A law prescribing satellite tracking devices be installed on vehicles engaged in mass transportation is in the making, designed to manage the enforcement of the federal government's impending petroleum subsidy phase-out.

In January this year, the Council of Ministers approved a regulation that proposes fuel subsidies for privately-owned vehicles be lifted progressively within a year, beginning July. Public transport vehicles would see the subsidies reduced by 10pc bi-annually over a five-year period. The remaining vehicle owners will have to carry the full weight of global prices by July 2023. The Ministry is mandated to compile data on vehicles entitled to benefit from subsidies for five years.

Officials at the Ministry hope that GPS satellite tracking devices allow them access to real-time information on vehicles' locations, routes, and speeds. The devices can also monitor most sensors on a vehicle, such as those measuring fuel consumption and accident detection. However, the number of vehicles required to install the GPS is unknown, according to Yohannes Beshawork, coordinator of a committee tasked to oversee the fuel subsidy lift-off.

Headed by Bero Hassan, a state minister for Transport & Logistics, the committee comprises representatives from the Ministry of Trade & Regional Integration, the Petroleum Products Supply & Distribution Regulatory Authority, and regional transport bureaus.

Data obtained from the Addis Abeba Transport Bureau shows that 10,131 mass transport vehicles provide services in the capital. They are part of the over 1.3 million registered vehicles on the country's roads.

Officials say concerns over potential illicit trade in petroleum products due to the dual-rate system to be introduced at pumping stations later this year are the motive behind the tracking systems.

“It aims to monitor those vehicles' activities to receive the subsidies,” Yohannes said. “This includes daily and monthly fuel consumption.”

However, the requirement does not apply to three-wheel rickshaws (commonly referred to as bajaj). Data from the defunct Federal Transport Authority shows that close to 30pc of all registered vehicles are rickshaws or motorcycles.

The regulation passed by the Council of Ministers three months ago includes ride-hailing service providers in the quarterly fuel price adjustment of 25pc beginning July. There are over 10,000 vehicles engaged in ride-hailing services.

Some public transporters do not welcome the lifting of fuel subsidies, claiming that it will add to the already skyrocketing prices.

“Even if it is gradual, the lifting of the subsidies will increase our cost of operation,” said Berhane Zeru, board member of Hidassie Cross-country Transport Plc.

Established in 2011, the transport company provides cross-country travel services with 100 buses.

Increasing fuel prices in the international market have put pressure on the federal government’s budget. Fluctuations in international oil prices are causing a mounting deficit in the Fuel Price Stabilisation Fund established to absorb price shocks from the international market. The deficit has reached 102 billion Br.

Initially, the Ministry planned to identify the number of vehicles required to install GPS before March 19, 2022. However, the deadline has been pushed further. Last month, the Ministry communicated its intentions to close to 50 GPS tracking device suppliers.

Industry players have welcomed the move with mixed feelings.

Solomon Kassa, general manager of Kassa Software Tracking Plc, says the requirement will open new business opportunities for suppliers, although it would be an added spending for owners and operators. GPS tracking devices can cost anywhere between 17,000 Br to 25,000 Br apiece.