How Ethiopia’s Promise of Shared Prosperity Remains a Pending Law in the House of Power
Mohamud A. Ahmed
Few issues in Ethiopia’s evolving political economy have stirred as much public curiosity and misunderstanding as the question of who rightfully owns the Ogaden gas reserves. The now-famous “50/25/25” formula – fifty percent of proceeds for the producing region, twenty-five percent for the federal government, and twenty-five percent for the rest of Ethiopia – has become a focal point of both aspiration and confusion. Yet beneath the popular debate lies a more intricate legal, constitutional, and administrative reality. While articulated by the House of Federation in 2019 as a principle of equitable sharing, the formula remains unratified by the House of People’s Representatives and thus lacks legal enforcement. This essay explores the constitutional and fiscal dynamics behind the controversy, while clarifying misconceptions amplified by social media in light of recent remarks made by the President of the Somali Regional State.
I have carefully listened to the recent statement made by the President of the Somali Regional State during Ethiopia’s Flag Day, where he addressed the question of the Ogaden gas and the regional share entitled to its people. His words resonated across the Somali Region and beyond, igniting widespread commentary, speculation, and sometimes confusion. Nearly ninety percent of the social media reactions appeared to misread or oversimplify his message, translating it into either a populist declaration of ownership or a claim of resource sovereignty detached from constitutional context.
It was precisely this misinterpretation that drew my attention and renewed my academic curiosity. As someone deeply invested in the study of governance and fiscal federalism in Ethiopia, I found it necessary to revisit the legal and institutional foundations of the debate. I have followed this matter for years, examining both federal proclamations and regional aspirations, and today’s public discourse risks misleading the population if left unclarified. The President’s statement, in truth, aligns broadly with what is known within the policy and legal community, though not yet codified in statutory law. What he expressed represents a legitimate political aspiration, anchored in partial institutional truth yet awaiting full legal maturity.
Ethiopia’s constitutional architecture was designed to reconcile the principle of shared national ownership with the right of regional participation. Article 51 of the Federal Constitution empowers the federal government to enact laws for the utilization of natural resources, while Article 52 allows regional states to administer resources within the framework of federal law. The Constitution therefore envisions a system of concurrent sovereignty, where both the center and the peripheries hold stakes in national wealth, but where legislative supremacy rests with the federal government.
In the petroleum sector, this principle manifests through Production Sharing Agreements (PSAs) negotiated by the Ministry of Mines and the Ministry of Finance on behalf of the Ethiopian state. These agreements define the fiscal regime that governs exploration, extraction, and distribution. The key elements include royalties paid as a fixed percentage of gross output, cost recovery allocations that reimburse the investor, profit gas that is divided between the state and the contractor, and corporate income taxes paid to the federal treasury. Each of these components is governed by national law and implemented through federal authority.
The Somali Regional State, despite being home to the Ogaden Basin’s vast gas reserves, is not a direct signatory to these contracts. Its fiscal claim arises politically, not contractually. For decades, this structural imbalance has generated frustration: the region bears the social and environmental costs of extraction without proportionate economic reward. In response to this tension, the House of Federation in 2019 proposed a new formula for petroleum revenue-sharing, recommending that fifty percent of the government’s revenue from gas be allocated to the producing region, twenty-five percent be retained by the federal government, and twenty-five percent be distributed among the remaining regions.
This framework was celebrated across the Somali Region as a long-awaited gesture of recognition—a partial remedy for historical neglect. Yet its constitutional status remains tenuous. The House of Federation possesses interpretive authority on intergovernmental revenue matters, but it does not enact fiscal law. The legislative power to ratify and operationalize such formulas lies with the House of People’s Representatives. No public record or gazetted law confirms that this body has ratified the 50/25/25 formula. Therefore, while the principle exists as a political resolution and an administrative guideline, it does not yet hold the binding force of law.
