Ethiopia has launched the first 26 natural gas-powered public buses in Addis Ababa and announced plans to bring in an additional 400 within three months, a move Prime Minister Abiy Ahmed says could cut public transport operating costs by at least 50 percent and ease the financial strain on millions of commuters.
The rollout represents the first commercial application of domestic natural gas extracted from the Gode area in the Somali Regional State. Unlike liquid petroleum products, natural gas requires dedicated infrastructure for compression, high-pressure transport, and city distribution.
“Because it is in gaseous form, extracting it from the well, transporting it, and delivering it to users requires significant additional work,” Prime Minister Abiy stated during the launch. To manage the logistical challenges, authorities have established custom storage facilities, high-pressure transportation tankers, and dedicated gas-filling stations across Addis Ababa and along major transit corridors.
A key component of the transition strategy involves retrofitting the existing fleet of the state-owned Anbessa City Bus Service Enterprise from diesel to compressed natural gas (CNG). Domestic engineering teams have retrofitted approximately 256 buses to date. While 26 of these converted units are now active on capital routes, the upcoming delivery of 400 new natural gas buses will significantly scale up transit capacity.
Once fully integrated, the expanded gas-powered fleet is expected to account for 30 to 40 percent of Addis Ababa’s active municipal transport system. The government’s long-term objective is to systematically replace fossil-fuel public transit vehicles across the capital over the coming years.
Illustrating the cost advantages for everyday commuters, Abiy noted that transit fares would reflect the operational savings. Under the updated structure, a typical urban bus journey previously priced at two Ethiopian Birr is projected to drop to one Birr.
To support the broader fuel supply chain, the government has also ordered 100 natural gas-powered commercial trucks, which are scheduled to arrive alongside the new bus shipment.
The transition away from liquid petroleum comes as Ethiopia faces high import bills and ongoing foreign exchange constraints. The country allocates approximately $4.2 billion annually to import refined petroleum, posing a substantial burden on national foreign currency reserves. Additionally, government spending on domestic fuel subsidies reached up to $128 million per month in recent years, according to data from the Ministry of Trade and Regional Integration. Shifting domestic transport and industrial demand to home-grown gas reserves is designed to reduce this financial drain.
Beyond public transit, natural gas utilization has begun expanding into industrial manufacturing. Key facilities, including major ceramic production plants in Mojo and Debre Berhan, have re-engineered their industrial burners to run on domestic gas. According to government figures, these two manufacturing centers currently possess the capacity to meet total national ceramic demand, lowering production costs for core building materials.
“For low-income households, transportation and housing represent two of the largest financial burdens in Ethiopia,” Abiy highlighted during his address. “By lowering transport costs, supporting affordable housing initiatives, and maintaining focus on food security, we are addressing the primary economic pressures affecting our citizens.”
The deployment of gas-powered buses signals a broader shift in how Ethiopia leverages its hydrocarbon resources. For decades, an estimated seven trillion cubic feet of natural gas located in the Ogaden Basin was viewed primarily as an export commodity.
The initial phase of the Ogaden LNG development project, inaugurated in October 2025 at the Calub gas field, established an annual production capacity of roughly 111 million liters, initially targeted at domestic heavy industry and regional export markets.
However, policy priorities have adjusted toward immediate domestic import substitution. The second phase agreements signed in mid-October between international energy partners—including China’s GCL Group and Jurong Group—aim to expand processing infrastructure.