Coal Imports Lose Duty-free Status In Latest Tariff Revision

Finance and Customs officials have declared intentions to begin levying customs duties on coal imports.

Ethiopia imports hundreds of millions of dollars’ worth of coal each year, with most of it being shipped in by cement plants, who require the fossil fuel to keep their furnaces lit.

Although Ethiopia produces a surplus of coal, the product is often unsuitable for use in cement factories as it is unwashed. Plans to install coal washing plants also remain unfulfilled.

A recent report from the Ministry of Mines indicates that cement factories could only cover two-thirds of their coal demand through domestic supply during the last fiscal year, while the remainder was sourced from abroad.

Ethiopia imported close to 490,000 tons of coal in 2023, up from 311,000 tons the year prior, and 235,000 tons in 2014, according to the report. The imports were necessary despite nearly 400 businesses holding licenses to produce coal in Oromia, Benishangul-Gumuz, Southwestern Ethiopia, and Southern Ethiopia.

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The decision to impose customs duties on coal imports will likely burden cement plants, despite a letter from Eyob Tekalign, a state minister of Finance, stating the latest revision of customs tariffs is necessary to “provide protection to local industries and assemblers to enable them to become competitive and succeed in import substitution.”

Coal import orders placed prior to the directive can be imported duty free within a 30-day period.

The revision also features changes to duties for vehicles and other products.

Duty rates for motor vehicles, including station wagons and racing cars, buses and lorries, stand at 25 percent.

It limits the designation of ‘new vehicle’ to those which enter the country less than three years following their manufacturing date and have less than 4,000 kilometers on their odometer.

Vehicle import orders placed prior to September 16, 2024, have a 30-day window to enter the country at the old tariff rate.

Clothing accessories and steel products now carry a 15 percent customs duty, while lubricants entail a five percent rate.

Debele Kabeta, Customs commissioner, ordered all customs branches to begin applying the new rules this week.

“The tariff regime needs frequent revisions to make sure local manufacturers and assemblers are getting necessary support and protection to stay competitive,” reads a letter signed by the Commissioner.