Government Will Not Reduce Fuel Prices (

The Mozambican Minister of Industry and Trade, Max Tonela, on Wednesday warned that the government is not able to reduce fuel prices, despite the sharp fall in the world market price of oil.
The main result for the government of the collapse of the oil price has been that it could end the subsidies (particularly for diesel) which it has been paying for years. But this did not mean that the government was yet making any substantial savings, said Tonela, cited by the independent television station, STV.
Speaking after a visit to the Confederation of Mozambican Business Associations (CTA), Tonela said “The government is still not saving. We are well aware of the movements in the international oil price. But for a long time the price of oil and its derivatives was rising, and fuel prices in Mozambique have been frozen since 2010”.
“During this period, the government subsidised the companies in the fuel sector”, he added. The subsidies were paid late, and the government still owes money to the companies.
“The government is not yet in a situation where it can think about reducing the fuel prices, since it still has responsibilities to the fuel companies operating in the country”, said Tonela.
Mozambique’s annual bill for importing liquid fuels rose from 400 million dollars in 2004 to 530 million dollars in 2010. Neither the figure for 2014 nor any estimate for 2015 has yet been published. The tumbling oil price should certainly push the fuel bill down, although the increasing number of vehicles on the road will, to some extent, counteract this.
The benchmark Brent Crude had been selling at about 105 dollars a barrel in mid-September. It fell to around 50 dollars a barrel in January, but has now recovered somewhat and was cited at 61.69 dollars a barrel on Wednesday.
Source: Business