Mozambique: Fuel prices rise – AIM report

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Mozambique: Fuel prices rise – AIM report

7:00 CAT | 18 Mar 2022

File photo: O País

Mozambique’s Energy Regulatory Authority (ARENE) on Wednesday announced price rises of up to 15 per cent for liquid fuels, taking effect as from zero hours on Thursday.

The sharpest price rise is for diesel. A litre of diesel now costs 70.97 meticais (1.1 US dollars, at the current exchange rate), rather than 61.71 meticais, a jump of 15 per cent.

The price of petrol rises by 12.1 per cent, from 69.04 to 77.39 meticais a litre. For kerosene, the price rise is much lower. The price of a litre of kerosene goes up by 4.6 per cent, from 47.95 to 50.16 meticais.

The price of domestic GPL cooking gas rises from 71.02 to 80.49 meticais per kilo – an increase of 13.3 per cent.

At a Maputo press conference on Wednesday evening, the chairperson of the ARENE board, Paulo da Graca, said the price rises would have been higher but for the mitigation measures announced by the government the previous day.

Those measures included a five per cent cut in port handling fees for petrol and diesel and a 60 per cent cut in the logistical infrastructure for fuel intended for filling stations. The government ordered a cut in the profit margins on fuel for both wholesalers and retailers of 15 per cent, and in the margins for fuel storage installations of 30 per cent.

Without these measures, said da Graca, ARENE would have been obliged to raise the price of a litre of petrol to 81.78 meticais, and the price of diesel to 74.48 meticais a litre. The real price of cooking gas should be 106.48 meticais per kilo.

The mitigation measures are temporary. The government warned on Tuesday that they will only be in effect “for as long as the situation of extreme rises in price on the international market continues”.

ARENE blames the price rise on recent increases in the price of crude oil, which in turn is blamed on the Russian invasion of Ukraine. This explanation ignores the vast profits that international oil companies have made over the past year, long before any Russian troops set foot in Ukraine.

Ironically, over the past few days the world market price of oil has tumbled. Earlier in the year, prices reached almost 140 dollars a barrel, but they have now fallen to below 100 dollars. As of Thursday morning, the benchmark Brent Crude was trading at 99.79 dollars a barrel. The price of Brent crude has fallen by 30 per cent since 7 March.

Of course, it will take some time for the current price reduction to work its way through the supply chain. Mozambican consumers are paying for liquid fuels that were imported when prices were much higher.

This week’s price falls are expected to be temporary, with the price of crude soon reverting to well over 100 dollars a barrel.

Source: AIM