Ethiopian Petroleum Supply Enterprise to receive 286 billion Birr recapitalization

This allocation was approved by the Ministry of Finance on June 12 and authorized by the board of Ethiopian Investment Holdings EIH, chaired by the Deputy Prime Minister, on June 23. Approximately 170 million Birr will come from World Bank funds by the end of the 2025/26 fiscal year, with the remaining 116 billion Birr drawn from this year’s 2.3 trillion Birr budget before March 2027. A temporary surcharge at pumping stations is expected to generate nearly 80 billion Birr, intended to clear outstanding claims on the Fuel Price Stabilization Fund and build EPSE's liquid assets to cover trade credit liabilities.

The government aims to collect 176 billion Birr from fuel taxes and an additional 90 billion Birr from motor vehicle and accessories taxes this year. This recapitalization, equivalent to 1.3 percent of GDP, is part of a plan to transition to lower-cost sight payments for fuel imports, reduce reliance on deferred Letters of Credit, and eventually implement an automatic fuel pricing mechanism. Challenges in fuel import include reliance on two suppliers, logistical constraints from Red Sea ports, and high costs associated with spot market purchases.

Despite recent improvements in supply and a moderate fall in prices, the IMF document highlights acute short-term financing pressures due to high fuel and ferti