Call for control of prices and profit margins

The fuel price controversy has been at the forefront of public debate since the last weekend partial cut. In the glass-half-full-or-empty story, some cling to the need to return to compensation policy to control prices, while others readily adhere to the “realism” of current prices..

In this regard, Hussein al Yamani, secretary general of the National Oil and Gas Union and member of the Democratic Confederation of Labour, estimated that “the price of gasoline should not exceed 7 dirhams, and the price gasoline should be sold at 8 dirhams, contrary to current market prices. Al Yamani added, in a statement to MoroccoLatestNews, that “ we must return to the previous prices of 2011, whatever the justifications for the government measures put forward by the Executive”justifying this by the fact that ” currently, the prices per barrel are similar to those of 2011 and the sale prices of fuels are different on the market.

The UNPG SG explained that “the main price difference is the participation of the State via the compensation fund in 2011, where the government had subsidized the sector at the rate of four dirhams per liter of diesel, and had also determined the profit margin of the distributors”noting that ” the latter has considerably increased at the present time ». He continued that ” a liter of crude oil is estimated at 7 dirhams, while a liter of refined gasoline is estimated at 12 dirhams, which means that 5 dirhams of profit is lost in speculation on refining “. He added : ” We would have saved this amount if we had undertaken the refining process, alongside price regulation and profit margin setting “.

Contrary to this thesis, the current government, as well as those that preceded it, maintains that it is difficult to reactivate the financial support intended for the fuel market via the compensation fund, due to its high cost. Official statistics speak of a saving of 65 billion dirhams thanks to this process. This sum could be invested in the construction of infrastructures and encourage private and public investments.

The floodgates of fuel subsidies have been definitively closed, said Fouzi Lakjaa, Minister Delegate to the Minister of Economy and Finance in charge of the budget, during a press briefing. He assured during a press briefing that “the hydrocarbon subsidy requires a financial amount of 74 billion dirhams to cover the compensation costs”. For the economic analyst Rachid Sari, this thesis is marred by ” ambiguity”. Also, he called on the government to present the economic data on which the experts can rely for a comparison, stressing that ” lower prices are expected given the regressive price cycle “.

Sari said in an interview with MoroccoLatestNews that ” releasing the prices is a disastrous decision, due to the failure of the fuel storage policy “. The analyst added “ We do not hold the government solely responsible. The absence of an energy security strategy is also one of the causes of this situation, which is chaotic to say the least, and which calls for the need for state price controls. The economist admitted that “supporting the compensation fund meant maintaining unified prices and playing an important role in financial balances.

However, the dilemma does not lie in the fund itself, but rather is embodied in the absence of “benchmarking” or benchmarking over the past twenty years, as prices change from month to month in the light of the rise in world oil prices. And our interlocutor added, ” It would have been more appropriate for the state to reduce oil-related tax revenues above a certain ceiling, because the state had made large profits during this period. “, suddenly wondering about the roles of the competition council with regard to its silence” on oil company profits “.

In this same context, Hussein al Yamani, expert in the energy field, confirmed that ” the distributors’ profit margin was determined by the State; But it currently reaches two dirhams after the liberalization of the market »noting that “ it is necessary to refer to price regulation to determine the profit margin, and to return to support “. He further suggested the creation by the government “ a national fund to control fuel prices, and therefore neither the State nor the compensation fund will interfere in the prices, since a national fuel price will be fixed throughout the year at a reference (10 dirhams, for example), so if the prices fall below the agreed price, we accumulate profits in this fund, but if they increase other than what was agreed, we consolidate them from the profits made previously ».

For his part, Omar Kettani, Economist and professor at Mohammed V University in Rabat, analyzing these impacts told MoroccoLatestNews that ” the clearing house once played its role in controlling prices. However, by removing government support, there are only two options left. Either resort to debt to compensate for the budget deficit or adopt an austerity policy to obtain positive results “. Kettani explained that ” the State withdrew financial support in order to avoid fluctuations in world market prices, in accordance with the recommendations of international monetary institutions. However, this has put us in financial difficulty, due to our dependence on international markets. “.

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