Fuel prices: the HAT minister shooting first before negotiating

Jovenna and Galana were the first companies to give in to the public ruling power’s repeated deterrents. Justice is absolutely off the point, it is merely a matter of a transitional government openly enforcing its rules of engagement in face of rising fuel prices. The HAT minister for Mines and Fuel management made a personal challenge of the restoration of April 2010’s fuel prices before Tuesday July 13th. Mamy Ratovomalala repeatedly emphasized that the single condition to the resumption of talks between the State and the private sector was the restoration of former prices. This zeal excess is motivated by the will to get the upper hand, so that companies will be the ones to be having to negotiate a rise, and so that the state will not have to negotiate a lowering.  

The HAT minister blamed the four oil companies for having made an alleged agreement in order to increase fuel prices unilaterally. Distributors conceded a first gesture by reducing the rise, but probably underestimated a whole regime yearning to put its best possible foot forward to consumers. The hell with the companies’ announced 15 billions of ariary high losses due to the weakness of the ariary against the dollar. The HAT minister is sticking to the fact that the barel’s price is down to 71 dollars. Taxes and royalties are not considered as causes for this consuming price rise, but rather as part the remedy.  

Oil policy 

According to one of the year 2004’s laws, the Malagasy Fuel Management Office (locally named OMH) together with the sector, are calculating and periodically updating the cost prices’ details, including taxes and royalties, but without private commercial details. The providing companies are seemingly using this latest point as their card up their sleeves in order to cast the state aside from price establishment processes. And they didn’t wait for the OMH’s next update in August to do so. For lack of possible subsidies, the state finally has to give up some returns basically expected from the consuming price in order to avoid inflation.  

If oil distribution companies are relying on the price liberalization argument of the prices, they are actually failing to respect the free competition’s rules as the current local oil policy is a matter of agreements on a common price between all companies. Price transparency was, however, basically dimmed to allow consumers to make their own choices The judicial assessment of such an agreement between providers is depending on the implementation of free competition’s related laws. For the time being, the HAT government can only require transparency over the providers’ consensual price calculations.