Addis Abeba — The federal government has resolved to reinstate diesel supply to pre-war levels, reversing months of curtailed distribution triggered by disruptions linked to the Middle East conflict, according to Finance Minister Ahmed Shide.

The decision will see daily diesel supply double from 4.5 million litres to nine million litres, aligning with demand from transport operators, manufacturers and agricultural producers who have faced persistent shortages in recent months. Authorities had previously halved supply volumes as global logistics tightened, constraining imports and inflating domestic costs.

Officials say the restoration reflects a reassessment of economic activity and supply chain pressures. Deliveries have already resumed along the corridor from Djibouti to Addis Ababa, the country’s principal fuel import route. Distribution within the capital began this week, with regional states expected to receive supplies shortly thereafter.

The move, however, comes with a steep fiscal cost. The government plans to inject an additional 20 billion Br a month into fuel subsidies to sustain the higher supply level. Total subsidy expenditure has already exceeded 300 billion Br, underscoring the mounting burden on public finances.

Fuel subsidies have long been deployed as a stabilisation tool, shielding consumers from international price volatility. Yet, their expansion is raising concerns among economists over fiscal sustainability, particularly at a time when competing demands on public spending remain acute.

Market observers anticipate that the increase in diesel availability could ease inflationary pressures in the short term, especially in transport and food distribution, where fuel shortages have translated into higher consumer prices. Still, structural challenges tied to Ethiopia’s reliance on imported petroleum products persist.

The Ministry also indicated that supplies of petrol and aviation fuel have already stabilised at pre-conflict levels, suggesting a partial normalisation across the fuel market. However, exposure to external shocks remains a key vulnerability, given the country’s dependence on international supply chains.

Analysts caution that while the policy shift offers immediate relief to businesses and households, it could complicate macroeconomic management if subsidy outlays continue to rise. Balancing price stability with fiscal discipline is expected to remain a central policy challenge in the months ahead.

The latest measure highlights the government’s effort to cushion the domestic economy from global disruptions, even as it navigates the trade-offs between economic stabilisation and budgetary constraints.