Ethiopia Grants Tax Exemption for Natural Gas Vehicles to Promote Local Energy Use

Addis Ababa, October 10, 2025 (FMC) — The government of Ethiopia has announced a comprehensive tax exemption for all types of dry and liquid cargo vehicles, as well as public transport vehicles powered entirely by natural gas (CNG – Compressed Natural Gas).

The measure is part of a broader national strategy aimed at promoting the use of domestically produced natural gas and reducing the country’s dependence on imported petroleum products.

Although Ethiopia possesses significant natural gas reserves, the nation has for years been unable to fully harness this resource.

Recent progress, however, shows that the government’s sustained efforts to reverse this situation are beginning to yield tangible results.

A newly established natural gas processing plant has officially begun operations in the Callub area, marking a key milestone in Ethiopia’s energy sector.

The facility enables the country to process and utilize its own natural gas resources. With production now underway, the government plans to supply the local market and accelerate the shift from petrol and diesel-powered vehicles to those running on natural gas.

In a letter addressed to the Ethiopian Customs Commission on Thursday, the Ministry of Finance underscored the multiple advantages of natural gas. The Ministry noted that natural gas produces far lower carbon emissions, offers high energy efficiency, and serves a wide range of power applications.

Beyond its environmental benefits, the Ministry highlighted that locally produced natural gas presents an important economic advantage by easing the country’s foreign currency burden associated with fuel imports.

To facilitate this transition, the government has enacted new regulations permitting the duty-free import of public transport and cargo vehicles—both for dry and liquid goods—that operate exclusively on natural gas.

This initiative aligns with Ethiopia’s wider efforts to bolster energy security, promote environmental sustainability, and enhance the logistics and transport sectors through the adoption of cleaner and more affordable fuels.