Mozambique: Government to review fuel price structure to reduce cost of living

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Mozambique: Government to review fuel price structure to reduce cost of living

5:35 CAT | 27 Sep 2025

FILE - "The reduction in the port handling fee would not only alleviate domestic costs but also contribute to increasing the competitiveness of Mozambican ports”, reads the note. However, the government believes that changing this fee “will require a formal deliberation (specific order), as well as institutional coordination with the Ministry of Transport and Logistics, the publicly-owned Ports and Rail Company (CFM), and the sector regulator.” File photo RM]

The Mozambican government plans to review the fuel price structure, as a measure to mitigate the real cost of living, marked by prohibitive prices for basic necessities, under the Economic Recovery and Growth Plan (PRECE), a document recently approved by the Council of Ministers (cabinet).

According to a document, cited in Friday’s issue of the independent newsheet “Carta de Moçambique”, the plan is aimed at reducing the cost of petrol and diesel by 14.75 Meticais/litre and 10.84 Meticais/litre, respectively (0.23 and 0.16 US cents at the current exchange rate) “with a multiplier effect throughout the production chain that uses these two types of fuel as one of its inputs.”

The current price of a litre of diesel is 79.99 meticais, while a litre of petrol costs 83.57 meticais. Hence, the changes proposed will bring the price down to 69.15 meticais for a litre of diesel, and 68.82 meticais for a litre of petrol.

To this end, the government intends to review three main components, most notably the port operating fee, currently considered one of the highest in the region. Currently, the country charges a fee of 0.86 Meticais/litre for handling fuel, and the idea is to lower it to 0.43 Meticais/litre.

“The adoption of the proposed measures on import logistics costs could result in an estimated total reduction of 0.50 Meticais/litre in the final price of fuel. The reduction in the port handling fee would not only alleviate domestic costs but also contribute to increasing the competitiveness of Mozambican ports”, reads the note.

However, the government believes that changing this fee “will require a formal deliberation (specific order), as well as institutional coordination with the Ministry of Transport and Logistics, the publicly-owned Ports and Rail Company (CFM), and the sector regulator.”

The other components to be reviewed in the fuel price structure are stabilization, the margin for central storage facilities, and the bank charges rate. For example, in the stabilization component, Mozambique currently charges 3.50 Meticais/litre, whereas the proposed value is 3.0 Meticais/litre, a reduction of 0.50 Meticais/litre.

“These measures do not have significant negative implications for the supply chain. The stabilization component was originally designed to compensate operators in contexts of non-adjustment of prices, allowing price stability and protecting consumers against abrupt fluctuations.

The government also intends to reduce logistical costs for fuel imports (including VAT) by 0.50 Meticais/litre. Although it requires coordination with operators and regulatory bodies, this measure improves efficiency and can make national ports more competitive,” reads the document.

The government also foresees a cumulative reduction in the cost of basic food items by 16 per cent through the elimination of VAT (Value Added Tax) on sugar, cooking oil, soap, and beans. It also provides for exemption of Mozambicans from the garbage collection fee paid when purchasing energy for domestic consumption, in expanding neighbourhoods and suburban areas not covered by the Municipal Councils’ garbage collection services.

Source: AIM