Advertorials | Nov 26,2024
Three inter-city transport companies have spent 450 million Br on new vehicles to meet the federal government’s fleet requirements.
The operators are working to replace about 1,600 vehicles under an amended commercial road public transport directive signed by Alemu Sime (PhD), ministry of Transport & Logistics (MoTL), which sets minimum fleet sizes by operator category and requires firms to expand step by step.
Each new vehicle is estimated to cost about 25 million Br. The companies blame limited bank lending, taxes and duties, licensing delays, shifting requirements and a shortage of electric-vehicle charging and natural-gas stations as the obstacles in their way.
They also claim the final directive strayed from what was agreed during consultations. Part of their contention is the use of "rental contract" rather than "joint operational contract." They are unhappy about the removal of a clause that would have let private limited companies run vehicles obtained through such arrangements up to twice the number registered under their own ownership.
Their managers claim the policy that pushed them to buy in the first place is putting their investment at risk. They claim financing is scarce, the charging and refuelling network is sparse, and public support has fallen short when it mattered most.
According to Berhane Zeru, chief executive officer of Ethio-Africa Transport Business and president of the Transporters' Federation, frequent regulatory changes had made investment hard to plan.
Sources said that the companies has lost a financing arrangement with the Commercial Bank of Ethiopia (CBE) because an expected letter from the Transport Minister never came.
"This was the time we needed support most." Berhane told Fortune.
Ethio-Africa has since spent more than 100 million Br on new vehicles after a loan from Dashen Bank, and intends to replace its whole fleet.
“We’re planning to replace all of our over 1,000 trucks with new ones," Berhane said.
For others, the tax bill bites hardest. Genzeb Asemamaw, chief executive officer of Almenson Trading Plc, disclosed the company had taken delivery of five trucks with another 24 in the pipeline, each costing about 25 million Br. Nearly half of the outlay went to taxes and duties.
“We would have bought two times more if we had tax relief," he said.
Shareholder contributions covered 40pc of the financing and loans the remaining 60pc. According to individuals familiar with the sector, some vehicles bought about eight months ago had yet to receive operating licences, held up by bureaucratic delay.
Financing is the main barrier for Merti Kegna Trading S.C. as its managers tried to expand. Its Chief Executive Officer, Tamrat Beyene, disclosed that the company was unable to secure loans from banks. It drew most of its money from shareholders' equity and a 30 million Br loan from Akkagedda Trading Company.
“The lack of bank finance had left the firm unsure it could afford more vehicles,” he told Fortune.
Bareo Hassen, state minister for Transport, acknowledged that no direct assistance had been given to these operators, although the state could help through policy guidance, encouraging banks to lend and weighing government-backed financing later.
“Tariff cuts and exemptions apply only to electric and natural-gas vehicles, their spare parts, with no equivalent relief for other imported vehicles,” he said.
The fleet rules arrive alongside a national push into electric and natural-gas vehicles. Operators say the policy has drawn investment, but that charging and refuelling points remain scarce, including in Addis Abeba. Because buses and charging systems are largely imported, limited finance leaves operators exposed to foreign-exchange swings and higher costs.
Research points to high upfront costs, inadequate charging, scarce technical skills and spare-parts shortages impacting a sector whose annual revenues are estimated to reach three billion Birr a year. The power grid poses further constraints, since buses need a dependable supply to run long hours on fixed routes. Natural-gas vehicles carry their own gap, needing refuelling stations, conversion shops, parts and trained technicians. Short of both networks, firms could be left with costly vehicles that are hard to keep on the road.
A five-year strategy to 2030 on national e-mobility names fleet transition, charging infrastructure and public-transport electrification as priorities. However, prospective investors in the transport sector do not find the policy matching with financing, tax relief, licensing support or working infrastructure.
According to Bereket Tesfaye, a transport and energy expert, converting 1,600 intercity buses would demand heavy preparation in energy, finance, skills and security.
“The fleet's total power need can be worked out only after weighing the buses' size, capacity, specifications, routes and operating conditions,” he said. "The energy requirement is very large.”
Bereket, who served as a program manager for Ethiopia at Pure Earth and studied the feasibility of electric vehicles in Ethiopia at a post-graduate school, estimated that a bus carrying 30 passengers, 40, and one carrying 60 passengers would have different energy requirements.
“The scheme would lean on charging stations, substations and enough distribution capacity,” he said. “Operators with 15 or 20 buses might need dedicated substations beyond what existing transformers can carry.”
The government would have to decide where charging stations, substations and depots go, and how they connect to the national grid, guided by the number and type of buses on each corridor.
However, the intercity bus market has become easier to see but no easier to map, as a national transport digitisation programme exposes the scale of the business while leaving its ownership and revenues largely hidden.
Figures disclosed during the launch of the national digital transport system in May 2025 counted more than 1,995 buses, organised into 13 cross-country bus associations. They run 255 registered inter-regional routes, carrying about 480,000 passengers a month. That is about 5.76 million journeys a year.
What the data still does not show is who controls the market. No credible public figure exists for total intercity bus revenue. The Ministry has not published an operator-by-operator breakdown of fleets, passengers, revenues or market shares, and there is no verified roster of all 13 associations. Many long-distance operators function as owners' associations, collections of individual vehicle owners under a common name, rather than as single incorporated fleets.
Among the associations, Abay Level-One Cross-Country Bus Owners' Association is one of the largest, with 106 members and 98 buses deployed. Hidasie Bus has reportedly controlled 35 cross-country buses.
Federal transport officials say digitisation could eventually turn the sector into a measurable industry, with estimates that it could add about 24 billion Br in value by 2028. They also foresee 130,000 jobs created, and yield about two billion Birr in tax revenue.
Experts like Bereket caution that rolling out all 1,600 at once could overload the grid and force major expansion in generation, transmission and distribution. They encourage a phased approach; at about 200 buses an operator, it would let infrastructure keep pace.
Some buses might travel 600Km to 700Km yet still need to recharge mid-route. Stations would be needed at the start, middle and end of major corridors.
“After travelling a certain distance, the vehicle may need to charge at a location in the middle of the route," Bereket said. "If that is not available, the journey could be interrupted."
Bereket, who once managed a vehicle import and assembly company, argued the Ministry would probably have to build the supporting network while private firms buy and run the buses, with state enterprises in power, telecommunications, and related services collaborating, and government-backed depots in Addis Abeba, Jigjiga, and along major corridors. Under such an arrangement, the public sector would provide the basic infrastructure while private operators managed the vehicles and services.
“The question is who will support the financing," he said. "If it’s through loans, the repayment period and other conditions need to be examined."
The biggest risk, according to Bereket, is security. Buses could run corridors linking Addis Abeba with Mekelle, Wollega and Gojjam, where capital-intensive charging stations, substations and depots could be damaged if security conditions worsen.
"Infrastructure established in those areas could be damaged," he said. "Because it is capital-intensive, considerable investment could be lost if the facilities are destroyed.”
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