This distinction between policy declaration and legal enactment is central to Ethiopia’s system of fiscal federalism. Without formal ratification, the formula cannot be implemented as a budgetary obligation. The Ministry of Finance continues to collect royalties, profit shares, and taxes under existing petroleum legislation, while intergovernmental fiscal transfers follow the established federal budgetary system. Consequently, revenues from the Ogaden gas remain under federal management until the legislative process elevates the formula into statutory law.
The issue, however, transcends legal mechanics – it touches on the philosophical question of resource justice. For the Somali Region, the pursuit of a fifty-percent share is not a plea for privilege but a demand for equity. It represents a vision of participatory development, where those who live upon the land that sustains the nation’s economy can partake directly in its fruits. For the federal government, the challenge lies in balancing such regional entitlements with national macroeconomic stability and cross-regional equity.
The public misunderstanding of the President’s statement reflects the broader struggle to translate complex fiscal policy into accessible public language. In his Flag Day address, the President’s assertion that “fifty percent of the gas belongs to us and fifty percent to the rest of Ethiopia” was not a unilateral claim of ownership, but a simplified expression of a long-debated revenue-sharing principle. His words echoed the essence of the 2019 House of Federation proposal, which indeed recognized such an arrangement in principle. The confusion stems not from the truth of his statement, but from the legal ambiguity surrounding its implementation.
Ethiopia’s resource federalism remains at a crossroads. On one hand lies the aspiration for decentralized prosperity; on the other stands the necessity of fiscal coherence. The absence of a ratified, transparent framework risks perpetuating the very disparities the 50/25/25 formula was meant to correct. Clarity is thus not only a legal imperative but a political necessity. To sustain public trust, the government must either codify the formula or publicly clarify its current standing within the national fiscal system.
At present, the matter remains in legislative suspension. The House of Federation’s 2019 decision has neither been rectified nor ratified by the House of People’s Representatives. It exists in limbo – a principle without statute, a promise without enforcement. Until parliamentary codification occurs, the 50/25/25 formula will continue to hover between aspiration and authority, cited in speeches and celebrated in rallies, yet unenforceable in court or budget.
Conclusion and Research Disclaimer
In conclusion, the claim that fifty percent of the Ogaden gas belongs to the Somali Regional State is politically accurate in spirit but legally incomplete in form. The President’s remarks during the Flag Day celebration reflect a legitimate aspiration consistent with the intent of the 2019 House of Federation framework, though the absence of parliamentary ratification renders it a non-binding statement of principle. The formula represents a moral equilibrium – a vision of fairness still awaiting the procedural sanctity of law.
This paper is the outcome of personal research and analytical reflection. I have pursued this subject out of deep intellectual interest and in response to the many questions I have received about it, particularly following the President’s recent remarks. It does not constitute legal advice, nor does it reflect the official position of either the Federal Government of Ethiopia or the Somali Regional State. The 50/25/25 framework remains pending, unratified, and under deliberation within Ethiopia’s legislative structure.
Mohamud A. Ahmed – Cagaweyne is a Columnist, Political Analyst,Researcher
Greenlight Advisors Group, Somali Region of Ethiopia. He can be reached at : +251 900 644 648
Editor’s Note : Views in the article do not necessarily reflect the views of borkena.com
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In Ethiopia the rule of law is non-existent. Only the will of the dictator PM is implemented. If, I remember correctly a big gold mining company started operation in Oromia a few years back. The Oromia region was a party in the contract and profit sharing scheme. So, what you need to follow is the PM words and the implementation mechanism in Oromia region so that you demand the same treatment for Somali or other regions.
The 50/25/25 resource formula for Federal and state revenue is a fair distribution of nation’s wealth. But it has never been applied in Ethiopia since the kingdom of Menilike till now. As a shrewd political analyst your writing subtly express some thing is brewing in the land of Ogaden ,what had happened in Niger Delta a revolt of local inhabitants against The Federal government of Nigeria should not be forgotten for those.who ignores History