PRICES OF LIQUID FUELS FALL

The Mozambican Ministry of Mineral Resources and Energy has announced a reduction in the prices of petrol, diesel and kerosene, taking effect as from Wednesday.The price of a litre of petrol falls from 56.06 meticais (about 90 US cents, at current exchange rates) to 53.57 meticais, a decline of 4.4 per cent. For diesel the price drop is negligible, at just 0.2 per cent – a litre now costs 51.79 rather than 51.89 meticais.The sharpest fall is in the price of kerosene, often regarded as the fuel of the poor. Kerosene now costs 37.88 rather than 41.62 meticais a litre, a reduction of nine per cent.But the price of cooking gas (butane, or LPG) rises sharply, from 61.08 to 70.32 meticais per kilo, an increase of 15.1 per cent. The price of compressed natural gas rises by 2.9 per cent, from 25.59 to 26.34 meticais a kilo.The Ministry statement announcing the new prices said they result from the implementation of a government decree of 2012, which requires monthly reviews of fuel prices. The prices at the pumps will be raised or lowered if, since the last review, the import prices of liquid fuels have moved by more than three per cent in either direction.The previous government, under President Armando Guebuza, had disregarded this mechanism, and opted instead for an extremely expensive policy of generalised fuel subsidies. Those subsidies have now been scrapped and, according to the deputy national director of fuel and hydrocarbons, Almirante Dima, interviewed by the independent television station STV, the prices at Mozambican filling stations are now market prices.Dima said it had been possible to reduce petrol, diesel and kerosene prices, partly because of a fall in world market prices, and partly because of the steady recovery of the Mozambican currency, the metical, against the US dollar, the currency in which fuel imports are denominated.The metical depreciated sharply last year, and by September had fallen to around 80 meticais to the dollar. Central bank intervention, notably through a sharp increase in interest rates, halted and then reversed the depreciation. On Wednesday, the metical was quoted at 62.2 to the dollar.