Ethiopia has begun operating its first 26 natural gas-powered public buses in Addis Ababa, with the government announcing plans to introduce an additional 400 vehicles within three months. Prime Minister Abiy Ahmed said the transition could reduce public transport operating costs by at least 50 percent and ease financial pressure on commuters across the capital. The rollout marks the first commercial use of domestic natural gas extracted from the Gode area in the Somali Regional State, a resource that Ethiopia is now prioritizing for domestic consumption rather than export.
The shift to gas-powered transit requires substantial new infrastructure. Unlike liquid fuels, natural gas must be compressed, transported under high pressure, and distributed through dedicated networks. The government has constructed custom storage facilities, high-pressure tankers, and dedicated filling stations across Addis Ababa and along major transit routes to support the transition. The state-owned Anbessa City Bus Service Enterprise has retrofitted approximately 256 buses to run on compressed natural gas to date, with 26 of these now operating on capital routes. The government has also ordered 100 natural gas-powered commercial trucks scheduled to arrive with the new buses.
For everyday commuters, the cost savings will be immediate. A typical urban bus fare that previously cost two Ethiopian Birr is projected to fall to one Birr under the updated pricing structure. Once fully deployed, gas-powered buses are expected to represent 30 to 40 percent of Addis Ababa's active municipal transport system, with the long-term aim of systematically replacing fossil-fuel vehicles across the capital.
Ethiopia faces substantial pressure on its foreign currency reserves due to energy imports. The country allocates approximately $4.2 billion annually to import refined petroleum, according to government figures. Additionally, domestic fuel subsidies cost up to $128 million per month in recent years, according to data from the Ministry of Trade and Regional Integration. By shifting transport and industrial demand to domestic gas reserves, the government aims to reduce this financial burden. Natural gas utilization has already expanded into manufacturing, with major ceramic production plants in Mojo and Debre Berhan converting their industrial burners to run on domestic gas.
Prime Minister Abiy emphasized the broader economic context during the launch, stating that for low-income households, transportation and housing represent two of the largest financial burdens in Ethiopia. He linked the transport cost reduction to wider government priorities including affordable housing and food security. The deployment reflects a shift in how Ethiopia manages its hydrocarbon resources, with policy now focusing on immediate domestic import substitution rather than prioritizing export revenue from the estimated seven trillion cubic feet of natural gas in the Ogaden Basin.
The initial phase of the Ogaden LNG development project, which began operations in October 2025 at the Calub gas field, established an annual production capacity of roughly 111 million liters. Second phase agreements signed in mid-October involve international energy partners including China's GCL Group and Jurong Group to expand processing infrastructure. For savers and commuters in Ethiopia, lower transport fares mean reduced daily expenses, while for businesses, cheaper fuel costs could improve overall competitiveness and reduce production expenses.