments to reflect international fluctuations.

Government’s Rationale and Public Reaction

Officials cite the need to stabilize the national economy, promote energy efficiency, and combat black-market activity as the driving forces behind the policy. “Continuing the subsidy was no longer economically or strategically viable,” said a senior official at the Ministry of Trade. “It distorted the market and invited corruption and illicit fuel trade.”

However, the announcement comes amid rising public concern, exacerbated by widespread misinformation on social media that triggered panic buying and long queues at fuel stations earlier this week. The ministry urged citizens to remain calm, assuring that supply remains stable and that price adjustments will be transparent and gradual.

Social Impact and Mitigation Measures

While critics fear the move will lead to higher transportation and commodity costs, the government insists that social protection mechanisms are being developed to shield low-income citizens from disproportionate impact.

Policy analysts suggest that this moment could also be a turning point for Ethiopia to diversify its energy sources, invest in public transportation, and encourage private sector participation in renewable energy.

Looking Ahead

As Ethiopia joins a growing list of countries opting to reduce or eliminate fuel subsidies, the full implications of this decision will unfold in the coming months. Economic experts say the success of the policy will depend heavily on the government’s ability to communicate clearly, ensure market stability, and implement safety nets for the most vulnerable.