Fuel prices have spiked, exacerbated by global supply disruptions and a weakening Birr, leading to higher transportation and production costs. The federal government has announced close to 10pc increase in retail fuel prices, setting the price of a litre of benzene at 91 Br and diesel at 90 Br.

Retail fuel prices have surged over the past five years, driven by global market dynamics, domestic economic reforms, and a depreciating Birr. The gradual elimination of government fuel subsidies, a policy encouraged by international financial institutions, has shifted the burden onto consumers.

Officials have promised to mitigate the impact on consumers, with the Ministry of Trade & Regional Integration (MoTRI) allocating 300 billion Br for petroleum subsidies, covering 80pc of diesel and 75pc of benzene costs. The subsidy is planned to last for one year, subject to quarterly reviews and possible extension.

“Rates have not increased as feared,” said Ahmed Tusa, an advisor to the Minister, noting the sensitivity of local prices to international market fluctuations.

International oil prices, which had remained stable at around 72 dollars a barrel until April, have recently climbed to 80 dollars. Domestically, benzene was previously priced at 82.60 Br a litre, and diesel at 83.74 Br, with market speculation that prices could surpass 100 Br.

According to Ahmed, public transport service providers would continue to receive additional support beyond the previous 19.50 Br subsidy for a litre. Over the past three years, the federal government has disbursed 197 billion Br in subsidies, along with 30 billion Br allocated for public transport. In the past two months alone, 35 billion Br in subsidies has been paid, with 150 billion Br required for credit payments.

The fuel sector faces problems such as waste and contraband, with an estimated 20pc to 25pc of imported fuels sold in the illicit market. Efforts to digitize the fuel supply chain and introduce GPS tracking for fuel trucks have helped curb some of these challenges, according to Ahmed.

As a net importer of crude oil, Ethiopia is highly susceptible to international price changes. Rising fuel costs are compounded by the Birr's depreciation against major currencies. The depreciation has magnified price increases, making fuel more expensive in local currency. Consequently, retail price increases beginning in 2019 reflect not only international oil trends but also Birr’s floating and economic restructuring.

The impact of the price increases is alarming for gas stations across the country. While it is still early to assess the full impact of the recent price hikes, the ongoing construction projects around the capital have hindered business operations.

Tigist Abebaw, office manager at a NOC gas station around Legehar, noted that the profit margin for retailers increased from 0.23 Br to 0.80 Br over the past year, but remains insufficient given the rising prices.

“It'll be too low even at one Birr,” she said.

Tigist added that the station supplements its income by renting out space for cafés and markets. The digitisation of fuel payments has helped reduce issues such as counterfeit currency and cash discrepancies although occasional outages in payment platforms have posed concern, she said.