Ethiopia ends fuel subsidy, increases pump prices [also kerosene prices]

Ethiopia ends fuel subsidy, increases pump prices [also kerosene prices]

Reuters - October 4, 2008

Ethiopia removed an annual $800 million fuel subsidy on Saturday and said the money would be used to stabilize rising food prices.

"The $800 million which the government was spending on fuel subsidies will be channeled to ease the spiraling cost of food grain during the current harvest season," the Ministry of Trade and Industry said in a statement.

Ethiopia says the combination of drought and high global food prices have forced prices upwards. It has already imported and distributed 150,000 tones of cereal to ease the shortage.

The ministry said a liter of petrol would now cost 10.15 birr from 9.61 previously. Kerosene is retailing at 8.59 birr from 5.72 birr previously.

Analysts say the subsidy removal may exacerbate inflation which was at 19 percent in March, according to government statistics. Read More.