Maputo — For the second time in three weeks, the Mozambican authorities have increased the price of liquid fuels by about 20 per cent - so that, taking the two price increases together, fuel is now almost 45 per cent more expensive than it was in May.

Under the increases, announced by the Ministry of Energy on Tuesday, and taking effect immediately, unleaded petrol, jet fuel, LPG cooking gas and fuel oil all rise by exactly 20 per cent. A litre of unleaded petrol that cost 19,600 meticais on Monday now costs 23,520 meticais (at current exchange rates, there are about 24,300 meticais to the US dollar). A litre of jet fuel rises from 12,476.1 to 14,971.3 meticais, while the price of fuel oil goes up from 8,515 to 10,218 meticais per litre. A kilo of LPG now costs 21,211.9 rather than 17,676 meticais.

Leaded petrol is slightly cheaper than the unleaded variety, with a price rise of 19.4 per cent - from 19,680 to 23,500 meticais a litre.

For diesel, the rise is 18.7 per cent. bringing the price of a litre to 21,150 rather than 17,820 meticais. The price of kerosene rises by 18.5 per cent, from 11,540 to 13,670 meticais a litre.

These prices are for the port cities where the fuels are unloaded - Maputo, Matola, Beira and Nacala. Elsewhere in the country, fuel distributors are allowed to add their transport costs when calculating the final price.

The Mozambican government reviews fuel prices every month, and alters them whenever the cost of importing fuel, expressed in meticais, has moved, in either direction, by more than three per cent, or whenever there is a change in fuel tax.

The May review was delayed, and the price increases only announced on 1 June - hence the fact that there have been two price increases this month.

The Energy Ministry statement says that the import prices of all fuels have increased since 1 June, and in the past three weeks the metical has depreciated against the US dollar by 1.77 per cent.

Since fuel imports are denominated in dollars, last year Mozambique was cushioned against the full impact of rising oil prices by the relative weakness of the dollar. But the metical's 2004 appreciation against the dollar has now been reversed.

In January 2005, there were about 18,000 meticais to the dollar. But the average buying and selling rates on the interbank money market, quoted by the Bank of Mozambique on Tuesday, are now 24,213 and 24,313 meticais to the dollar. At some of the Maputo foreign exchange bureaux the dollar is selling for 25,000 meticais.

These are the highest fuel prices Mozambique has ever experienced. The falls in the price of fuel in late 2004 and early 2005 have not only been reversed, but consumers are substantially worse off than they were a year ago.

The price of petrol is 28 per cent higher, and of unleaded petrol 29.5 per cent higher, than on 21 June 2004. The cumulative price rise over the year has been 33 per cent for kerosene and 46 per cent for diesel.

Such large rises in fuel prices will work their way through the economy and threaten the government's target of keeping inflation this year to below eight per cent. The country's trade union movement protested bitterly at the 1 June price increase. This second price increase comes just two days before union leaders are due to meet with a government team headed by Labour Minister Helena Taipo, and is bound to encourage union demands that the government revise upwards its 14 per cent increase in the statutory minimum wage.