Fuel supply in Mozambique will reach breaking point, companies warn govt

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Fuel supply in Mozambique will reach breaking point, companies warn govt

1:44 CAT | 03 Mar 2017

File photo / For illustration purposes only

Gasoline companies say they can no longer afford differences in fuel purchase prices

Three weeks after several provinces reported fuel shortages, the Mozambican Association of Petrol Companies (Amepetrol) has warned that Mozambique risks running out of petrol and diesel if the current oil price compensation system is not changed.

In a letter to the prime minister, fuel supply companies say they can no longer afford the difference in the price of buying fuels in the international market with the price converted to the metical in Mozambique.

Petrol stations accuse the government of delaying compensation, creating problems for company accounts, especially as Mozambique is consuming far more fuel than in the past.

In the letter, the companies report accumulated losses since June 2016 of about US$70 million, to be paid by the Mozambican state, adding that the figure has been rising between seven and ten million dollars a month due to the increase in the price of fuels in the international market.

“The current decapitalization of companies is largely due to the lack of updating of fuel prices, which, to date, has already given the industry a credit of approximately US$70 million to be paid by the State. We estimate that this value is currently being increased from seven to ten million dollars per month, a figure that may increase still further if prices in the world market continue with the upward trend that has been registered for the last few months,” the fuel distributors’ letter reads.

In the letter, sent with the knowledge of the Minister of Mineral Resources and Energy and the national director of Hydrocarbons, petrol stations say that it is urgent that the government change the current system of subsidizing prices or risk the collapse of the Mozambican oil industry.

“In view of the above, we emphasize the absolutely essential and urgent need to change the current subsidy system, definitively ending the system of price compensation. Maintaining the current system for any length of time may cause the entire industry to collapse and jeopardize the country’s economic sustainability,” the letter concludes.

Compared with neighbouring countries, Mozambicans pay little over half for gasoline and diesel fuel after state subsidies.

Source: O País