Morocco’s competition council advises against fuel price cap

fuel-pump.jpegCapping fuel prices would not be in the best interests of consumers or the economy, the head of Morocco’s competition regulator said on Friday, opposing a government plan to restore price controls.

Calls to limit the profit margins of fuel distribution companies were triggered during a consumer boycott campaign last year, which took aim at big business including Morocco’s largest fuel company owned by agriculture minister Aziz Akhannouch.

The government requested an opinion from the competition regulator before taking any action, although the governance minister said two weeks ago that caps would be imposed by mid-march.

“Setting the price of fuel will be inappropriate and inefficient to preserve the interest of the Moroccan consumer and the economy,” Driss Guerraoui, head of the competition regulator, told reporters.

He said that temporary measures such as price capping would only have a limit impact and called instead for “structural dysfunctions” in the sector to be addressed.

Backtracking on the liberalisation of fuel prices, in force since 2015, “risks sending a bad signal to the market and investors,” he said.

Morocco lifted subsidies on fuel under pressure from international lenders but maintains them on cooking gas, sugar and wheat.

Guerraoui said that a price cap would not take into consideration wider factors affecting prices, including volatility in international markets.

He recommended boosting local storage capacity and competition in the sector to put downward pressure on prices.

Twenty fuel distribution companies operate in Morocco of which 7 control 70 percent of the market with only 3 companies controlling 53 percent, he said.

Morocco imports 93 percent of its refined oil needs after the shutdown of its sole refinery Samir over unpaid taxes.