Mozambican government cuts fuel prices sharply

MAPUTO, Nov. 25 (Chinese media) -- The Mozambican government has cut the prices of liquid fuels by up to 10.2 percent, effective as from Tuesday, the state media AIM reported.

The sharpest cut is in the price of petrol which falls by 10.2 percent from 41.62 to 37.36 meticais a liter. The price of diesel falls from 33.35 to 31 meticais a liter, which is a reduction of seven percent. A liter of kerosene falls in price by 8.8 percent from 29.33 to 26.75 meticais (about 24.4 meticais to one U.S. dollar).

Announcing the price cuts, Energy Minister Salvador Namburete said they resulted from the decline in the oil price on the world market. The price of a barrel of oil fell from 104.04 dollars in mid-September, to 69.81 dollars in October.

Oil prices have continued to fall since then. The price quoted on the New York Mercantile Exchange on Monday evening was 53.44 dollars a barrel.

When speculators drove the price of oil as high as 145 dollars a barrel earlier in the year, the Mozambican government took emergency measures to keep fuel prices within the reach of local consumers. This entailed temporarily suspending some of the taxes on fuel.

Thus the government lifted import duties and Value Added Tax (VAT) on diesel and kerosene, and cut by 50 percent the handling fees charged for fuel imports by the publicly-owned ports and rail company, CFM.

With the sharp drop in oil prices, Namburete said the time had come to start re-imposing these taxes. Thus, as from Tuesday, CFM is doubling its fuel handling fees, and the five per cent customs duties on diesel and kerosene will once again be collected.

For the time being, the VAT suspension remains in force. But the government expects to resume the collection of VAT on diesel and kerosene in December. Namburete promised that then, if the situation so justified, there could be further cuts in fuel prices.

The fall in the price of diesel means that the government will stop subsidizing the diesel used by the private minibuses that provide much of Mozambique's urban passenger transport.

After the February 5 riots against rises in the fares charged by Maputo minibuses, the government and the Federation of Mozambican Road Transport Associations agreed that, in lieu of a fare rise, the chapa owners would receive a fuel subsidy, for all payment in excess of 31 meticais a litre.

The subsidy now falls away, but will resume if, at some time inthe near future, diesel prices rise above 31 meticais a litre.