Mozambique to pay stations to keep fuel price low

Mozambique will reimburse petrol station owners for at least some of the losses suffered on imported fuel sold at state-controlled prices, as shortages have broken out, a newspaper reported on Friday.

The government will now pay suppliers to keep petrol prices down in the face of rising international costs, said independent newspaper O Pais, citing Mozambique’s Deputy Energy Minister Jaime Himede.

The country’s fuel industry says that the popular price controls, which currently cap a litre of unleaded at 0,89 United States cents a litre in one of the world’s poorest countries, led to $200-million in losses last year.

Faced with the loss, companies had stopped importing fuel, leading to shortages in major cities in recent weeks.

The amount of payments to the fuel suppliers is still being negotiated, Himede told O Pais.

The move enables the government to maintain the price controls while easing the shortages.

The Mozambican Association of Petroleum Companies had warned of widespread fuel shortages if the policy was not changed, with media reports this week of gas stations in Beira limiting drivers to just 10 litres of diesel.

The capital Maputo was also reportedly affected by fuel shortages.

Maputo was paralysed in 2008 by fuel price riots that saw police open fire on protesters, killing three.

With national elections set for October 28, the government has been keen to keep fuel prices down even as global oil prices have risen.

The current prices were set at the beginning of the year, when the government announced a 30% decrease in gasoline prices.—Sapa-AFP