Govt’s Monthly Loss to Fuel Subsidy Drops to 4 Billion Birr

ADDIS ABABA – Government’s monthly loss to fuel subsidy has dropped to 4 billion Birr from 10 Billion Birr after a revision, says Petroleum and Energy Authority (PEA).

The government began revising subsidies for petroleum products in July, 2022.

The adjustment is a part of a plan to phase out subsidies at gas pumps by June next year, except the public transport sector.

The revision has reduced monthly loss to fuel subsidy of the government from 10 billion Birr to 4 billion Birr, PEA Director-General Sahrelah Abdulahi told the Ethiopian News Agency on Friday.

The government is still subsidizing fuel as per the international fuel market price, Director General Sahrelah said.

Otherwise, she said the cost of fuel for consumers should be much higher, 81 for naphtha and Birr 66 for benzene per liter, if it was calculated on current global prices.

Ethiopia’s debt or loss due to fuel subsidy has so far reached 171 billion Birr.

The measures being taken would gradually ease the debt, said the Director General, adding that the government has secured 5 billion Birr in value added tax levied on fuel stations.

The measures also involve introducing policy incentives to encourage electric vehicles with a view to reducing the huge foreign currency expenditure on fulre purchase, Aysha said.

Last Sept, the Ministry of finance revised its tax regulation to exempt Electric Vehicles – both imported or locally assembled – from Value Added Tax, excise tax, and surtax.

The move was aimed at encouraging local vehicle assemblers and making electric vehicles affordable to users as well as reducing the growing fossil fuel consumption of the transport sector.

Transport officials also plan to come up with “incentive packages” for local manufacturing and assembly EVs as well as associated infrastructure.