Ethiopia spends million of dollars to meet its energy requirement, it is estimatedrnaround 20-30 million dollars is spent for the purchase of furnace oil for cementrnsectors only. In order to change the country’s economic situation and to come-out ofrnpoverty it is necessary to develop and utilize the country’s energy potential.rnFor the reason of fuel economy cement plants all over the world are switching overrnfrom fuel oil or gas to coal for their kiln operation. Ethiopia has discovered largernpotential low grade coals at different areas. The development and the utilization ofrnthis indigenous coal as an energy source for all energy consuming sectors will be arnmajor issue in this country in near future.rnThe study aims to determine the potential use of one of the indigenous coal as arnsubstitute in place of furnace oil in cement industry.rnResults from the analysis and comparisons of Yayu coal quality revealed thernpossibility of using Indigenous coal in place of furnace oil up to a certain percent.rnBased on the results the study attempts to select the equipments required if Yayu coalrnis replaced in place of fuel oil in Mugher Cement Enterprise.rnSubstantial investment for additional facilities and equipments are required, and as arnconsequent considerable saving in production cost in addition to the reduction ofrnforeign currency can be achieved through the switch over to indigenous coal.rnAdditionally the study revealed air pollution, spontaneous coal fires and coal dustrnexplosion are the major concerns of cement plant if this indigenous coal is used inrnplace of furnace oil.rnIn view of this the study recommended cement plants to see this alternative source ofrnenergy and to identify their concerns as soon as possible.