Agencia de Informacao de Mocambique (Maputo)
24 July 2009
Sao Paulo — The Mozambican government has guaranteed that there will be no shortage of fuel in the country and that fuel prices will not rise until the end of the year, despite the increase in international oil prices over the last few months.
Energy Minister Salvador Namburete, who is accompanying President Armando Guebuza on his current visit to Brazil, gave this guarantee in an interview with AIM in Sao Paulo.
Namburete said the government had been shocked by a statement issued on 16 July by the Mozambican Association of Fuel Companies (AMEPETROL) which threatened a disruption in fuel supplies unless the government raised fuel prices, which have been unchanged since March.
The AMEPETROL statement claimed that "normal distribution and sale of petroleum products are profoundly compromised", due to "insufficient action from the Mozambican government".
Namburete said that ministers had read this statement with incredulity, since it came at a time when discussions were already under way between the government and AMEPETROL, and when the government had already given written guarantees that it would ensure that neither the fuel distribution companies nor motorists would pay for the rise in international prices - in other words, that the government would again introduce mechanisms to subsidise fuel.
"The letter in which the government gave this guarantee to AMEPETROL, that we were willing to compensate the fuel distribution and marketing companies, just as we did last year, during the enormous hike in world fuel prices - that letter was discussed line by line between us and the AMEPETRO leadership before I signed it and delivered it to the chairperson of the association, Jose de Castro. He was to ensure it reached the other members", said Namburete.
He stressed that the letter gave AMEPETROL full guarantees, and all that was missing was to discuss a ceiling for the compensation to be paid to the companies, which would be calculated using the percentage increase in crude oil prices as a basis.
What the government had expected was that the association would now discuss the compensation mechanisms - or perhaps that other members would say they did not agree with the letter, and that therefore further meetings should be held to refine the government's position. Instead AMEPETROL has issued a statement "as if there had never been any dialogue, much less an agreement in principle. It is not true that there has been a lack of action by the government, as claimed by this statement".
Namburete was sure that the statement did not reflect the position of all members of the association, and he noted that the version published in the Mozambican media was not signed by any of the AMEPETROL leaders.
The statement also claimed that the losses caused by the discrepancy between Mozambican prices and the world market prices during the 2008 world fuel crisis were born entirely by the distribution and marketing companies. Namburete said this was quite untrue: the government had opted to remove a range of taxes on diesel and kerosene, in order to prevent prices from rising. As a result the government lost 65 million US dollars in tax revenue.
"This time we stated in our letter to AMEPETROL that the government will adopt the same measures as last year, so that neither the distributors nor the consumers have to pay for this new rise in the world market price of oil", he stressed. "That's why we don't understand why AMEPETROL issued this statement. It spreads the idea that there could be a crisis, because the government is not doing anything to solve the problem".
Namburete insisted that there will be neither fuel price rises this year nor any general fuel shortages. Recent fuel shipments unloaded in the ports of Maputo, Beira and Nacala were sufficient for the next three months, and strengthened existing stocks of fuel. He claimed that those stocks were sufficient for the rest of the year.
More tankers were due at Mozambican ports in the near future. So there would not be a shortage, and even if some companies refused to distribute the fuel, there were always alternative distribution channels. "It might not be as swift and efficient as when all the stakeholders are involved, but I don't foresee a situation where we have long queues at the petrol pumps", said Nambuerete.
He added that not all AMEPETROL members agreed with the threat to reduce or interrupt fuel supplies, and instead believed that the government would honour its promises. He would not say which companies these were, apart from the publicly-owned fuel distributor, Petromoc.
"Last year, we were able to deal with a huge price increase, the highest in the history of liquid fuels, when the price of a barrel of oil reached 150 dollars. So why should we be incapable of dealing with the current situation where oil prices are between 65 and 70 dollars a barrel?", Namburete asked.
Furthermore, the government had now been informed that AMEPETROL has dropped its threats, and that, as from Friday all the companies should be working normally. The government would monitor the situation to see whether this was indeed the case.
For, despite Namburete's optimism, there have been interruptions in supply. Earlier this week several Maputo petrol stations ran dry, but, according to a report on the independent television channel STV, the situation seemed to have returned to normal by Thursday.
Far worse was the situation in Beira, where queues at fuel pumps did develop. The shortage was of diesel: there seemed to be plenty of petrol. At first, the owners of fuel pumps rationed the fuel, limiting each vehicle to 30 litres. Then the diesel ran out altogether. Thursday TV reports said that there was not a drop of diesel available in Beira.
But this may not have been the result of any AMEPETROL threat. According to the Sofala provincial government, the crisis was due to the difficulty of tankers docking in the port of Beira. This problem was temporary, a tanker did begin to unload fuel on Thursday, and the situation at the fuel pumps was expected to return to normal some time on Friday.
A meeting to discuss compensation for the fuel companies took place in Maputo on Thursday, attended by Finance Minister Manuel Chang, Planning and Development Minister Aiuba Cuereneia, Deputy Energy Minister Jaime Himede, the Governor of the Bank of Mozambique, Ernesto Gove, and the chairperson of Petromoc, Mateus Katupha.
Himede insisted to reporters that the government is taking measures that will not damage the interest of either the fuel companies or of the consumers. He did not speak of figures, on the grounds that negotiations were still under way.
Fuel prices - particularly for diesel - are sensitive. A rise in the price of diesel in January 2008 led to a 50 per cent increase in the fares charged by the privately owned minibuses (known colloquially as "chapas") that provide much of the passenger transport in Maputo. This sparked off serious rioting in Maputo on 5 February, leading to the withdrawal of the fare increase, and a scheme to subsidise fuel for the chapas whenever the price goes above 31 meticais (1.2 US dollars) a litre.
Currently the price of diesel is only 22.45 meticais a litre. Kerosene, widely regarded as the fuel of the poor, sells for 15.58 meticais a litre. The current cost of petrol is 23.1 meticais a litre.
In 2008, the government subsidies did not extend to petrol, which rose by the middle of the year to 41.62 meticais a litre. This time, however, the government appears to be suggesting that petrol prices will also not be allowed to rise.
The key mechanisms to alleviate the pressure on the distribution companies in 2008 were fiscal. The government waived customs duties on diesel and kerosene, and Value Added Tax (VAT) on diesel and on the transport of fuel from the ports to the final point of sale. These measures allowed the fuel companies to make more money without directly penalizing the consumer.
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