Mozambique: COVID-19 Causes Crash in Transport Companies' Income

Maputo — Mozambican road transport companies are suffering a loss in their daily income of 57 per cent, and fear that this could worsen to 70 per cent, if the current restrictions caused by the Covid-19 pandemic continue for a further two months, according to the Confederation of Economic Associations (CTA), cited in Tuesday's issue of the independent daily "O Pais".

The CTA argues that one way to assist transport companies would be to reduce the price of fuel. The government ordered a cut in fuel prices which took effect on 13 May - but the CTA regards the current prices, of 64.22 meticais (93 US cents) for a litre of petrol and 60.15 meticais for a litre of diesel, still as far too high.

"The private sector had been calling for a price cut, but when it came it was less than expected", said a CTA source cited by the paper. "So its impact has been limited, particularly on the transport sector, where fuel accounts for 45 per cent of operational costs".

He claimed that a freight transport company carrying goods from Maputo to Chibuto, a distance of 220 kilometres, used to spend 14,628 meticais on fuel for a return journey. With the new price, the cost falls by only 3.4 per cent, to 14,128 meticais.

Furthermore, a change in the price structure for fuel, introduced by a government decree of November 2019, also added to the costs or transport companies. The price came to include a margin to cover central fuel storage facilities.

The CTA source said this put an extra 1.22 meticais on the price of each litre of fuel. Without this change, he said, the new prices would have been 63 meticais for a litre of petrol and 58.93 meticais for a litre of diesel.

The CTA had hoped for a much greater cut in fuel prices, bearing in mind the sharp fall in crude oil prices. The average oil price had fallen from 66.25 dollars a barrel in January, to 20.84 dollars in April, a decline of 68.5 per cent. This far outweighed the depreciation of the metical against the dollar, which was just five per cent over the same period (from about 64.5 meticais to the dollar in January to 67 meticais to the dollar in April).

The CTA hopes that in future changes in the prices of fuel at Mozambican filling stations will better reflect the international price changes, though it admits that fluctuations in the exchange rate of the metical must also be taken into account.

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