Until recently, Ethiopia spent more on fuel imports than it earned from exports. Yet, despite billions of dollars poured into petroleum every year, fuel stations are drying up, queues are lengthening, and the black market is thriving. Confronted with a growing mismatch between supply and demand, the government says it is tightening controls, modernizing distribution, and cracking down on illegal trade.
Despite importing more than 4.3 billion liters of petroleum products in the 2024/25 fiscal year—an eight percent increase from the previous year—the gap between supply and demand has only widened.
DestawMekuanint (PhD), director general of the Petroleum and Energy Authority, said that 60 companies are licensed to transport and distribute fuel from the Port of Djibouti to more than 1,600 stations nationwide. Yet 117 stations have shuttered, he noted, citing regulatory violations, avoidance of digital transactions, and hoarding.
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“The real challenge is the mismatch between demand and supply — demand is far higher than supply,” said a representative from a fuel transport company, who asked not to be named. “The Horizon Terminal in Djibouti, which was refurbished 20 years ago, can no longer meet Ethiopia’s current fuel needs.”
The representative explained that safety concerns had forced operators at the terminal to reduce valve speed by roughly 30 percent of daily capacity, even as the facility continues running around the clock. Ship delays, flooding, and logistical bottlenecks have compounded the problem.
“The daily quota for gasoline is about 9,000 cubic meters,” the transporter said. “But rising demand from infrastructure projects, gold refineries, agro-processing, and heavy industries is straining supply channels.” Fuel stations in major cities are frequently overwhelmed, while those in remote or border regions face chronic shortages.
The financial burden is staggering. Ethiopia now spends more than USD 4.5 billion annually on fuel imports—an amount that, until recently, surpassed the nation’s total export earnings.
To rein in the chaos, the government has rolled out a mandatory digital payment system for all fuel transactions. Launched in the 2023/24 fiscal year, the policy requires sales to be processed through platforms such as Telebirr and bank-integrated apps. Officials say the move is meant to improve transparency, eliminate illicit cash-based sales, and allow for real-time tracking.
So far, 1,851 stations have adopted digital payments, but compliance remains patchy. In May, the Authority reported that some stations conducted only nine to 10 percent of their sales digitally, suggesting widespread circumvention.
Take white diesel: of the 1.8 billion liters distributed, nearly 1.5 billion—about 76 percent—were sold through electronic platforms, according to the Authority’s annual report. Benzene lags further behind. Of more than 540.6 million liters distributed, just 313.3 million, or 58 percent, were transacted digitally.
The persistence of black-market trade helps explain the shortfall. In the Robie zone of the Oromia region, a liter of fuel was reportedly selling for as much as 450 birr on the informal market—several times the official price.
A Market Distorted by Hoarding and Smuggling
Destaw warned that fuel transactions conducted outside digital platforms are illegaland punishable under Ethiopian law. The Authority has already taken action against companies that failed to comply. “Fuel stations found to have the lowest levels of digital transactions were suspended from receiving fuel altogether,” he said.
The penalties are steep. Under the Petroleum Products Marketing Proclamation, hoarding, smuggling, or price manipulation can lead to three to five years in prison and fines of up to 500,000 birr.
But the problem runs deeper than paperwork. Hoarding and speculative practices by some station owners have worsened shortages, especially in recent months as the government has repeatedly raised prices. Misinformation about further hikes has only fueled panic.
“In some cases, customers were seen purchasing and storing up to nine barrels of fuel, fearing future shortages, despite government assurances that such rumors were false,” Destaw said. Meanwhile, some station managers deliberately delay unloading fuel, often through the night, in order to sell later at inflated prices. “This manipulation of the market has enabled some operators to earn up to 500,000 birr per tanker, based on unofficial price increases of 10 birr per liter,” he added.
Drivers say they are caught in the middle. A trucker who asked to remain anonymous described the situation in Logia, Dichotu, and Semera, in the Afar Region. Fuel, he said, is sometimes unloaded overnight—only for staff to claim the next morning that none is available. At other times, truck drivers are told to wait for days until the Ministry of Trade and Regional Integration announces a price adjustment.
The delays come at a personal cost. Truckers are paid per round trip between Djibouti and their final destinations, and idle time means lost income.
