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Angola, Nigeria Wind Down Fuel Subsidies, as Kenyans Brace for VAT Increases on Petrol

Section: DOWNSTREAM/RETAIL · June 4, 2023 · No comments |

By Macson Obojemuinmoin

Angola’s increase in the price of gasoline at its filling stations by 88% is the farthest it has gone, in five years, to move the needle on fuel subsidy reduction.

On June 2, 2023, a litre of gasoline shot up from 160Kwanza to 300Kwanza, an 88% jump.

The government says that measures to mitigate the effect of the price increase will be implemented for some priority sectors and “highly vulnerable classes”. The subsidy (meaning former low prices) will remain for the agricultural and fishing sectors, some public companies like the Public Electricity Production Company ( PRODEL) as well as Taxi Drivers, Bus Drivers and goods laden Trucks.

The country has determined that subsidies on petroleum products, valued at close to $3.6Billion in 2022, will go, but it doesn’t want to take off the subsidy in one fell swoop.

The story is different in Nigeria, where gasoline subsidy ended on May 29, 2023, the day of the coronation of Bola Ahmed Tinubu as the country’s 16th President. Subsidies for other products had long gone. The new gasoline prices, of between 488Naira in Lagos and 570 Naira in Borno, in the country’s far northeast, are about 186% higher than the subsidized prices which became extinct on Mr. Tinubu’s inauguration day.

Kenya’s gasoline and diesel prices are deregulated, but President William Ruto is determined that a large increase in taxes is the way to fund the building of critical infrastructure. The Finance Bill submitted in mid May 2023 to Parliament is expected to double VAT on petroleum products to 16%, pushing up prices of a litre of gasoline by Sh13.51 to Sh196.21, while diesel will increase by Sh12.40 to Sh180.88, at current crude oil prices.

Fuller details are published in the May 2023 edition of the Africa Oil+Gas Report

Russia Will Help Mozambique to Stabilize Fuel Prices

Section: DOWNSTREAM/RETAIL · August 2, 2022 · No comments |

Russia has said it was open to working with Mozambique to reduce, by half, the cost of petroleum products in the country’s filling stations.

Alexander Surikov. Russian Ambassador to Mozambique, said his country would “allow Mozambique to start importing fuel directly from Russia, avoiding intermediaries, potentially reducing by at least half the costs of acquiring the products”.

Russia is wooing friends all over the world as the European Union imposes sanctions on it in the wake of its invasion of Ukraine, which has pushed up crude oil prices and exacerbated global supply change challenges. Africa has become a key site in the contest of will between Russia and the west.

″Russia is open to working with Mozambique in this regard”, Surikov declared at a consultation meeting with the Confederation of Economic Associations of Mozambique (CTA), “We are open to projects in the fuel sector and in others of mutual interest.” he said.

Mozambique has had to deal with skyrocketing prices of petroleum products. The Mozambican Energy Regulatory Authority (Arene) announced the third fuel price rise in 2022 on July 1.

The sharpest rise was for LPG cooking gas for which a kilo of gas leaped by 19.28% from 85.53 meticais to 102.02 meticais; the price of a litre of diesel rose by 11.4% from 78.97 to 87.97 meticais. For gasoline the increase was 4.4%, from 83.3 to 86.97 meticais a litre. This is the first time that diesel has become more expensive than petrol at Mozambican filling stations.

The price of a litre of kerosene rose from 71.48 to 75.58 meticais, which is an increase of 5.74%.

NNPC Approves Aramco’s Bid to Challenge Dangote Refinery

Section: Downstream, DOWNSTREAM/RETAIL · November 15, 2019 · 2 comments |

Saudi Aramco is mulling investment in Nigeria, says NNPC, the country’s state hydrocarbon company and the most influential entity in the West African oil patch.

NNPC is keen on having Saudi Aramco invest in the Nigerian midstream, but the important part of the story is that the Saudi state firm wants to use NNPC as a platform to supply West Africa with gasoline, says Mele Kyari, the NNPC chief executive.

And the NNPC, surprisingly, doesn’t mind. The two parties are holding talks on potential cooperation.
Teams from NNPC and ADNOC, which is the UAE’s state hydrocarbon firm, have also met in Abu Dhabi to discuss investment opportunities that could range from upstream to midstream to downstream, Kyari told reporters at a recent industry event in Fujairah in the UAE.

Mr. Kyari doesn’t see a problem with the Nigerian state owned oil firm, having an agreement with a Saudi Oil Company to supply gasoline into West Africa, at the time a Nigerian owned business entity is at a significant stage of construction of a large refinery, to produce gasoline and other products, with focus on the West African market. The Dangote Refinery, the largest single train in the world, will cost between 9 and 11 Billion US Dollars, according to estimates. Instead, the NNPC CEO gushes: “Aramco is quite keen on getting the opportunity to supply gasoline to West Africa and we will provide them with the right platform.” Mr. Kyari also adds: “We are the largest importer of gasoline in West Africa. It is a clear opportunity for them.”

Gasoline, Diesel Prices, Keep Going Up in South Africa

Section: Downstream, DOWNSTREAM/RETAIL · September 26, 2019 · No comments |

Petrol prices, which have increased by almost 15% in South Africa since January this year, look set to increase further in October 2019.

The country’s fuel price is deregulated, which means a hike in crude oil price and a weakening of the local currency, the Rand, directly push prices up.

Those two have happened so far in September 2019, leading to warnings by regulators of an imminent hike of diesel and gasoline prices.

After an initial spike of 20% to above $70 a barrel, the oil price has since retreated, with Brent crude oil currently trading at $63 – compared to $60 before the attack. Saudi output was restored in the week of September 23, to pre-attack levels.

The Rand took a hit amid concerns about a global trade war and broke through the R15/$ level for the first time in three weeks. It was last trading at R15.03.

Based on the latest calculations of the Central Energy Fund, the biggest parastatal in the Department of Energy (DoE) the recent Rand and oil price movements will leave unleaded 95 octane petrol on track for an increase of 19c a litre, while 93 octane petrol could be cut by around 4c. Diesel prices will increase by 24c, and paraffin by the same margin.