Ethiopia will begin transporting fuel products by rail starting Tuesday, marking a major shift in how the country moves strategic imports and signaling a renewed push to reduce logistics costs, foreign-exchange losses, and pressure on its overstretched road network.

The pilot project is being implemented by the Ethio-Djibouti Railway Joint Stock Company (EDRC) in partnership with the National Oil Company (NOC), following a directive issued by Prime Minister Abiy Ahmed earlier this month. The initiative will bring 110 fuel transport wagons into operation—assets that have remained unused for years despite Ethiopia’s growing fuel demand.

Unlocking Idle Infrastructure

The fuel wagons were procured as part of the broader Ethio-Djibouti railway project but were never deployed due to missing last-mile infrastructure linking the railway to fuel terminals. Ethiopia has historically relied almost entirely on road transport for fuel deliveries from Djibouti, exposing the economy to high transport costs, supply disruptions, and foreign-exchange leakages.

During a visit to the Horizon Oil Terminal in Doraleh, Djibouti, Prime Minister Abiy directed authorities to urgently shift fuel transportation to rail, citing efficiency, cost reduction, and national security considerations.

Sources familiar with the matter said negotiations are currently underway with Djiboutian counterparts to construct a 1.5-kilometer rail connection between the Horizon Oil Jetty and a nearby railway station—an infrastructure gap that has long prevented fuel from being loaded directly onto trains.

Trial Run Begins This Week

The initial trial run is scheduled to depart from the Ndode Railway Depot, located on the southern outskirts of Addis Ababa. The first shipment is expected to transport approximately 120,000 liters of diesel, allowing regulators and operators to assess safety, quality assurance, and operational readiness.

“Once the pilot meets the required safety and performance standards, fuel transportation by rail will be rolled out at scale,” sources said, adding that regulatory oversight will be closely coordinated with energy and transport authorities.

If successful, the program could be expanded to include gasoline, jet fuel, and other petroleum products, significantly altering Ethiopia’s fuel supply chain.

Cost Savings and FX Impact

Logistics experts say the move could generate substantial savings for the Ethiopian economy. Currently, fertilizer and fuel are trucked short distances between ports and rail terminals—a process that costs the country up to $10 million annually, according to industry estimates.

Beyond direct transport costs, the reliance on trucking has contributed to:

• Higher fuel prices due to inefficiencies
• Increased road congestion and maintenance costs
• Supply disruptions during fuel shortages or security incidents
• Elevated foreign-exchange outflows

Transporting fuel by rail is expected to lower per-unit transport costs, reduce fuel losses, and improve supply predictability—an especially critical factor as Ethiopia continues to manage foreign-exchange shortages and inflationary pressures.

Stabilizing Strategic Markets

Fuel and fertilizer are considered strategic imports in Ethiopia, with direct implications for food security, industrial production, and inflation. Disruptions in fuel supply often cascade across the economy, affecting transport costs, electricity generation, and consumer prices.

By shifting these commodities to rail, policymakers hope to stabilize volatile fuel and fertilizer markets, while also improving the reliability of deliveries to major consumption hubs, including Addis Ababa and industrial zones along the railway corridor.

“This is not just a logistics reform—it’s a macroeconomic intervention,” said one logistics analyst. “Lower transport costs ultimately feed into lower inflationary pressure and improved competitiveness.”

Broader Railway Revival Effort

The fuel transport initiative comes amid broader efforts to revive the Ethio-Djibouti railway, which has struggled with operational challenges, power shortages, and lower-than-expected freight volumes since its launch.

Authorities view fuel and fertilizer transport as anchor cargoes that could improve the railway’s financial sustainability, increase utilization rates, and justify further investment in supporting infrastructure.

If the rail-based fuel transport system is fully operationalized, Ethiopia could significantly reduce its dependence on long-haul trucking—an outcome aligned with the government’s wider goals of modernizing logistics, lowering import costs, and strengthening economic resilience.