A representative from a transport company, however, insisted the issue lies less with sabotage and more with sheer scarcity. “The government has yet to address the long queues of vehicles waiting for fuel—even government cars are lining up.” As for trucks delayed en route, the representative added, “We report whenever they’re stopped and explain the reasons behind it.”
Diversion of tankers has also become a growing concern. The Authority says it has begun installing GPS trackers to monitor routes in real time. “If a truck meant to deliver fuel to Shashemene is found rerouted to Adama or Debre Birhan without authorization, that is a punishable offense,” Destaw said. In the past year, 17 trucks were fitted with GPS devices as part of a pilot program. Fuel loaded in Djibouti, he stressed, should reach Addis Ababa within four days; any delay now triggers an investigation.
But truckers say that is unrealistic. “We wait at least seven days, sometimes up to 15, just to queue and load fuel in Djibouti,” the driver said.
Beyond bureaucratic bottlenecks, smuggling across Ethiopia’s porous borders continues to distort the market. The problem is especially acute in gold-rich regions such as Gambella, Benishangul-Gumuz, and Bench Maji in the southwest. “In areas like Dima in Gambella, demand has soared due to gold processing, which relies heavily on diesel-powered water pumps,” Destaw said. “Artisanal miners often pay far above the market rate, which pushes up local prices and incentivizes illegal sales.”
Queues, Quotas, and a Search for Solutions
For months now, long lines of cars and trucks have snaked outside fuel stations across Ethiopia, testing the patience of drivers. Transporters, businesses, and households alike are feeling the ripple effects of a shortage that has become both a daily frustration and a macroeconomic concern.
Delays and inefficiencies at Djibouti’s ports—the lifeline of Ethiopia’s fuel supply—have cut daily deliveries by millions of liters, according to transporters and station owners.
One station owner, approached by The Reporter Magazine, rejected the Authority’s accusations of hoarding and profiteering. “We sell fuel at the price set by Ministry,” he said, referring to the Ministry of Trade and Regional Integration. “The fundamental problem is supply. Over the past two years it has been bad, but this year is the worst—extremely scarce.”
He pointed to the government’s quota-based allocation system as a key driver of the shortages. “It takes 15 to 20 days to move fuel from Djibouti. Under these conditions, obtaining fuel is very difficult,” he explained. Black diesel now requires waits of up to 20 days, he said, while benzene is even harder to come by. “We’ve worked at this post for over a decade, and we’ve never seen a challenge like this year. The government must act.
The constrained port capacity in Ethiopia continues to represent a significant structural vulnerability. Long delays in unloading shipments, combined with inefficient clearing and payment systems, have compounded bottlenecks.
To address the imbalance, the government is weighing a new fuel allocation framework that would distribute supply more equitably based on population density, industrial demand, and geography. The plan would divide the country into seven clusters, including the Addis Ababa–Sheger hub, according to Destaw. Discussions are underway with the Ethiopian Petroleum Supply Enterprise and transport companies, with a proposal expected to reach the Macroeconomic Committee after review by a ministerial steering group.
At the same time, the state continues to subsidize fuel. More than 192 billion birr has been spent to shield consumers, including 30 billion directed toward cross-country buses. Destaw warned, however, that full liberalization would be too painful for households. “But gradually transferring the actual cost to end-users is necessary,” he said, “to prevent further strain on public finances.”
Ethiopia’s appetite for fuel is only growing. In the 2024/25 fiscal year, the country imported over 724,000 metric tons of gasoline and 2.6 million metric tons of white diesel. Large-scale projects alone consumed 17 percent of imports. “These industries demand huge amounts of fuel,” Destaw said. “The Authority is now negotiating with the National Bank on mechanisms to deliver fuel directly to industries and artisanal miners, bypassing retail stations in hopes of easing shortages and curbing black-market siphoning.
But policy alone is unlikely to solve the crisis. Enforcement remains fraught. Destaw acknowledged that some illicit trade is abetted by “irresponsible behavior” within government bodies as well as by station operators and transporters. The Authority has pledged stronger legal action and tighter monitoring in the months ahead.
Ultimately, Ethiopia’s fuel crisis is not simply a matter of supply and demand. It is a test of accountability, infrastructure, and modernization. As the country confronts foreign exchange shortages and the transition to digital systems, the question remains whether its fuel economy can be restructured to serve the public—or whether it will continue to be captured by those profiting from scarcity.
